OmiseGo is building a decentralized exchange that converts between USD and a coin (any coin any currency).

http://www.tristone-llc.com/omisego-the-global-standard-for-...

Isn't that just what Kraken or Coinbase already does?

Someone needs to be the operator of exchange between fiat and crypto, at which point they and you will be subject to tax and regulation.

Anyone who operates an exchange is subject to money transmitter laws and KYC laws.

Anytime you convert from cryptocoins to fiat, you're subject to capital gains tax if you're a US citizen.

https://www.usatoday.com/story/tech/2014/01/27/bitcoin-deale...

https://cointelegraph.com/tags/localbitcoins

> Isn't that just what Kraken or Coinbase already does?

No. It's more akin to an operating system of money rather than a proprietary siloed app.

Except you can't get usable fiat out?

There needs to be an endpoint distributor of physical cash, SWIFT, or wire transfers of real fiat and those end points are subject to regulation just like localbitcoins or ATM machines are subject to regulation.

Can you explain how a decenteralized exchange provides USD?

abstracted IOU "stable-tokens" like Tether are NOT USD, see the case of Liberty Reserve [1] or [2]

[1] https://en.wikipedia.org/wiki/Liberty_Reserve

[2] https://hackernoon.com/the-curious-tale-of-tethers-6b0031eea...

https://medium.com/@bitfinexed/are-fraudulent-tethers-being-...

> Can you explain how a decenteralized exchange provides USD?

A major part of the OmiseGo plan is full cash-in/cash-out capabilities via as many ATMs as they can get connected to.

They have access to quite a few thousand ATMs out the gate via strategic investments and partnerships with a number of very large banks in Aisia.

Their parent company is Omise (basically the Asian Stripe) already has a cashflow of $100-$500m/day. FYI They will be switching all their existing business to run on the new dex, so from the get go it will start with a large volume as the test case.

Checkout the OmiseGo white-paper for the main details.

Someone in the Stellar community is working on that.

Why not? By using a usd-token like usdt it become possible. Bitshare usd also has been very stable lately and it is fully decentralized.

Somebody has to guarantee that the the USD are actually there to perform a trade. There's no other way to guarantee that that doesn't imply going off-chain.

MakerDAO uses collateralized smart contracts to provide stability to their Dai token. Right now, only ETH can be used as collateral, but in Q2 they are starting multi-collateral support.

https://makerdao.com/ https://coinmarketcap.com/currencies/dai/

Their whitepaper's explanation of how this works is horrendously complicated. There's no way you can encode that sort of logic into a cryptocoin in a bug-free manner. Steer clear of this.

Their contracts are up. If you can find a way to exploit one of the bugs, you can profit massively.

If your profit is massive enough they may even roll back the chain and do a hard fork!

And who will abitrate the collateral? While it's smart wallets and crypto currency it can be enforced by cryptographic proof but when the collateral is USD then it's going to have to exist somewhere.

And you're likely to sue the shit out of someone if there's a bug in the encoded contract or it turns out there's no collateral because blockchain.

> Somebody has to guarantee that the the USD are actually there to perform a trade.

That's what kids in my day called "a risky click".

A usd-token requires trust that the token issuer isn't just printing magic internet money. You've just moved your point of failure from the exchange, to the token issuer.

All evidence points to USDT being just that - magic internet money, with nothing backing it.

Dozens of exchanges risking their reputation on it suggest otherwise.

I'm not sure if you're legitimately confused on this subject, or are deliberately misinforming people.

Just because an exchange trades tether doesn't mean their reputation is staked on it. Exchanges do not vouch for the instruments that are being traded on them.

Tether is issued by Tether Limited, which is a shell corporation wholly owned and controlled by one exchange - Bitfinex. Not 'dozens of exchanges.'

Allegedly, when someone gives Tether Limited $1 USD, they give that person 1 USDT. In reality, Tether has never actually been audited, and for all we know, they just give themselves 1 USDT, and sell it on the market... Without keeping a 1:1 reserve.

Do you honestly believe Tether has 2.2 billion dollars in a bank account?

Tether is a huge red flag to me..Enron level.

Yes, the I believe the sum of fiat deposited on bitfinex, bittrex, huobi,... is close to that amount. I even see people from high school "investing" in crypto now.

It's really not hard to believe when you consider how many millions of people are on these exchanges. Binance touts 3 million users, and has 425,819,642 tethers. 141$ average a user is completely believable.

You're being taken in by a basic accounting trick.

Let's suppose I buy 100 USDT on an exchange.

What Tether claims happens:

0. Bob and I own $100. Tether and Bittrex own nothing.

1. Bob sends $100 to Tether Limited.

2. Tether limited sends Bob 100 USDT. They now have $100 in their bank account.

3. Bob transfers 100 USDT to bittrex.

4. I send $100 to bittrex. I buy 100 USDT using that $100 from Bob.

5. Bob withdraws his $100 from Bittrex. I withdraw my 100 USDT from Bittrex.

6. Now, I own 100 USDT, Bob owns $100, Bittrex owns nothing.

7. Tether Limited has to hold $100 in reserve. It's not their money - it's supposed to be backing USDT. In addition to having assets of $100, they also have $100 of liabilities.

The reality:

Steps 0-6 are the same.

Step 7: Tether Limited buys a vacation to the Bahamas with their $100, and ignores the $100 liability. They are actually insolvent, and I have no recourse against them, because the Tether TOS make it very clear that I cannot redeem my USDT for USD from them.

The whole point of tether is that it is supposed to be backed 1:1 with USD in Tether Limited's accounts. They have not proven to anyone that this is actually the case. For all we know, all that money went to the Bahamas, or a Swiss bank account, and they are just issuing USDT, pocketing what people pay them for it, and keeping none of it in reserve.

While I think you're absolutely right in general, there are a few exchanges that are registered as serious financial institutions, which means they need to follow stricter regulation and actually back 100% of their user's assets. As far as I know at least Coinbase and Bitstamp are among these.

Yes, and to my knowledge the legit folks like Coinbase aren't using Tether. They're using actual USD. They'll still likely get hurt when the scam collapses, but nowhere near as much.

considering that multiple exchanges in addition to bitfinex ONLY deal with USDT (instead of regular USD), that's not too implausible.

For the Tether to exist, someone's supposed to give Tether USD in exchange to USDT. If these exchanges are trying to avoid USD, where's the USD to buy the Tether coming from?

You can wire real USD to Bitfinex.

Yes, and Bitfinex promptly gives it to Tether. Which they control.

https://medium.com/@bitfinexed/spoiler-alert-the-institution...

https://www.coindesk.com/bitfinex-tether-break-silence-go-me...

Sure, I'm not disputing this, just giving one plausible way Tether might be getting real USD.

Oh, they're certainly getting some.

The suspicion is they're siphoning it off to their personal accounts, and that they're claiming to have received way more USD than they actually have so they can issue USDT that aren't actually backed to manipulate the market.

In that case, I'm confused by your question: "where's the USD to buy the Tether coming from?"

You seem to have changed what you're suspicious about.

For clarity, there's a variety of very suspicious things about Tether. While they're clearly receiving some USD, they're printing $100M in Tether every couple days now.

If I claim to have $50k, you'll probably assume it comes from my job. If I claim to have $2B, as Tether does, you'll probably want some proof. Tether's promised regular audits, but they've released none and their supposed auditor has now scrubbed any mention of them off their site.

There's been a fair amount of conspiracy-theory-like thinking around Tether in general, with people making a morass of self-contradictory claims about it and shifting their positions every time someone points out one of the claims doesn't stand up.

To be fair, tether really is quite shady. I think the real truth is probably somewhere in between.

The USD is in the cloud, duh! It's magical cloud thinking all the way down, at least until you reach the turtles.

I like bitshares and own some. But it's not decentralized. Its delegated proof of stake I think.