Pricing a "market cap" for a crypto when only a tiny percentage of it is trading in the market is not a realistic measure of value.
https://cointelegraph.com/news/trueusd-audit-shows-full-us-d...
Not only are many of them full backed, but they all trade extremely close to parity with one another. Which means that they are all considered relatively safe by the people actually holding them.
trading rather than holding. The people doing the trades are the ones determining the pricing. The people holding are reducing the supply of the asset in the market, but they're not actively participating in pricing of trades.
I'm not aware of any reason why the Bitcoin network couldn't switch to VPN-level overlay networks. Using Tor would be somewhat problematic, given the limited bandwidth. But I'm pretty sure that it'd be doable. Other options include Orchid and Loki.
Mining could be an interesting issue. Government pressure could render large-scale mining operations unworkable. But as I understand it, the Bitcoin network could function just as well with far^N less mining capacity. Difficulty would just decrease with less mining competition. And that would mitigate the key negative impact of electricity usage.
Not too many years ago, there were trusted services that sold Bitcoin (and Liberty Reserve and Pecunix) for cash sent anonymously through the mail. I haven't needed that for years, but I'm pretty sure that such services still exist. And given the escrow sector that's developed to serve dark marketplaces, trust is likely far more verifiable.
Cryptocurrency and meatspace money are now entirely separate for me. I earn all the cryptocurrency that I need anonymously online. And I don't risk manifesting it as meatspace cash. While that's not currently workable for most people, I don't see why it couldn't become so.
How do you buy things in real life?
Now, most people I know who hold Bitcoin are motivated primarily by other reasons. But still, I can cut down my cash spending/donations by a few $1000/yr just by doing those things above — which have fairly loose ties to my physical person — with Bitcoin.
The point is that my online anonymous coward personas and my meatspace identity are as isolated as I can manage.
i.e., you cannot fulfil your meatspace needs using cryptocurrency as of yet. It doesn't matter that you are able to isolate your identity online from your meatspace identity.
And this is what gov't can easily enforce - through money laundering laws. If ever cryptocurrency becomes prevalent enough to offer meatspace usage directly, you can bet your bottom dollar that gov't will regulate, and prevent anonymous spending (at least, for any large-ish amounts).
For example, cryptocurrencies could displace cash for gig economy tips. Maybe they already have, for all I know. Also for online porn and gambling.
I've also done some privacy-related development. For example, a client wanted a private IKEv2 server with a nested VPN chain backend. To provide iOS devices with anonymity that was stronger than VPN services provide, but also easy to use.
Also, oil has large carry costs. Many things with large carry costs are called toxic garbage and have negative value. Oil is just a useful so it mostly has positive value, but the moment you can’t use it, it joins in valuations other toxic garbage.
"Stablecoins" are not stable. How many times do we have to learn this lesson in finance? The probability distribution underlying this stuff is not what stability proponents think it is. They will be stable until they aren't, and then they will blow up. Chasing stability in inherently unstable systems is a fool's game.
1. Pegged value currencies are subject to Soros-breaking-the-Pound style attacks.
2. USDC is based on Ethereum, a first-generation cryptocurrency with numerous design flaws, at both the protocol and scripting language level. On top of that is an increasingly complex network of DeFi apps which can be exploited in sophisticated ways, as we saw with recent multi-part hack across several DeFi apps.
3. The US Dollar itself may be heading into a period of instability, given the massive US Govt debt and Federal Reserve operations.
You can stick your head in the sand and pretend stablecoins are stable, or you can acknowledge they’re more likely one more in a long history of financial folly.
(Their governments finally put an end to it. But I'm not sure you want to include that in the 'system'?)
There's no good reason to encourage value generation through inaction. That's one of the many good reasons to have abandoned deflationary currencies.
From the banks point of view, funds in checking accounts and funds issued as cash were pretty much the same. Just that the cash didn't pay interest, and you didn't know who had it. And it could get lost and never come back to you. (Though perhaps similar to people abandoning accounts sometimes?)
Holding the notes issued by a bank was equivalent to giving the bank a no interest loan. The bank itself invested the funds in loans to other companies. You forewent consumption and took on some risk.
Nominal GDP was remarkably stable over that time in Scotland. In reverse that means that one pound represented about the same share of total economic activity year after year. (The absolute, real amount of economic activity increased a lot.)
So people will take 99.99999999% losses and not 60-80%.
Real dollars go in.... IOUs out of a bull's behind come out.
"USDC IS NOT LEGAL TENDER. USDC IS A DIGITAL CURRENCY AND COINBASE HAS NO RIGHT TO USE ANY USDC YOU HOLD ON COINBASE. COINBASE IS NOT A DEPOSITORY INSTITUTION, AND YOUR USDC WALLET IS NOT A DEPOSIT ACCOUNT. YOUR USDC WALLET IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC)."
(https://help.coinbase.com/en/coinbase/getting-started/genera...)
https://help.coinbase.com/en/coinbase/getting-started/genera...
But every line in the disclaimer are probably applicable to bond/USD ETFs as well, but people aren't exactly fleeing from those.
But either way, I think most people would not tend to view something like USDC as a bond (in which the bond holder is a creditor to the bond-issuing organization, with the associated risk-adjusted return on capital), but more like cash.
Regulation can be good, regulation can be bad, how you do it matters far more.
The short term solution to "everything's fucked" is to stop making it even more fucked.
That's not a solution, that's a vague sentiment.
1. Criminals don't want their activities to be tracked on a public ledger. Cash is anonymous. Bitcoin is not.
2. Criminals already have money laundering systems in-place, and relationships with corrupt bankers.
3. Cash is accepted at more places. So it's more useful to have.
We're talking trillions of dollars in USD crime here. It's not even close.
That's a massively higher share for cryptocurrencies than in legitimate transactions, isn't it?
While BTC is tracked between wallets and that's easily measured, it's unclear how to measure wallets being transferred between people.
That's awkward, given that:
* "All the bitcoins in the world [are] worth roughly $160.4 billion" - Investopedia
* USD M2 (2018): $16.1T - https://tradingeconomics.com/united-states/money-supply-m2
So really, BTC is used at least as much, relatively speaking, for crime, as USD.
There's a non zero chance that your criminal extortion scheme won't end up with bill serial numbers tracked by federal authorities. Hence that's probably why 97% of ransomware uses BTC.
What payment processor would ransomware use? Credit card processors would close their account. Nobody can close your Bitcoin account. That can be used for crime, but also is a legitimate protection against the abuses of governments and banks.
Before Bitcoin, they were using stuff like Walmart giftcards.
[1] https://www.wired.com/story/was-bitcoin-created-by-this-inte...
The reality is that the market expects solvency for the foreseeable future, and tether solves a market problem (liquidity in environments that do not impose the KYC laws required by the US government to trade USD), thereby allowing Bitcoin users to achieve a level of anonymity while still having liquidity. It also, of course, allows a wider variety and leverage range of financial instruments.
Because betting either way in a manipulated market is a sucker's game. Bitfinex has their finger on the scales. Why on earth would I bet in their casino?
Does anyone other than Bitfinex even allow you to short USDT? Remember those two are one and the same, and Bitfinex doesn't even have banking. What are they going to pay my USDT short in? USDT?
It's popular to shit on cryptocurrencies these days, and they certainly have their shortcomings, but they are still fascinating systems and the markets are even more interesting. Instead of intellectual discussion, people seem to flood the comments with hate and jealousy, presumably because some people made more money than them due to presumed luck.
Is it possible that somebody will make money speculating on cryptocurrencies? Sure. Some people make money from MLM schemes too. But ultimately these are negative-sum activities: more money goes in than comes out. And a lot of the money going in is from suckers being taken for a ride. I think there's nothing wrong with people being negative about that.
Like most, you have trivialized the use cases in places like Venezuela and Zimbabwe where the state backed financial system has failed. With the current state of technology, Bitcoin has no ability to replace the global payment network. Claiming that means it's a failure that hasn't lived up to anything is hyperbole. The system's very existence and self maintenance after over a decade is impressive enough to me. I also believe the financial utility of a new asset class with new properties is interesting and useful on its own, although I doubt the layman would agree.
Those are utterly irrelevant until you solve the initial distribution problem. Ready for it?
- Those people don't have money.
- The only way to purchase a meaningful quantity of BTC is through purchase on an exchange. After all, it's twice as hard to mine today as it was yesterday, and in Venezuela you'll just get your mining rig socialized (this has happened a few times).
- If you exchange within the country, then you're just moving the poops around. It's zero sum. Steve has a bunch of Bolivars. He exchanges with Alice for BTC. Now Alice has a bunch of Bolivars, and Steve has BTC. The net worth of the system was preserved perfectly. BTC did nothing for the union of Alice and Bob -- except they lost a ~$0.50 transaction fee, which is a few days wages.
- If you exchange outside the country, who on earth outside the country wants your Bolivars?! If you can exchange outside you may as well buy Gold or Dollars. Those haven't dropped 50% in the last 3 years. Even if you did buy BTC, it's still a zero net sum situation -- except they lost a ~$0.50 transaction fee, which is a few days wages.
Bitcoin is meaningless for third-world countries in aggregate until the initial distribution problem is solved.
The problem in Venezuela isn't a piss-poor currency, that's a symptom of a piss-poor government. No amount of magic beans will change that, until the people solve the problem.
Nobody. So you don't buy BTC with Bolivars, you sell art commissions or do some work on Mechanical Turk or grind for online game currency with a real market value, and arrange to receive payment in BTC. Then you buy stuff with BTC.
Meanwhile if there isn't that much BTC in the country, that doesn't matter -- currencies can have a different value in different places when arbitrage is restricted. So maybe BTC is worth more there. Or maybe arbitrage isn't really that restricted in practice and if it started to be more expensive there somebody would make a profit by supplying BTC in exchange for exporting boatloads of oil or coffee beans or whatever people in those countries produce.
Yes, you can buy things with BTC.
https://reason.com/2016/11/28/the-secret-dangerous-world-of/
> that's a symptom of a piss-poor government. No amount of magic beans will change that,
Did it solve their government problem? No. But it resulted in a little more food in the country then there would otherwise be by allowing citizens to subvert their government's financial controls. BTC provides a base level quality of money, that basically acts as an insurance system against the worst governments. Does it have a huge use case in a country with a healthy and functional financial system? No. But if things go to shit in a country, people can still use Bitcoin and safely transfer value online instead of reverting to trading gold coins in person.
I know you want all things BTC to be bad. But try to keep it intellectual, not emotional. What about the technology -- do you think it's fascinating that a relatively simple and elegant protocol of incentives and cryptography can result in a self sustaining financial system still running a decade after its release?
> But if things go to shit in a country, people can still use Bitcoin and safely transfer value online instead of reverting to trading gold coins in person.
For a small handful of people. That doesn't address the problem on a broad scale. The bar isn't "can Bitcoin address the needs of a small handful of people in Venezuela." Of course it can.
> What about the technology -- do you think it's fascinating that a relatively simple and elegant protocol of incentives and cryptography can result in a self sustaining financial system still running a decade after its release?
I think it's fascinating a single transaction expends 700kWh (enough to drive a Model S from SF to New York) and produces 87 grams of e-waste -- and yet somehow costs less than $0.50, which is due to the socialization of costs in the form of block rewards, aka inflation. Each BTC transaction actually costs about $70.
I think it's fascinating a system brought in to free us from the tyranny of a single entity's ability to freely print currency has had it's pricing entirely subsumed by an entity with the ability to freely print a currency who's symbol is just one character off.
Just because something's simple doesn't make it good.
A transaction expends 700kWh of energy? Source?
If they have use for them, why not? Also money are indeed a zero sum tool designed solely for moving poops around, shouldn't be a problem, and yes, BTC is money.
Huh? The Bitcoin price on 2017-05-12 was $1686. It did hit $19345 on 2017-12-16, however.
> Matuszewski told On the Brink's Nic Carter that the idea of tethers driving the price of bitcoin significantly higher is "not true whatsoever."
> "I say this as someone who created and redeemed billions of tether over the course of my life and specifically created it in 2017," he said.
> In short, Matuszewski affirmed that there were incentivizing events for the generation of Tethers. Bitfinex didn't print Tether out of nowhere either, since Matuszewski said he himself was one of the drivers.
> “I can tell you that billions of dollars were sent in to make it like that," he said. "I can 100%, without question, verifiably guarantee it happened. I did it, I was there...That money wasn't just being hypothecated. It wasn't just coming out of thin air, that was happening."
I worked for Circle, I worked with Dan, and I can guarantee you that Dan (former head of Circle Trade, the second largest crypto OTC desk) knows his stuff, and Tether is nowhere near as sketchy as your posts and conspiracies would have you believe.
Great! Then an audit should be right around the corner, yeah? Or did we forget when their last auditor quit [1].
> "I say this as someone who created and redeemed billions of tether over the course of my life and specifically created it in 2017," he said.
Tether's terms of service: "The right to have Tether Tokens redeemed or issued is a contractual right personal to you. Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves." [2]
Translation: Redemptions not guaranteed.
> I worked for Circle, I worked with Dan, and I can guarantee you that Dan (former head of Circle Trade, the second largest crypto OTC desk) knows his stuff, and Tether is nowhere near as sketchy as your posts and conspiracies would have you believe.
I'm sure the NYAG disagrees. [3]
Likely in no small part because one large market participant doesn't validate a fraud. They would be hugely incentivized to provide Matuszewski service so that he could go on record and say exactly this kind of thing. I'm sure the same quotes could be attributed to big players in the Madoff case.
So, in short: [audit needed]
[1] https://markets.businessinsider.com/currencies/news/cryptocu...
[3] https://cointelegraph.com/news/new-york-ag-finds-it-perverse...
You saw somebody providing guarantees despite illiquidity?
Is an audit for the thing that represents over 80% of the volume of all cryptocurrency exchanges that much to ask?
Should we just have faith that the lord Satoshi is come?
[1] https://www.circle.com/blog/usdc-reserve-attestation-report-...
Tether is bad. Where it intersects is it can create the impression people think Bitcoin is worth something in dollars.
ok
> Bitcoin is bad because...
??
> The irony of talking about auditing in fiat as stock prices soar despite 20 million unemployed.
Stock are not a proxy for the economy, as you're discovering. They're a forward-looking price discovery mechanism. The market sees an end to this, and they're pricing it in. There's no reason a stock's ticker should fluctuate day by day to reflect the current sales. That's not how stocks are priced.
> Enjoy exponential exacerbation of income disparity so you can keep your BigMac at a "stable" price.
Stock prices have nothing to do with Big Mac prices. In general Big Mac pricing is an excellent metric when estimating purchasing power parity [1].
Income / wealth disparity is a real problem, and I guarantee you, bitcoin is not the solution to that. It's got worse wealth inequality than any banana republic. "The top 2.8 percent of wallet addresses control 95 percent of the supply of bitcoin, according to statistics." [2] Income inequality isn't relevant here since income tends to follow inflation.
That's a social problem that needs a social solution.
> NOTHING is valued correctly, RN.
Things are valued according to what people are willing to pay.
> Bitcoin is the metric system for money.
In a way it's closer to the imperial system: a slow, old, backwards, deflationary when the whole world is inflationary, system. Economically speaking of course.
In general though that's a meaningless statement.
[1] https://en.wikipedia.org/wiki/Big_Mac_Index
[2] https://finance.yahoo.com/news/five-reasons-why-bitcoin-weal...
I think in the context here, "pricing with gold" would mean you need to find someone who will actually give you that price in gold.
Tether is a fly-by-night con job that, to disburse USD redemptions, wires hundreds of millions of dollars to money launderers in the Carribean, who then go ahead and steal most of it.
And when law enforcement starts digging through their books, we discover that a third of Tether's 'reserves' consist of a "I'll pay you guys a few billion dollars, pinky swear", scrawled on a napkin.
It's not fractional reserve. It's straight-up fraud.
Not anymore, the Fed lowered them to 0%.
- USDT is a fictional currency invented by Bitfinex to make up for the fact they don't actually have access to banking because they're unbelivably shady.
- They got many other exchanges onboard since it effectively allows you to skirt AML and KYC regulations.
- Bitfinex is a shadowy cabal of truly dreadful market participants who mess around under the covers with Tether and use it to effectively control pricing. They print Tether and use it to buy BTC to drive the price up. They then sell BTC for Tether if they want to drive the price down.
- They promised for 5+ years that they'd get Tether's bank account audited but instead auditors up and quit.
- They had 30% of their assets seized in a money laundering sting but of course, the exchange rate remained 1:1 instead of 1:0.7
- The NYAG is suing them.
The price you see of BTC doesn't really reflect anything other than Bitfinex' manipulation. The rate of BTC inflation falling from 12.5BTC/block to 6.25/block affects miners and their ability to be solvent. Not much else.
Who are the the same people, don't forget, despite repeated denials thereof, even if the same executives signed contracts between the two, on both sides.
And even when you get beyond that, you run into the 'arms length' fiduciary issues.
[1] https://www.icij.org/investigations/paradise-papers/paradise...
Is the exchange rate supposed to be related to the amount of assets they hold? If you go to exchange one currency for the other in either direction and that's the amount you can get, that's the exchange rate. If everybody tried to cash out all at once then they might not have enough, but neither would Bank of America. That doesn't mean the exchange rate between physical cash and Bank of America deposits isn't 1:1.
Meanwhile they presumably turn a profit, so just because they lost some of their assets, how do you even know they don't still have enough?
How do you know they have any? In order to have any semblance of legitimacy Tether needs to complete and publish the audit they promised every 6 months for 5 years.
Currently, based on their own website, the limiting factor is that their auditors only publish their reports in Mandarin, so there's literally nothing they could possibly do to release them. Even though those same auditors happily published attestations in English [1]. Before they were fired, and replaced with Friedman LLP, who quit.
All very cool, and very legal.
BoA doesn't claim to back every deposit 1:1 with physical cash. Far from it. The whole basis of fractional reserve banking is that they lend most of those deposits out to other customers. This is fine though, because the deposits are insured by a government-backed protection scheme.
Tether works on explicitly the opposite principle. One banked dollar for every minted Tether. Since they have no government propping them up, the certainty of those dollars is the only thing you can hold onto as far as Tether’s reality. Once they’re gone, the music stops.
Thsi one I don't understand: A ton of MXN has been seized because El Chapo had been using it for shady stuff, but yet nobody expects the MXN/USD pair to suffer from that.
Why would it be different? The fact that someone takes the token "by force" won't suddenly decrease their value.
But they obviously don't, they hold, at most, 70 cents.
It'll be a bank run.
I find the older comments really illustrate some of the cognitive dissonance Tether skeptics hold.
Keep doubling down I guess, might get lucky one day.
Like most cryptocurrency constructs, Tether is ridiculously shady, but that doesn't mean it's easy to predict when it will go out of business.
It's a link in the chain, which makes it fair game.
Traders value Bitcoin the same in USDT or USDC, and USDT / USDC trades at parity. That implies the market trusts USDT. It doesn't matter what people on HN say, as long as the market agrees.
1. ...that "the feds are debasing our currency through their relentless printing"
It is producing a measured, consistent, relatively small 2% rate of inflation over decades and decades. They are of course acting on behalf of an elected body, and ultimately accountable to that body. They're also audited.
2. ...that Tether's relentless, un-audited, 70%-at-most backed printing is fine because the "market trusts it" and "nobody's forcing you to use it."
The market trusts it because number go up, and it's in the interest of exactly zero market participants to show the world the emperor has no clothes.
It's also not fair to say that "nobody's forced to use it" when everyone is forced to use it. In 2018, 80% of all crypto exchange transactions were conducted in Tether. That makes USD transactions by far the minority. Since arbitrage bots keep the prices in sync, and the majority is USDT, even the USD exchanges follow the USDT prices so long as there exists sufficient liquidity to balance the books. [1]
[1] https://www.wsj.com/articles/the-mystery-behind-tether-the-c...
That body being whom?
>They're also audited.
By whom?
All of this information you can obtain via quick google.
Doesn't that auditor owe FRS $17T?
[1] https://www.newyorkfed.org/aboutthefed/fedpoint/fed46.html
The idea is that you use it to invest: into real estate, into equities, into bonds, heck even a savings account collateralizes mortgages. Yes, even your magic beans represent the system working. The system is designed to encourage the continued survival of the most economically fit companies, etc, by your picking winners.
Don't hold money. Certainly not more than you need in the event of an emergency.
Yes, for very short periods of time, ideally. To the extent that remains true the effect of inflation is smoothed out. As at each stage in the transaction chain prices can adjust pricing to reflect inflation. Think of it like a continuously variable transmission. Yes, it has gears. But the effect is basically smoothed out if you do it quickly enough.
> Saying “don’t hold money” tells me everything I need to know about your understanding of economics.
It clearly doesn't.
In such an environment you want to get rid of your USD as fast as possible and turn them into something you value, whether it be land or whatever. The money itself is by design an inflationary currency. Most people don't understand this, which is just fine with the people who print the money and the ones who distribute and loan it out.
Now, having lots of liquid cash AKA liquidity is a good thing as long as you get rid of it soon by putting it in assets. Lots of people gladly go into debt taking out loans to buy productive assets and declare bankruptcy multiple times playing this kind of game. It's kind of insane in a way.
> The market trusts it because number go up, and it's in the interest of exactly zero market participants to show the world the emperor has no clothes.
Wouldn't work on extreme market fluctuations. Bitcoin dropped 50% and USDT still hold the peg. Bitcoin then almost tripled in a short period and USDT still hold the peg. I'm not sure if they have full reserves or running some magic; but whatever they are doing is working very well.
We know they don't have full reserves because we know 30% of them were seized. [1]
> ...but whatever they are doing is working very well.
Frauds work until they don't.
[1] https://cointelegraph.com/news/head-of-crypto-capital-arrest...
You suspect they don't have full reserves because you know 30% of them were seized. Presuming "full reserves" means 1:1 backing (what else could it mean, here?), your statement assumes they had exactly 1:1 reserves before the seizure. If they had more than that, your assumption could end up false.
So sure, you suspect. From what I've read in this thread, I tend to agree. But I fail to see how you know.
Presumably they buy tether when it's under $1 and sell it when it's over $1 to maintain the peg. Not magic.
"It doesn't matter what those crazy geologists say, as long volcano hasn't exploded yet."
The market can never overvalue or undervalue? Hmm...
It is a fact that at present, you can't replace your entire life with cryptocurrency transactions, but the actions of the Federal Reserve over the last few months demonstrate how useful it is to have a parallel construct that actually represents an asset that isn't immediately able to be transmogrified by actions of a shadowy cabal (JPow in particular, who with his 50mm nest egg stuck in a hole at BlackRock, has a direct incentive to keep markets afloat)
Just my $0.02
How is that relevant? If he's right, he's right.
It would be amusing to go through all the posts from 2017 on the subject.
I'm also not asking for proof of a negative (that Hillary didn't destroy her emails). I'm asking for proof of an affirmative. That Tether does have funds to back it's liabilities. Should be easy. Bring in KPMG, show them your bank accounts and have them attest to it.
If they do that I'll shout how wrong I was from the rooftops. I'm only asking them to follow through on their numerous, repeated promises over a half decade.
"We are aware of online discussions about Tether’s lack of publicly-available audits. Periodic audits of our bank balances have been performed by the Taiwan-based auditing firm TOPSUN CPAs & Co. The results of those audits were for the benefit of shareholders and were not in a form suitable for public consumption (to begin with, they were in Mandarin)" [1].
... they couldn't share these audits because they were in Mandarin?! Where on earth would they find a translator.
Note that they never said the audit _agreed with_ the numbers listed on the website/exchanges.
Also note that the shareholders of Tether are Bitfinex, who, in addition to being an exchange is... Tether.
In other words: yes, we all understand the issues with Tether. I’m still hodling. You do you.
I sold at BTC$17000, thanks.
The only thing Bitcoin is worth is what someone is willing to pay you for it since it has no, you know, underlying value. If that number is determined substantially by manipulators, well, what good is it? It may as well say "In Giancarlo Devasini [1] We Trust" on it.
The "monetary property" it possesses is defined in Tethers. You can send them back and forth all day but if you have no baseline of what it can be exchanged for, I can just move lines in my spreadsheet back and forth too. That's not a "monetary quality."
[1] https://www.crunchbase.com/person/giancarlo-devasini#section...