The tether argument is a solid one.

Cuddles

Cuddles

A quick review:

Major exchange comes out with tether and claims each coin is backed by USD.

No real proof of funds have been provided.

The argument is that the exchange printed coins without backing, depreciating it's actual value against other crypto (mainly BTC).

This in effect creates an artificial USD price which most people believe is backed by cash (unfazed faith in tether backing).

First audit already fell apart as bitfinex is claiming "unnecessarily complicated" (read bs).


Shit could hit the fan.


FWIW, having backed crypto defeats it's decentralisation in my opinion since now you have to rely on the stored asset and it's governance.
 
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well, good thing markets are efficient and they've already priced in any fundamental downside. time to buy buy buy!
 
cole_ said:
well, good thing markets are efficient
More...

Where did you hear that? Unless you were sarcastic.

The interesting thing about tether is that nobody can pinpoint what would be the breaking point for them. You see they don't really guarantee the buying back of tethers, and one might need a lawsuit to try to force them in case they refuse it.

Law enforcement is testing them, but only in a soft way, so there are still months left to run the scam. Maybe at one point they just decide they made enough money.

It is also possible they truly believe in their model and they would go down with the ship. All 3 bosses of the company are known so they will have to hide in plain sight once the show is over.
 
Isn't USDT a tracker instrument? a tracker just tracks the price of the underlying, it doesn't have to be backed by anything.
 
bln said:
Isn't USDT a tracker instrument? a tracker just tracks the price of the underlying, it doesn't have to be backed by anything.
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I am not sure what a tracker is, but it is a promise. The company promises to back every USDT with a dollar in a bank, and until a tether is eventually burnt, that money should be in the bank.

But they don't actually promise the exchangeability of tether back to dollar.
 
bln said:
Isn't USDT a tracker instrument? a tracker just tracks the price of the underlying, it doesn't have to be backed by anything.
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Yes and no.... Most crypto track in pairs to either Bitcoin or usdt, but if usdt is not backed, then it's artificial. Some exchanges are backed by USD (kraken for instance) and their price more or less mirrors other exchanges.

The problem is artificial pricing by tether if not backed by anything, in which case, this mirrored pricing can quickly plummet if tether is farcical.
 
Tether's market cap is miniscule.

If it implodes the REAL impact will be negligible, but the SENTIMENTAL impact will, for a while at least, be considerable.

Still won't be more than a tiny dent in the bull market in crypto-currencies..
 
Fileiro said:
Tether's market cap is miniscule.

If it implodes the REAL impact will be negligible, but the SENTIMENTAL impact will, for a while at least, be considerable.

Still won't be more than a tiny dent in the bull market in crypto-currencies..
More...

@ 2 billion, you may be right. I just worry about the psychology impact on the USD pricing of coins?
 
The solution is to avoid Tether by creating your own neutral positions by positing enough BTC on exchanges offering leverage to go short. The advantages of this over Tether is:

You can keep your alts portfolio, and only estimate how much BTC you need on the shortable exchange (and leverage) to neutralize your entire portfolio. With Tether, you have to sell out of all your positions, and put it all in Tether. If you don't have a Tether wallet, then you have to hold that on an exchange.

This means you can keep your alts portfolio in wallets, and only expose just enough BTC to the shortable exchange to neutralize (hedge) the portfolio. Say you have 10 BTC total value of portfolio. You can move 2.5 BTC to the exchange, and take 3x leverage short (or 3 BTC and 2x leverage), approximately neutralizing the portfolio. Only 25% is exposed to an exchange, the rest in wallets. Tether forces 100% out of wallets (temporarily) out onto an exchange, paying exchange rates to convert, there to stay, if there is not Tether wallet.

Examples of shortable exchanges:
BitMEX
CME
SimpleFX
 
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