> As with all classic Ponzi schemes it will collapse when some external event causes a bunch of people to demand convertibility at once, and they can't meet their overvalued rate.

But why is everyone keeping their USD in USDT? For ponzis it makes sense because you're promised a rate of return, but for USDT you're essentially losing money every day due to inflation.

I mean, I don't think it's being used for this purpose, but something convertible to dollars is handy if the US specifically doesn't want you to trade in dollars. Although that then potentially makes Tether itself a target of the US government.

You can loan out USDT for absurd interest rates.

If you look at the classic definition of a ponzi scheme, bitcoin doesn't fit, though central bank fiat currencies do. See macro economist Lyn Alden's excellent article for the full explanation: https://www.lynalden.com/bitcoin-ponzi-scheme/

I see a key difference: we choose to participate in a Ponzi scheme, whereas the central bank fiat system is one we are forced to participate in, just by means of being born in a particular country. There’s no choice involved, being backed by the full force and legal monopoly of the state. That’s a key difference many tend to gloss over when pursuing this characterization.

The details may be different but the active ingredient is fraud.