The world's most used crypto, Tether explained

Pekelo

Pekelo

"Let's say, in theory, that everybody sells a bitcoin they bought when the price drops to where they bought it at. https://xplaind.com/147599/market-clearing-price

So, if (B) Bitcoins are 'Mined', and they were all sold for (D) dollars, the perceived 'value' of a Bitcoin is at least (D/B) - Based on the idea that someone is willing to at least buy at the price someone else sold at.

If Tether prints fake money (T) and uses it to buy bitcoin as well, the perceived valuation becomes ((D+T)/B) - Which is artificially high - once you've sold (B/D) Bitcoins, the (T/B) remaining Bitcoins will only be bought by people using funny money.

Like the old goldbug axiom goes, 'Good money drives out bad' - and Tether is the worst money there is. As miners take more and more (D) out of the system to keep the lights on, the percentage of (T/(D+T)) that underlies the valuation of the Bitcoin ecosystem gets higher and higher. As long as SOMEBODY's still buying, it stays below 100%, but..."

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Simple view:

Tether Inc prints Tether out of thin air

Tether Inc tells everyone each Tether is worth $1. People believe this at face value

People buy Bitcoin with Tether on pretense it is equivalent to the same number of USD

Therefore Bitcoin price can be controlled to a value of your choosing with no real world money required

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Even their own documents claim it's it's not strictly backed by USD holdings, but instead backed by various resources - Many people postulate that includes a nontrivial percentage of Bitcoin(Tb) at the current market value(V).

Which makes ((D+T)/B)=V above into ((D+(Tb*V))/B)=V

... which is, combined with their reluctance to submit to an independent audit, troubling.

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Differences between the Fed's quantitative easing and Tether printing:

  1. The Fed manages the money supply in order to keep its value stable within a pretty negligible 1.50–1.75% band per annum, while Tether is printed in order to drive BTC to unstable growth which can jump 2% per hour.

  2. The Fed produces money that goes into the general economy, so the effect is spread over all assets. Whereas Tether goes into manipulating the face value of only one or two individual products, basically BTC or ETH.

  3. The USD "money" produced by the fed is accepted over basically 100% of the national economy, and probably close to 100% of the global economy to, in return for pretty much any good or service. Whereas USDT are accepted only by a handful of specialist speculators.

  4. The goal of the Fed is to create a low inflation rate to avoid (a) deflation, and/or (b) mass inflation such as we have seen in the past, both of which lead to widespread global management problems for governments. The goal of Tether is to create personal wealth for a handful of individuals in a giant money printing scam.
 
All of the quotes are from r/buttcoin

"The way to think about it, I think, is in terms of money supply.

There's a certain amount of money in the crypto market looking to buy BTC. Since the number of BTC is roughly fixed, the more money in the market, the higher the price of BTC will be. This is BTC's "money supply".

The money supply goes up (= BTC price rises) when people decide to put more money into the market, and goes down (= BTC price falls) when people take profits and miners extract cash to pay costs.

Now enter Tether. Tether creates USDTs, which are like money, and crucially are accepted as money across the crypto ecosystem. But they cannot be extracted or taken as profits. You can't buy the proverbial lambo with USDT, nor pay for your mining rig. You can only buy BTC and other crypto.

So now the money supply for BTC is "total amount of money put in plus the supply of USDT". (Leaving aside a bunch of complicating factors like other currencies and coins.) The basic dynamic above still holds -- so when money supply goes up, either because people put money in or new Tether comes into existence, the BTC price rises. Tether has been printing enormous amounts of USDT this year, and so BTC goes up.

Why is this a problem? Roughly, because USDT isn't actually equivalent to USD. If people withdraw from the market to buy stuff, they have to be paid in USD, but the USD eventually won't be there. In theory that's when you can take your USDT to Tether and redeem them for their "reserves", but they don't actually have those in any liquid form. (Or any form.) And then it all falls apart."

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"This is missing a critical step:

Assuming people are buying Tether (USDT) with actual money, things are sort of fine as money is entering the ecosystem. Yes, some is being bled out to pay for the miners but there is still fiat coming in which justifies the production of Tether.

There is no evidence this is happening. Fiat doesn't seem to be entering into the system at a greater rate than before. Tether, however, is. Tether is being minted and provided to exchanges where it is then sent to trading bots to buy BTC with. This increases BTC demand and thus price. But... if most BTC is being bought with USDT, making it go up in price, but USDT can't go up in price because it's not supposed to... you need to bring in more and more USDT to keep this going, and we don't see a lot of USD or other fiat entering at a higher rate than it has been. This means that the USDT coming in, which is propping up the price, is being made out of thin air. Which means, that all the money that is supposed to be in there, justifying 1BTC=19k USD... doesn't exist. Which means that 1BTC doesn't really equal 19k USD.

Now here is the fun part of Ponzinomics: There is no way out of this. Unless 19b+ in USD suddenly floods in, the price will crash sooner or later. The later it happens, if they keep printing USDT, the worse it's going to be. If it does flood in... the BTC price can't increase or the same thing happens. The only, and I mean only, way out of this for the exchanges requires two things that won't happen to happen simultaneously:

  1. Lots and lots of money coming. 19B worth. All at once.
  2. Big chunks of previously frozen BTC (like the supposed Satoshi wallets and governmental seizures) suddenly hitting the market all at once to depress the price that should be rising and keeping it mostly stable so that it can make up the debt of all the unbacked USDT."
 
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Yeah, BTC as an "investment" is at best shaky, at worst a scam or Ponzi underlain by fraud. But that's a common distinguishing feature of manias and bubbles, which we are clearly in now.

One day the air will rush out, but that day looks to be some time off yet. We've really just entered the public participation phase with insurance companies and old-line asset managers jumping in. By analogy we might be in 1999, or 1986-87 in Japan.
 
Trader Curt said:
I don't know I always cash out into usd, which is even more printed out of thin air
More...
But at least the USD has a more predictable deflation. There is no way it could drop 5-10% against other currencies in a matter of a day. Bitcoin easily does. Yes, there is appreciation as well, but the risk of a quick and massive devaluation is ever present. Plus hacking is another fear, as is some new supercomputer that will be able to crack people's private keys or whatever they call them.

Its fine to 1-5% in it as a speculation, but a signification percentage of your net worth??? Only if you're prepared to lose it all, and I think that is easily a 10% risk if not higher.
 
100% net worth into cryptos for us
emoji_u1f911.png
yolo! For some reason, I view fiat as riskier than bitcoin
emoji_u1f914.png


[PS: actually inaccurate, car is paid off, and jewelry and other stuff so lower than 100% but no stocks, or real estate]
 
NoahA said:
But at least the USD has a more predictable deflation. There is no way it could drop 5-10% against other currencies in a matter of a day. Bitcoin easily does. Yes, there is appreciation as well, but the risk of a quick and massive devaluation is ever present. Plus hacking is another fear, as is some new supercomputer that will be able to crack people's private keys or whatever they call them.

Its fine to 1-5% in it as a speculation, but a signification percentage of your net worth??? Only if you're prepared to lose it all, and I think that is easily a 10% risk if not higher.
More...

Well that's the thing about the most riskiest assets, they are also the most rewarding. And to me Bitcoin is not a very risky asset, because if you do your homework you will find out that there is a big demand for it, while on the surface everyone looks at it like "A lottery ticket"

I got 25% of my worth not in Bitcoin but in another crypto that I think has huge potential, I already cashed out on Bitcoin, and waiting for a bigger dip. Another 50% is in Psychedelic stock that is doing amazingly well. :D
 
Always a great litmus test with Crypto is if they bang on about Tether being a fraud and the only thing propping up Bitcoin.

So if they say the above, you know they a) haven't done any proper research, and b) aren't worth listening to.

Like Meyer Lansky said and proved (to the dopey mob bosses) - there's far more money to be made in Casinos via running a clean joint than a dirty one. The Tether gang know this as well although at the same time I doubt they're squeeky clean.

But let's assume for one momenet tether is a fraud and it goes bust. Will that be the final end of Bitcoin? Nope. It may well go down, perhaps by 1/3rd, then again it might not. But what it won't do is make Bitcoin fail as people have been predicting now for 11 long years and counting.
Bitcoin is very very hard to kill as has been proved over the last 11 years and once the tether dust has settled, Bitcoin will go marching on as it always does. In fact, many Bitcoin holders would WELCOME a failure of tether because it would be another hard test for Bitcoin. Bitcoin needs these hard tests to prove itself. Bring them on.

Ultimately, Bitcoin was strong before tether and it will be strong with or without tether. So to blame Bitcoins strength on tether printing and then double secret bot buying with those new unbacked tethers is laughable. No doubt if tether doesn't fail, the Bitcoin bears will just ramp up the screams of ponzi and tulips, the same disproven fud we've been hearing now for many many years. By all means criticise Bitcoin but try to come up with some original thoughts...
 
Imagine when even the issuer of Tether can't explain how the process work:

https://www.reddit.com/r/path%3D%252Fr%252FButtcoin%252Fcomments%252Fkv65x7%252F

"Paolo: In any case, the entire concept of us issuing tether to buy bitcoin for ourselves, doesn’t make sense. So why issuing tethers when we already have the dollars and we have the ability to manage our inventory and our portfolio, so we could just use the dollars, right? So the entire narrative is completely nonsense, right? So why we have to do two steps when we can do one?"

cadaver0
"he is basically saying they wouldn't even use their own fucking product to buy BTC, they would just use fiat
and we're supposed to believe that the big, smart money is doing the extra steps to go through tether instead of just using fiat"
 
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