The world's most used crypto, Tether explained

[Pekelo]

The Tether printer ran out of ink, Bitcoin's price dropped:

https://www.reddit.com/r/path%3D%252Fr%252FButtcoin%252Fcomments%252Fkv5qlz%252F

"Can someone explain why no tethers are minted anymore?

dizekat:

• I don't think anyone knows but my speculation is that they turn it on and off to make butters net loss be accounted for with bitcoin price variations and HODLing rather than with tether price ->0. Because if tether price becomes 0 then they can't run that again in a few years.
  
  A rigged casino takes away your money when you buy the chips, but it avoids any issue with redeeming the chips by making you lose the chips as well, or by having you keep your chips on the table in an ever increasing pile.
  
  edit: basically I think they buy up bitcoin with tether to raise the price, then sell some of their bitcoin for USD. They also probably sell some bitcoin for tether when they need to maintain the peg without having to part with USD. Offload the cost of maintaining the peg onto fomoers.
  
  I'm thinking this is the magic behind the peg: they have a lot of bitcoin, they can just trade that back and forth to maintain the peg as bitcoin price swings wildly, all while sweeping up any margin bullshit on their own exchange."
  

 

[Pekelo]

tether_fud

"I think that Bitfinex/Tether buys up surplus USDT on Kraken to keep it pegged at $1. Back in 2018 when Tether suddenly lost its peg to $1 and crashed to ~$0.85 it was when Bitfinex had temporarily lost their banking relationships and with them the ability to transmit dollars. It was suspected that this kept them from moving funds to Kraken to be able to buy it back up to $1. It lasted for a few days. Since then any drops to USDT on Kraken only last for a few hours."

 

[AbbotAle]

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

"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"

Investors have no need for tether so buy Bitcoin with fiat.

Traders use tether for all sorts of different trades because it's quick to move it around the crypto ecosystem.

For those thinking that Bitcoin is built on tether and if/when tether goes, the whole crypto market will get smashed and never comes back, you're in for a long long wait...

 

[Pekelo]

For those thinking that Bitcoin is built on tether and if/when tether goes, the whole crypto market will get smashed and never comes back, you're in for a long long wait...

OK, I will take the other side of that bet. I think we will get an answer in the next 30 days, so we won't have to wait too long.

In the main time, would you care to explain how come anytime Tether stops printing, Bitcoin's price start to fall? Check the BTC price vs. Tether issued chart for reference. Fact: Out of the 24B Tethers 3B were printed in this year.

 

[AbbotAle]

OK, I will take the other side of that bet. I think we will get an answer in the next 30 days, so we won't have to wait too long.

In the main time, would you care to explain how come anytime Tether stops printing, Bitcoin's price start to fall? Check the BTC price vs. Tether issued chart for reference. Fact: Out of the 24B Tethers 3B were printed in this year.

1) if I had just 1million little sats for every time I heard 'soon tether will crash, burn and take BTC down forever, soon I tell you, just wait, it's about to happen, wait a bit more, my sources say it's immenent' I'd probably have more coins that Satoshi.

2) For the 101st time, tether is a sideshow to Bitcoin. Bitcoin had great success pre tether and will have great success post tether (if tether goes).

3) The higher BTC and the Alts go the more demand for Tether, it's as simple as that because more business in the sector is being done. Traders love tether (what it offers them) and rightly so. Importers/exporters/merchants around the world also love it and rightly so.

4) Tether is being watched by the authorities like a damn hawk, plus, it's all on a public blockchain, not the best scenario for mass scale fraud. Is there some fraud happening? Sure, but it's small scale like there's always fraud going on in the banking sector but it's small time as well in regards to the legit business going on.

5) Look at the price of BTC since tether said it wasn't 100% backed? BTC exploded so clearly the market, made of of at least 1million+ people doesn't seem that worried. If there was a time for the whole show to implode, surely that was it.

5) I don't bet, but as you do, why not bet against those 1m+ people and short both BTC and tether, then come back in 30 days and tell us how you got on. I'm putting in an alarm to revist this thread. (Note, if you make a profit on the BTC short without Tether imploding and effecting the price of BTC, the profits won't count as they would have been made via a normal correction in the BTC price which wasn't associated with tether problems).

 

[Pekelo]

The higher BTC and the Alts go the more demand for Tether,

In theory, yes. The problems with theories that they don't work in real life.

Even the Tether guy acknowledged that for the average costumer there is really NO POINT in using Tether as an intermediate product. Why would you introduce an unnecessary extra step?

5) Look at the price of BTC since tether said it wasn't 100% backed? BTC exploded so clearly the market, made of of at least 1million+ people doesn't seem that worried.

People didn't worry about prime mortgages in 2007 yet....

But yes, tether could keep going on as long as people think it is solvent, or hope that they have the time to jump ship, if it proves to be untrue. It is fractional reserve banking at best, and wasn't that what crypto users were crying about?

4) Tether is being watched by the authorities like a damn hawk

That is funny and remind me the blinded SEC lady from The Big Short. NYAG doesn't even have jurisdiction over the Bahamas, where Tether is banked. As long as you avoid using American costumers, nobody is watching...

---------------------------------

Look, it is very simple. When the CEO of a company can't explain how their business works, and actually argues against the usage of their product, then something is up. When a product is too good to be true, like Madoff's or Theranos' results, then there is something fishy going on.

Throw in the not under any jurisdiction nature of the crypto world, and you have a perfect sto... I mean fraud going on.

 

[Pekelo]

Note: I am using this thread more of a Tether diary, taking notes for myself.

Here is a good take how tether could be operating with a 1-2% profit:

"However, it appears that Tether Inc is still selling new Tethers, presumably for $1 each (although that's not proven), so it's a big question on who is paying full price for Tethers when they can frequently be bought up for less than $1 on the open market. But let's assume that Tether is selling new batches of Tether for $1, hundreds of millions of dollars per week right now. If Tether Inc is the one buying back up excess Tether then they've stumbled across an excellent business opportunity. If they are selling new Tethers for $1 and buying back old Tethers for $0.98 or $0.99 then they're making 1 or 2% for doing absolutely nothing but shifting tokens around. And that could be why we're seeing the printing binge right now, since the more they print the more they make."

This actually makes sense. The only problem though is explaining why anyone would want to use Tether as an on-ramp into crypto world, using an extra step. It is possible though that so many people cashing out into the stable coin that there is a constant need for tether, although I don't think that would be 24B in size. Probably 1-2B could easily handle the temporary cashing outs.

 

[AbbotAle]

The only problem though is explaining why anyone would want to use Tether as an on-ramp into crypto world, using an extra step.

Because that extra step is a massive money making step that's why.

So deposit fiat, receive tether. Now you've got a asset/currency that can be seamselsy and very quickly moved throughout the crypto world to trade for all sorts of different strategies. Arbitrage between exchanges being one of the main uses.

Same with merchants. In Russia for example Chinese merchants are doing massive business, most of it in bulk (not retail). Both sides of the trade (buyer/seller) use massive amounts of tether and both can seamlessly exchange the tether in their own countries (if need be) back into their respective currencies. Works like a charm for them.

But normal buyers of Bitcoin of course don't need tether, they deposit fiat, buy say Bitcoin and that's that. For example, a Michael Saylor type buyer would have no need for tether so didn't need to take that extra step which for him wouldn't have made sense and cost him money. Same for someone buying just $500 worth of Bitcoin and looking to hold.

Pek, I don't think you've done your research into how tether works and what it offers users. You seem to have picked up on the standard comment of 'tether is a scam' and ran with it.

Another big piece of FUD is 'you can't redeem tether'. Do you and others who repeat this kind of nonsense think 10's thousands of people/comnpanies who have bought tether with fiat think for one momeent they can't get their money/fiat out, and are locked in a black hole with no escape? Surely if that was the case we'd have heard 1,001 stories over the last few years how it was impossible to redeem tether for fiat and the whole thing would have collapsed long ago?

 

[AbbotAle]

Look, it is very simple. When the CEO of a company can't explain how their business works, and actually argues against the usage of their product, then something is up. When a product is too good to be true, like Madoff's or Theranos' results, then there is something fishy going on.

Throw in the not under any jurisdiction nature of the crypto world, and you have a perfect sto... I mean fraud going on.

1) No CEO (of a private company) is at liberties to tell the world how his business operates. Some do, some don't. If one doesn't like a companies product, don't buy it or use it but don't expect that company to let you know its business plan.

2) Did the CEO really argue against the use of tether? If so please post a link because logic implies no company tells its potential market not to use its products. Why be in business in the first place?

3) Tether is hardly nirvana or the greatest thing since sliced bread. It's just a great product that fills an important need for certain people/companies. Many don't need it so don't use it. To say it's a Madoff/Theranos type scam is nonsense.

4) More money is made in the world by being legit than running a scam, assuming you want to remain in business for the long term that is and not have the risk of going to jail. Tether is probably a major money maker for the issuer/operator so no need to be scamming. I always think of Meyer Lanskey and the short sited mob in Cuba who ran dodgy Casinos (double dealing, crooked roulette etc). Lanskey came in and said there was no need to steal because it means a shit reputation (less punters) and with the guaranteed odds on our side there's more money to be made by running a clean joint. The Casinos then cleaned up their acts, gave their punters a fair deal, and business boomed as word got out.

 

[AbbotAle]

Addicts often rotate their addictions.

Get a real coke habit, give it up and then move on to say sex addiction.

Give the nookie up and it might be a shopping addiction and so on.

I think we're going to see the same sort of behavior with Bitcoin sceptics. They're desperate for something to cling on to.

So if/when the tether is going to be the final end of Bitcoin type nonsense finally disappears, I wonder where the sceptics will pivot?

Bitcoin will boil the oceans has to be the front runner with an outside chance of 'it's the money of the domestic terrorist'

WE MUST DO SOMETHING!