[HN Gopher] Bitcoin: Magic Internet Money
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Bitcoin: Magic Internet Money
Author : Bostonian
Score : 23 points
Date : 2021-01-13 20:44 UTC (2 hours ago)
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| rbtprograms wrote:
| Once you accept that everything is a simulation and nothing is
| real, the price of Bitcoin makes perfect sense.
| ogogmad wrote:
| What's the point of Tether? Is it to move money between exchanges
| while avoiding KYC/AML?
|
| Didn't work for me when I was using Bitfinex. They asked for KYC
| when I tried to withdraw some Tether. Now I'm at a loss in trying
| to understand the point of it.
| thinkloop wrote:
| It's to exit your crypto positions without the costly process
| of going into fiat.
| ogogmad wrote:
| Why is converting to fiat any more expensive than selling for
| Tether?
|
| [edit]
|
| Maybe I've figured it out: It's essentially a way of moving a
| sum of fiat between exchanges without going through a bank.
| If you withdraw to a bank, then you have to wait a while
| before you can move that money back into an exchange. At
| least that's my experience.
| x3n0ph3n3 wrote:
| Exiting to fiat requires KYC reporting and taxes. Tether,
| in many settings, allows you go get away with _not_ doing
| that.
| ogogmad wrote:
| But that requires that the exchange doesn't impose KYC
| requirements when you withdraw Tether. Do such exchanges
| exist? Are they legal? Bitfinex, which is closely
| affiliated with the company that runs Tether, actually
| does _not_ allow you to withdraw Tether without doing
| KYC.
| marcell wrote:
| While Tether may indeed be a fractional reserve, that doesn't
| seem like an existential threat to bitcoin.
|
| At any given time, a small scale bitcoin holder (<1000BTC) can
| liquidate their entire position on Coinbase and withdraw USD to
| their bank account within a few days. A large holder would have
| to be more careful, but the market is big enough to liquidate
| 10,000 BTC over a week or two with minimal price impact.
|
| Given this, we can see from revealed preferences that most small
| and large bitcoin holders are _not_ liquidating their positions
| for USD. Whether or not Tether is a fractional reserve doesn 't
| really change this.
|
| That said, if Tether is revealed to be a fractional reserve, it
| would almost certainly be a huge short term shock to the system
| for bitcoin. Liquidity between exchanges would be shot, and the
| news would scare many investors away from the market. I wouldn't
| be surprised to see an 80% short term drawdown in that scenario,
| similar to when Mt Gox crashed. But again, this doesn't really
| change the long term dynamics I described above, since holder's
| ability to liquidate BTC for USD was never an issue.
| arcticbull wrote:
| Re: fractional reserve. Fractional reserve banking without a
| backstop is dreadful and was a major contributor to the Great
| Depression. Luckily, we learned from that and created the FDIC.
| It's not at all the same thing and you cannot consider
| fractional reserve banking to be equivalent to fractional
| reserve banking _with a backstop_.
|
| It's _not_ the same thing as fractional reserve banking, where
| a bank loans money it doesn 't have and leaves itself with a
| negative balance until the loan is repaid (which btw, also has
| to be backed very carefully). It's printing money to buy BTC
| and pump it.
|
| Last, they also _don 't owe you any money or other assets_ if
| you try and withdraw. They can say no, and tell you to stuff
| it. Read their T&Cs on their website.
| Ulrich2 wrote:
| I dont understand that:
|
| 1. So someone sells (potentially) worthless Tether for Bitcoin,
| ok.
|
| 2. But who is selling his Bitcoin for Tether in these volumes?
| Miners need to sell for cash to finance their operations.
| tedk-42 wrote:
| Ain't no magic. As countries boost their economies via cash
| stimulus packages, this cash needs to end up somewhere and two
| easy places are crypto exchanges and the stock market.
| arcticbull wrote:
| I mean yeah, the burden of proof here is very much on Tether, as
| it always has been. They've claimed it was backed 1:1 with cash,
| that was proven false. They then claimed its backed by all sorts
| of stuff maybe, who knows?
|
| What we do know is that their own website T&C says by holding a
| USDT token, they owe you nothing. They never have to allow anyone
| to withdraw a single penny. They can sail off to a (different)
| island and keep any assets they may or may not have, scot free.
| They're chuck-e-cheese tokens.
|
| They hired an auditor, then the auditor quit.
|
| They bank with a domestic bank in the Bahamas, Deltec, who they
| may well own (as they owned Noble in Puerto Rico before it was
| bankrupted due to their ownership being revealed) - and guess
| what? The Bahamas' government domestic bank foreign liabilities
| do not show a 24B influx of USD over the last year.
|
| There's no reason - nor has there ever been reason - to believe
| Tether is anything other than a scam to enrich Tether and bank
| Bitfinex. The crazy thing is that USDT volume amounts for 80% of
| BTC trading volume. [1]
|
| I just can't understand the "well, let's just assume it's fine
| until proven otherwise" attitude. If that's your attitude I've
| got a tokenized bridge to sell ya.
|
| To call Tether a systemic risk to the entire crypto space is
| quite the understatement.
|
| [1] https://coinlib.io/coin/BTC/Bitcoin
| vsareto wrote:
| The fact that Tether has gone on for so long is proof you can
| do these kinds of things on the year-long scale and have plenty
| of time to plan an exit well before the cards collapse. People
| have been calling the risk of Tether for a while (self
| included) but it just hasn't been realized. It's entirely
| possible it survives a significant amount of time for it to
| become a necessary part of BTC, whether that's ultimately good
| or bad.
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