Even if BFX did not know this before they build their exchange, this most likely became clear from day 1. Tether is a great hedge against this (politics aside).
Could you address anything that you think is "factually incorrect"?
> The post I was responding to claimed Tether was specifically created to address Bitfinex's wire issues. That is false.
It does not claim that it was "specifically created for that", it claims that "Their solution" to the wire problems was "Tether". It does not state anything about why Tether was created in the first place.
> Secondly, there is plenty of reason to create something like Tether independently of any wire issues (specifically: to normalize prices between exchanges).
People will arb the effiencies away anyway, regardless of what tools the exchanges provide them. Besides tether a lot of people in Taiwan are arbing through the traditional banking system [0].
But you are right, it IS important that there are ways to flow money in and out. Which is exactly what Tether is for according to OP's argument.
[0] https://steemit.com/bitcoin/@kingscrown/living-in-thaiwan-yo...
Read the post, man, very first paragraph:
> Bitfinex was cut off from the US financial system, which makes it impossible for them to clear USD-denominated wires...Their solution: issue a cryptocurrency which is claimed to be 100% backed by USD and say that it is redeemable 1-to-1 for dollars... we just can't actually physically give you the dollars.
> People will arb the effiencies away anyway, regardless of what tools the exchanges provide them. Besides tether a lot of people in Taiwan are arbing through the traditional banking system [0].
That's true, except you probably have never tried to actually execute that kind of arbitrage before. I have, so let me tell you the problem tether solves: speed. If you do arbitrage through the banking system, you have to wait for wire transfers to clear. That can take days to weeks. That means you have to wait for the spreads to be large enough and stable enough to compensate you for the enormous risk of being exposed to the vicissitudes of the crypto markets during that time. And that's assuming you already have the accounts setup in the right countries. Tether makes all that instantaneous. That is an enormous benefit to arbitrageurs equalizing prices, and inter-exchange liquidity.
I've read it a few times now, still can't find where they say they specifically created tether (the system) for this exact purpose. Keep in mind that the issuance of tether is not the creation of the complete tether blockchain/system (they are issuing new tether around the clock).
> That's true, except you probably have never tried to actually execute that kind of arbitrage before. I have, so let me tell you the problem tether solves: speed.
You are right, I have never tried arbing through the banking system. I am doing small/mid scale arbing in cryptomarkets, however I stay away from anything that touches any bank / FIAT.
Though my point is that: yes arbing through banks is slow, inefficient and very dangerous. People will do it nonetheless because of the margins you can make. The exchange does not care how hard it is or how people do it, just that there is some guy somewhere (potentially flying around with suitcases of cash) who is doing it.
So yes I 100% agree with:
> That is an enormous benefit to arbitrageurs equalizing prices, and inter-exchange liquidity.
But bfx only cares about the latter, not really about the people doing it.
> Bitfinex was cut off from the US financial system, which makes it impossible for them to clear USD-denominated wires...Their solution: issue a cryptocurrency which is claimed to be 100% backed by USD
Right there. patios11 claims that Bitfinex's "solution" to their wire problems was issuing Tether. That is demonstrably false, because Tether predates Bitfinex's wire issues by more than a year.
> I, J.L. van der Velde, hereby declare as follows:
> 1. I am the Chief Executive Officer for iFinex Inc. (“iFinex”), BFXNA Inc. (“BFXNA”), BFXWW Inc. (“BFXWW”), and Tether Limited (“Tether”). I have personal knowledge of the facts set forth below, and if called and sworn as a witness, I could and would testify competently thereto.
> 2. iFinex, through its subsidiaries BFXNA and BFXWW, owns and operates a leading global Virtual Currency platform called Bitfinex.
Bitfinex is responsible for Tether.
patio11 is well respected in this community, so I guess the post is upvoted just because of the author. I personally respect patio11 on quite many topics as a very knowledgeable, but when it comes to Bitcoin and cryptocurrencies he seems to have some personal issue with them, which makes his posts on the topic not that objective.
If you have a substantive rebuttal to make, do that instead of engaging in passive aggressive character assassination. What you’re doing is probably satisfying, but it doesn’t convince anyone else that you’re correct who doesn’t already side with you, and it’s insidious in that it steers the course of the conversation away from an individual’s point and onto their identity.
When you have to choose between following a pre-bankrun rumour or following unsubstantiated pushback, follow the rumour. It costs you maybe 5% to get out vs 100% if you're wrong and banks / money holders compete on assuring people that there is less risk with their solution so if Tether can't provide assurance then that is their problem. Cut and run.
(Possible responses include both "the traditional financial system and fiat currency is actually pretty good" and "someone should run a reliable FDIC equivalent as a business for new exchanges and new coins".)
The only problem is that there's no way to know for sure whether an exchange is running on a fractional reserve or not.
Well, they've never proved it. Just a literal: "Hey, we promise we have the money."
So, can't really say; it's basically a Schrödinger's cat to everyone on the outside. We will only know when it booms — or busts.
Both are owned by iFinex LTD, and had the same CEO till earlier this year. Total amount they have lost comes out to $1 Billion.
How are you still claiming "They may not be"?
I also wish that "everybody I disagree with is a shill" meme stayed in 4chan and reddit, it's incompatible with reasonable discussion.
So, I did lose the time-value of that money (they didn't pay me interest on it), and I didn't get paid back in Bitcoin or Ethereum, which would have been more money, but i'm still very happy with how they handled it. I think it was the most reasonable and honest solution to the problem that they had available to them at the time.
> Don't accuse others of astroturfing or shillage. Email us and we'll look into it.
> Don't feed egregious comments by replying; flag them instead. When you flag something, please don't also comment that you did.
Reversing Tether tx does nothing to recover those Bitcoins.
Edit: found this: https://www.reddit.com/r/btc/comments/7e1840/the_30000000_us...
It seems like people did in fact notice the $30m being deposited on Bitfinex and being used to buy Bitcoin, all before it was known to be stolen. Difficult to confirm a thing like this, but I wouldn't bet against it.
http://article78againstnydfs.com/docs/317-cv-01882-BitfinexC...
And the company officers are currently actually bitfinex people?
Total coincidence.
Poloniex is owned by a guy named Tristan D'Agosta. He's a little bit less easy to track down, but does seem to be a real, known person with a real history and life.
I don't know how they each separate customer and operating funds, but i'm sure the Bittrex guys at least would probably be happy to tell you if you ask in their Slack channel, assuming they don't consider it a security risk.
Basically everything about the parent comment is factually incorrect. I'm not sure why it's so upvoted. I guess people just like scandal in the cryptocurrency world and would prefer to believe what comports with their preconceptions.