[HN Gopher] Anyone Seen Tether's Billions?
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Anyone Seen Tether's Billions?
Author : CPLX
Score : 123 points
Date : 2021-10-07 11:11 UTC (11 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| qeternity wrote:
| It seems to come up every time Tether is mentioned, so I will
| make a top level comment: do not short USDT/USD. You will not
| win. The only way you might (emphasis on might) short Tether is
| to be long off shore and short CME (I explain why in a comment
| further down).
| rossdavidh wrote:
| The biggest news, buried near the bottom:
|
| "After I returned to the U.S., I obtained a document showing a
| detailed account of Tether Holdings' reserves. It said they
| include billions of dollars of short-term loans to large Chinese
| companies--something money-market funds avoid. And that was
| before one of the country's largest property developers, China
| Evergrande Group, started to collapse. I also learned that Tether
| had lent billions of dollars more to other crypto companies, with
| Bitcoin as collateral. "
| cjensen wrote:
| One dollar of Evergrande's debt -- that is, a promise to pay
| one dollar -- is not worth anywhere near a dollar. So besides
| the sketchiness of having lots of Chinese company paper on
| their "asset" books, there's the whole question of how they are
| valuing said paper.
|
| In other words, when they say they have $1 dollar of assets for
| every $1 of issuance, is the asset an Evergrande promise to pay
| $1? Or is it an amount of stuff they can liquidate easily to
| obtain $1?
|
| It's the former, of course. And the "auditors" they used
| checked and said "yep, they have the right amount of promises
| to pay from distressed Chinese companies that, if those
| companies actually pay, it will be enough money."
| colinmhayes wrote:
| They said the debt isn't with Evergrand. That being said,
| there's no way to verify that, and when Evergrande falls
| apart it's likely the entire chinese bond market will.
| TheAlchemist wrote:
| It's also very strange that he don't specify how many
| 'billions' - could be 2, or ... most probably 69 billions $.
| inasio wrote:
| Tic toc tic toc... Sounds like we'll found out very soon [0].
|
| [0] https://www.bloomberg.com/news/articles/2021-10-07/holder
| s-o...
| lebuffon wrote:
| So they are doing banking, lending deposits at interest,
| without any regulation or oversight.
|
| I think we know from history how that story ends.
| graeme wrote:
| Of note, Tether values their reserves at redemption value.
|
| So if they have a loan to an insolvent company that trades at
| 25 cents to the dollar, Tether's attestation values it at 100%.
|
| See emphasis of matter, page 2 of their attestation
|
| https://tether.to/wp-content/uploads/2021/08/tether_assuranc...
| newaccount2021 wrote:
| the ship has sailed, the entire crypto market will eventually be
| bailed out...what's the point in wasting money chasing a paper
| trail around the world? we let a beanie-baby asset get big enough
| to kneecap markets, so now we have to pay
|
| everyone knows tether is bullshit, it hasn't slowed down crypto
| speculation. and how is tether less bullshit than ethereum? both
| of them are pure sentiment
|
| some fool with two dollars to his name is cheering on "build back
| better" which will eventually be the same money used to bail out
| crypto
| throwoutway wrote:
| If this goes on for a few more years, with broader investment
| from traditional investors (ETF), when Tether collapse I half-
| suspect that the cryptocurrency markets will bring the NYSE down
| with it in the fall as people sell to cover losses
| arcticbull wrote:
| The last time Bitwise tried to list an ETF, they revealed to
| the SEC that 95% of all bitcoin trading volume was fake. If the
| SEC permits a real BTC ETF that would represent a serious
| failure on their part, IMO, and I agree the potential for
| Tether contagion would increase materially. [1]
|
| [edit] this financial cancer can't get excised quickly enough.
| The longer we wait the more will get hurt.
|
| [1] https://cointelegraph.com/news/bitwise-tells-us-sec-
| that-95-...
| PretzelPirate wrote:
| > The last time Bitwise tried to list an ETF, they revealed
| to the SEC that 95% of all bitcoin trading volume
|
| 95% of Bitcoin trading on *unregulated* exchanges was
| fraudulent. There's a reason why people don't use
| CoinMarketCap anymore and it's precisely because it shows bad
| metrics from fraudulent exchanges.
| arcticbull wrote:
| They're all unregulated. Coinbase was included in their
| list. The word "unregulated" was a flourish added by
| cointelegraph as a distraction.
|
| > Of the 81 exchanges evaluated in the report, only 10
| provide volume figures that are legitimate, according to
| Bitwise.
|
| Coinbase is regulated as a money transmitter, like Venmo.
|
| [edit] what I believe they meant was that 95% of all
| trading volume was fake and 100% of that came from the less
| reputable exchanges.
| vxNsr wrote:
| What does fake trading volume mean in this context?
| CPLX wrote:
| Presumably wash trading that doesn't reflect any actual
| transaction. Or just straight up fake reporting of "off
| chain" trades that never happened by exchanges.
| trashcan_ wrote:
| I don't know why people don't understand this. There was a
| twitter spaces a few weeks ago after one of these ETF delays
| where a bunch of bigwigs pushing these ETFs seemed clueless
| or willfully ignorant of this fact. Its just pathetic.
| throwoutway wrote:
| Looks like a futures-based Bitcoin ETF may come in ~2 weeks :
| https://www.thinkadvisor.com/2021/10/04/the-first-u-s-
| bitcoi...
| qeternity wrote:
| You massively overestimate 1) how much capital would flow into
| a bitcoin etf and 2) how large that would be relative to the
| rest of the US (or global) equity space.
|
| Bitcoin has a trillion dollar "market cap". That's about 4% of
| the US equity market cap. In reality bitcoin's market cap is
| nonsense, the real float is much smaller, and the real market
| is much much smaller.
|
| $GBTC has 35 yards aum, and that is mostly due to the massive
| bull market in the last 18 months (thanks to Tether). The
| amount of hard cash that has flowed in is a small fraction of
| that, perhaps something like $7B (and since done 5x in
| performance).
|
| But $GBTC is OTC and so not everyone can invest, and a vanilla
| ETF would likely garner more interest. How much more I don't
| know. But $NKLA was a $30b fraud at its peak and yet in terms
| of market health, it was hardly a blip on the radar.
| earthtolazlo wrote:
| The federal government should have shut down Tether years ago.
| At this point, Tether growing its tendrils into the real
| economy and becoming a systemic risk almost feels like an
| inevitability. Madoff 2.0, but even more obviously fraudulent.
| CPLX wrote:
| It's actually an interesting thought experiment to try to
| figure out what would (will?) happen when all this comes
| crashing down.
|
| I am an extreme skeptic on all things crypto, I don't hold any
| and I think it's basically a gambling fad. But, with that said,
| I grudgingly recognize that it now has some powerful
| establishment interests behind it and things that have that
| tend to defy the laws of gravity, often forever. So I have no
| idea what will happen.
|
| But it's interesting to contemplate scenarios. One obvious one
| might be that crypto values would be highly correlated to the
| values of specific stocks that are in favor by crypto
| enthusiasts (aka "meme stocks" or maybe Tesla, etc) and that if
| there's a full on crypto crash those specific stocks will be
| annihilated by margin calls, since it's the same set of retail
| investors.
|
| That's one hypothesis, I'm sure there's many other interesting
| ones.
| alfiedotwtf wrote:
| Anyone Seen Fort Knox's Trillions?
| NelsonMinar wrote:
| Any guesses why this post is flagged and not visible on the HN
| home page?
| loeg wrote:
| Plenty of cryptocurrency enthusiasts read HN, and some might
| flag negative press.
| NelsonMinar wrote:
| It's now unflagged and back on the front page. Weird.
| moneywoes wrote:
| Are there any legitimate stable coins?
| longwick wrote:
| AFAIK I think Terra's UST is pretty legit
| davidcbc wrote:
| Are there any legitimate cryptocurrencies? Stable coins as just
| another layer of scam built upon a foundation of scams.
| fleddr wrote:
| Almost all of them are legitimate. Most of them are
| speculative, but that doesn't mean they're a scam.
| stOneskull wrote:
| > Are there any legitimate cryptocurrencies?
|
| maybe the ones like lbry or steam.. publishing payment
| tokens.
| vmception wrote:
| MIM - they lean into the "magic internet money" meme because
| they don't need to convince people of its seriousness. It is
| collateralized by asset backed and interest bearing cryptos
| that earn transaction fees such as xSUSHI
|
| DAI - but the MakerDao system has worse collateral than MIM, no
| interest bearing assets to my knowledge, but that can easily
| change with votes
| arcticbull wrote:
| I'm a major skeptic of the space, and even I haven't actually
| heard anything shady about the Gemini dollar. Which is why I
| suspect nobody is uses it, but I digress.
| mariocesar wrote:
| I think Binances BUSD is the closest to legitimate
| arcticbull wrote:
| Binance is the last institution you should be stapling the
| concept of stability to. They're literally under
| investigation by every major world financial authority,
| including by the Cayman Islands monetary authority.
|
| BUSD is a co-brand issued by Paxos.
|
| No idea how it would hold up once the bear trap snaps shut on
| Binance.
| unyttigfjelltol wrote:
| The U.S. Mint apparently is producing a brass/manganese- clad
| copper $1 coin called the "American Innovation dollars".[1]
|
| You could try that.
|
| [1] https://en.m.wikipedia.org/wiki/American_Innovation_dollars
| h2odragon wrote:
| Dunno, I hear they're planning a big dilution soon.
| https://www.axios.com/trillion-dollar-platinum-coin-mint-
| jan...
| arcticbull wrote:
| Increase in supply is not inflation. It's quite unlikely to
| cause any actual measurable dilution. But let's pretend for
| a second. Given that all major stable coins are pegged to
| or benchmarked against the dollar, any inflation in the
| dollar would carry over into stable coins 1:1 so the remark
| would be a nonsequitur.
| [deleted]
| unyttigfjelltol wrote:
| The way it's _supposed_ to work is you then fall back on
| the intrinsic value of the copper. That 's the 'coin' part
| of what the 'Mint' does.
| recursive wrote:
| And where do I get a coin made of copper?
| csense wrote:
| Nah, as soon as inflation makes it profitable to melt
| coins, they make melting coins illegal.
|
| https://en.wikipedia.org/wiki/Penny_(United_States_coin)#
| Num...
| dustintrex wrote:
| No. USDC was long considered the adult in the room, but they
| started going off the rails earlier this year, dropping the 1:1
| promise, delaying attestations and also now facing heavy
| regulatory scrutiny.
| EricDeb wrote:
| Gemini (GUSD) I believe is fairly solid
| JohnHaugeland wrote:
| I don't understand why this is flagged
| johnnyApplePRNG wrote:
| Me neither... I only got here by submitting the article (8
| hours late!).
|
| The comments are great.
|
| This article should not be flagged.
| CPLX wrote:
| A deeply reported investigative journalism piece by a preeminent
| media outlet for financial journalism, touching on a core tech
| issue, is... flagged?
| nevi-me wrote:
| The article talks about Tether's issued coins making it as large
| as one of the top 50 US banks (if it were a bank).
|
| How many banks does the US have?
| Armisael16 wrote:
| The FDIC lists a little under 5000
| (https://www.fdic.gov/analysis/quarterly-banking-
| profile/stat...).
| iav wrote:
| Plus 4000 local credit unions.
| dustintrex wrote:
| Even more damning is this:
|
| > _about $30 billion of its dollar holdings are invested in
| commercial paper--short-term loans to corporations. That would
| make Tether the seventh-largest holder of such debt, right up
| there with Charles Schwab and Vanguard Group._
|
| "Would", because nobody in those markets has seen them.
| HillRat wrote:
| At some point I suspect that they're going to be exposed as
| holding billions of dollars in ultra-high-risk junk Chinese
| ABCP. Even before the current economic and political climate,
| that stuff was toxic -- you can buy dodgy SCP for about a
| penny on the dollar given how poorly regulated the China
| commercial debt market is.
| reactspa wrote:
| This is sounding eerily like the Jeffrey Epstein case, where
| he was this storied super-successful trader and speculator,
| but there was no paper trail of the trades that made him into
| a billionaire.
| NelsonMinar wrote:
| I don't understand how Tether has survived this long. Bitfinex
| and Tether sure look transparently like a fraud, all the way back
| to the "no really we have $1 in the bank for every Tether but you
| can't audit us" days. And yet it continues to occupy its role as
| the underpinning of most cryptocurrency markets. Why hasn't it
| blown up yet? My best guess is that it's useful to everyone
| taking in money from new retail investors. Also there's no clear
| financial incentive for blowing it up; there's no way to easily
| short Tether, for instance.
|
| This article talks about the way Tether is loaning out what
| reserves they have. The Economist looked at this phenomenon and
| found Tether has a 383-to-1 leverage. That's going to be a
| complete disaster the moment there's a major blip in the economy.
| Say, a major Chinese real estate company going broke. Or interest
| rates in the West finally going up and causing a market
| correction. Maybe that's what will blow it up.
|
| The good news is the Economist also thinks the inevitable
| cryptocurrency disaster will be bad but won't destroy world
| economies. " its holders would lose hundreds of billions of
| dollars but that the fallout would be manageable." I sure hope
| that happens before this tower of unregulated investments gets so
| big that when it falls over it crushes the real economy.
|
| But don't worry folks, this is all good for Bitcoin.
|
| https://www.economist.com/leaders/2021/08/07/why-regulators-...
| arcticbull wrote:
| It took Liberty Reserve 7 years and 17 countries cooperating to
| get nuked from orbit.
|
| Tether was founded as Realcoin in 2014 by a group including
| former child star and accused sex offender Brock Pierce, so
| while it's technically just rounding the 7 year mark, it didn't
| begin in earnest until it was taken over by Bitfinex towards
| 2015 and didn't become majorly problematic until 2016/2017
| according to the NYAG findings. [1]
|
| Given the vastly larger scope here, I suspect we're going to be
| dealing with them for a few more years as the wheels of Justice
| spool up.
|
| For anyone wanting to learn more I highly recommend Bennett
| Tomlins write up. [2]
|
| [1]
| https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
|
| [2] https://bennettftomlin.com/2020/12/08/an-introduction-to-
| the...
| soared wrote:
| > by a group including former child star and accused sex
| offender
|
| This makes your argument seem conspiracy-theory-esque,
| despite your links having some quality information. That
| quote is more akin to clickbait than it is a valid point in
| your argument.
| shawabawa3 wrote:
| It's trivially easy for anyone to short tether, simply take out
| a DeFi loan of tether backed by any other crypto collateral
| (including e.g. USDC so you don't have liquidation risk).
|
| It will just cost you a few % APR to keep the position open
| NelsonMinar wrote:
| I'm not sure I follow your short structure but you're
| mentioning other cryptocurrencies. Is there a clean bet where
| I sell Tethers and get dollars? (USDC are not dollars.)
| jkhdigital wrote:
| So convert the USDC to dollars and withdraw the dollars.
| Done.
| graeme wrote:
| In the event Tether busts, the entire crypto markets will
| freeze up, and it's plausible usdc will not be redeemable
| or face a run. USDC aren't dollars and have been opaque
| about their backing. The bulk of their assets are in
| "cash and cash equivalents" which sound good, except they
| include less than 90 day commercial paper here! They also
| don't state its quality or say how much of their
| cash/equivalents are CP rather than cash or treasuries.
|
| Never been audited, only attestations
| rdtwo wrote:
| Yeah but where do they run to? I could see dark money
| having to run into BTC and ETH because real dollar
| redemption is a problem if you operate out of China for
| example.
| NelsonMinar wrote:
| Like I said, USDC is not dollars. If you're betting on
| Tether collapsing you sure as hell aren't going to take
| payment on that bet in USDC.
| jaggederest wrote:
| It's like people didn't live through 2008 and discover
| the magic phrase "counterparty risk", or something. I
| guess that was 13 years ago, so maybe they didn't.
| X6S1x6Okd1st wrote:
| They're different organizations, few people seriously
| think that USDC is going to 0.
| TacticalCoder wrote:
| USDC is backed by Coinbase (USDC are issued by Centre, a
| joint venture of Coinbase and Circle if I'm not
| mistaken). And Coinbase is an HN unicorn.
|
| Everybody at Coinbase is known, it's operated from the
| US.
|
| Coinbase ain't anywhere, not even remotely, like
| tether/bitfinex. There totally exists a world in which
| USDT goes to 0 while USDC is still worth 1 USD.
| endisneigh wrote:
| So your logic is that big, known entities can't go
| bankrupt or be scams?
| NelsonMinar wrote:
| It's like you never heard of the 2008/2009 financial
| crisis and how financial contagion works.
|
| Also Coinbase is not so pristine or pure. They were
| misleading customers with a gentler version of the same
| thing Tether did. "Coinbase Vowed Token's All-Cash
| Backing; That's Not True". https://www.bloomberg.com/news
| /articles/2021-08-11/coinbase-...
| aqme28 wrote:
| Coinbase will swap your USDC for dollars. It's pretty
| painless.
| arcticbull wrote:
| Nope, occasionally exchanges will manipulate the price up to
| liquidate shorts - for instance the highest recorded trade
| price of USDT was about $1000 and dexes leave you at risk of
| flashbots and smart contract bugs.
| X6S1x6Okd1st wrote:
| I've held a short position on USDT through AAVE for a
| couple months now. USDT would have to go to ~2 to liquidate
| me.
| qeternity wrote:
| If USDT goes, so does AAVE and everything else. And as
| has been mentioned, the iFinex crew have squeezed USDT to
| $1,000 before.
| SilasX wrote:
| DeFi exchanges operate algorithmically with published
| smartcontracts, so they can't be deliberately manipulated
| like that[1] -- can you link the example of the DeFi where
| USDT traded at $1000?
|
| Or were you just equivocating between DeFi and centralized
| exchanges in response to a comment that specifically
| suggested DeFi?
|
| [1] Which is not to say they can't be manipulated at all,
| but you'd have to go after the entire market or exploit
| some existing bug; it's different from the ones where
| centralized exchanges pull arbitrary shenanigans on their
| own platforms.
| qeternity wrote:
| OP is obviously talking about CEX since it's not possible
| for a DEX to have a USD market (like the above mentioned
| USDT/USD).
|
| As for DEXs being manipulated, absolutely not sure why
| you believe that's the case? This has nothing to do with
| DEXs and everything to do with margin (which are coming
| to DEXs).
|
| DEXs and AMMs make it much more expensive to provide
| liquidity in terms of capital efficiency versus CEXs, and
| thus more vulnerable to manipulation. But without margin,
| there's not much economic benefit for a bad actor.
| qeternity wrote:
| Absolutely do not do this. Do not bet against the house
| inside casino walls.
|
| If you have enough capital to weather potential dislocations,
| the only real way to play this is to be long off shore
| (perps, probably) and short CME. This position is long
| BTC/USDT vs short BTC/USD, the net of which is short
| USDT/USD. The reason for doing it this way is if it doesn't
| play out, or goes to 100k first, you're just wearing a bit of
| spread and funding risk, but let's call it delta neutral.
| OTOH, if Tether nukes, crypto will explode in Tether terms
| (since it's worthless) and implode in USD terms. Now, you
| won't actually get paid on your offshore long because the
| house is bust, so you'll have a paper cut there (keep as
| little margin as possible). But your CME short will pay you
| nice, hard, centrally cleared greenbacks.
| [deleted]
| iSnow wrote:
| Does crypto do anything but cause troubles? If it's not actively
| destroying the environment, then it's endangering financial
| stability.
|
| How does the government not step in here?
| fleddr wrote:
| Ironic remark, as Bitcoin is invented in response to the
| instability of the traditional financial system.
| recursive wrote:
| Very many things have effects different than the ones
| motivating their invention.
| cinntaile wrote:
| Any economic activity is basically actively destroying the
| environment though. The big difference is that there are a few
| supply chain steps that get bypassed before value is created. I
| know I know, someone will take issue with that and say that no
| value is created with crypto when a coin gets minted and the
| rewards are distributed while value is created along each
| supply chain step when you manufacture a car. That's fine,
| we'll have to agree to disagree.
| dustintrex wrote:
| https://archive.is/2021.10.07-101853/https://www.bloomberg.c...
| fleddr wrote:
| "Solana, up 9,801% in 2021 for seemingly no reason at all"
|
| No reason at all, huh? Anybody with even a remote interest in
| crypto knows why Solana has exploded. It's L1 season and Solana
| is a direct competitor to ETH, which suffers from high usage
| fees.
|
| Every other L1 has exploded in value. As said, L1 season. These
| kind of statements make me suspect the author never used crypto
| in their life.
|
| The cultural gap between crypto and non-crypto is pretty
| hilarious. The reason crypto holders don't give a shit about any
| of this, is because to them, a 50%, 80% or even 90% pullback of a
| coin is just an ordinary Thursday.
|
| You can't threaten a crypto holder with "losing it all", because
| that's an everyday reality for them. And so is multiplying their
| wealth by 2, 5, 10, 100.
|
| Why would so many people engage in this degenerate gambling? This
| is the part skeptics just won't get. Because the existing
| financial system/situation doesn't work for them.
|
| Young people are locked out of any and all assets. They can't
| afford real estate or any meaningful amount of stock. Savings
| accounts have a negative yield.
|
| Crypto is the asymmetrical bet. There's the sizable risk to lose
| it all, yet an upside potential that is countless times larger.
| And in the case you lose it all, it wasn't that much anyway.
|
| It is an act of desperation and a sign of very unhealthy issues
| in our "regulated" economy: low wages, job insecurity, student
| debt, inflation, low interest rates, inequality, the list goes
| on.
|
| For sure there will be another crash. Nobody cares. Because they
| have nothing to lose anyway and will just start over. Because the
| underlying economic issues did not change.
| [deleted]
| notJim wrote:
| > Nobody cares. Because they have nothing to lose anyway and
| will just start over. Because the underlying economic issues
| did not change.
|
| If crypto was _only_ these people, I 'd have more sympathy for
| them. But in reality, it's some of those people, and then tons
| of far more sophisticated people who are trying to take
| advantage of the rubes. In the end, the Tether people will make
| out like bandits, and everyone else will be left holding the
| bag.
| qeternity wrote:
| > It's L1 season
|
| You say this as if it's a valid thesis outside of CT. Solana
| has exploded because Alameda, Cumberland and related VCs have
| made it so.
|
| > Young people are locked out of any and all assets. They can't
| afford real estate or any meaningful amount of stock. Savings
| accounts have a negative yield.
|
| Casually ignores Robinhood and equity markets, where most of
| any under 50s should have most of their wealth. Fixed income is
| a much bigger problem for old people than young people. Real
| estate, I will agree with you. But none of this justifies
| crypto.
|
| The rest of your comment is truly bizarre. You're defending it
| pretty strongly while also seemingly admitting that there's
| little real economic value being created and that will result
| in a crash with people getting wiped out and starting over.
|
| Why accept this? Why not focus on the real issues, instead of
| just accepting degen apeing with open arms?
| CPLX wrote:
| I'll bite. What can I use Solana for?
| fleddr wrote:
| Well, like all crypto you can buy it and hope it goes up in
| value :)
|
| But as for actual usage, it's a smart contracts blockchain
| that is fast, proof of stake, yet has drastically lower fees
| than Ethereum.
|
| Anything can be built on top of it but this particular rush
| was caused by a second hype wave of NFTs. As more people want
| to join the NFT frenzy, it got really expensive to mint one
| on Ethereum, hence people rushed to this alternative.
|
| For the record, I don't own any solana and never have, just
| explaining what it is. I wish I did own it a year ago though.
| pionar wrote:
| > Well, like all crypto you can buy it and hope it goes up
| in value :)
|
| So, speculation. That's what all crypto is for.
| xboxnolifes wrote:
| And just like many stocks that don't plan to ever offer
| dividends.
| throaway6942 wrote:
| tbh, Solana does offer "dividends" in the form of PoS
| rewards!
| CPLX wrote:
| There's another use case for those stocks. You can buy a
| whole bunch of them and then you get to run the company.
|
| If you buy enough GM stock eventually you can give all
| your friends and family members Corvettes for Christmas.
|
| Stock actually represents an enforceable claim on wealth
| that exists in the real world. Crypto not so much.
| fleddr wrote:
| Both the typical stock holder and crypto holder see a
| number on screen and hope it goes up. That's it. Most
| stock trading is done by algorithms, not even people.
|
| A typical stock holder can never claim any underlying
| asset nor do they have voting rights, so you're really
| stretching.
|
| The difference is simply in risk appetite. People are
| going to keep drinking Coca Cola at large scale so owning
| their stock is low risk. But also low return.
|
| Crypto is high risk, extremely high return. There's a
| sizable chance to lose your money but a larger chance to
| get returns that are astronomical. I'm talking 5x - 10x
| in mere months.
| headmelted wrote:
| "There's a sizeable chance to lose your money but a
| larger chance to get returns that are astronomical"
|
| Past performance is not indicative of future returns.
| CPLX wrote:
| Indeed. The only use case is gambling. Unregulated gambling
| at that.
|
| The parent's comment's "For no reason at all _except
| gambling_ " was implied and likely not confusing to the
| reader.
|
| Also happens to pretty clearly answer the question of why
| people have extremely serious concerns about all this.
| fleddr wrote:
| A separate reply on the gambling part (my other reply is
| about utility).
|
| You're not listening. Crypto holders don't care about
| those concerns. They willingly gamble. You can ban and
| shut down all of crypto (in reality, you can't) and
| they'll move to meme stocks or betting on sports.
|
| You can't stop it or regulate it. Because it's a culture.
| It's an entire generation that is fucked anyway. Even the
| modest ambition of a middle class life style is out of
| reach. So they have nothing to lose, and will bet it all.
|
| They aren't dumb or ignorant. They are fully self-aware,
| and self-identify as plebs, degenerates and ape
| investors. They know what they're doing.
|
| The "concern" is misplaced and fails to impress. From
| their point of view, "regulation" is the traditional
| system which is exactly the reason why they're in crypto.
| The traditional system failed them.
|
| The real concern should be aimed at the economic
| conditions that young people face. For as long as
| skeptics don't get that, they will never understand
| crypto and its culture.
| CPLX wrote:
| Yes this all sounds accurate to me.
|
| The problem is as a society this isn't a positive thing,
| and we should put some energy into stopping runaway
| gambling fads because they are highly destructive when it
| all comes crashing down.
|
| And it always does.
| fleddr wrote:
| I'd prefer society puts more energy into a more balanced,
| sane and stable economy and financial system. To address
| the actual disease rather than the symptoms.
|
| But I'll leave it at that.
| BLKNSLVR wrote:
| Well said right the way through.
|
| The other thing cryptocurrencies potentially offer is an
| alternative financial system to the status quo. There are
| lots of bugs to be worked out, but it's well on its way,
| and Solana and Ethereum (as only two examples of many)
| have the ability to act as the platform upon which these
| financial services can be built.
| headmelted wrote:
| Is it though?
|
| A whole lot of talk about middle class lifestyles being
| out of reach in the same sentences as "WHEN LAMBO?".
|
| I'm sympathetic to the widespread lack of upward mobility
| these days. This is confusing it with something else.
| fleddr wrote:
| If you've already made up your mind that crypto is a scam
| and gambling only, despite it being an enormous space,
| there's no point in asking.
|
| https://solana.com/ecosystem
|
| The above shows the 400 or so things built on top of
| solano. I would expect for most projects to not be very
| useful to the masses and likely most will fail. Which
| isn't different at all to the typical startup scene.
|
| I consider most of it garbage, and I would expect you to
| conclude the same. Which is fine. The only counter point
| I have is to not dismiss the entire space as a whole.
| Things are moving very fast, and some concepts are
| intellectually interesting, just poorly executed.
|
| For example, NFTs are considered the most ridiculous
| thing ever now, but that doesn't mean they will be in
| this state forever. The next-gen NFT containing the
| actual art, copyright integration, and smart contract
| integration are a matter of time.
|
| Imagine a photographer, currently sharing photos to stock
| services for pennies, with zero control over terms.
| Middle men milking them dry. With a fully integrated NFT
| chain, the photographer can claim and prove ownership and
| dictate terms. They can decide to sell 10 copies, and
| dictate that if they are resold, the photographer gets a
| 20% royalty. The photographer can make higher-end
| versions available, at higher resolution, wider color
| gamut and ask more for that version. This independent and
| advanced type of reselling is hardly possible
| traditionally. And importantly, 100% of the revenue goes
| to the creator.
|
| NFTs can be entirely interactive, and can be anything. A
| photo, a song, a 3D model, a plot of land in a game.
|
| Imagine being an amateur talented 3D model builder right
| now, and Hollywood directly buying your model. Which is
| something that won't happen right now because of B2B
| contracts and the complexities of dealing with small
| vendors. Soon it's just the click of a button, done. The
| possibilities of making a "digital living" will
| drastically expand.
|
| Outside of objects having serious undisputed value (like
| 3D models), you may think nobody cares if you "own" the
| rights to a JPG. One can trivially copy it after all.
| This attitude, that all digital content is worthless and
| frankly has no owner, is curious. Even more so in a
| society almost fully digital.
|
| Take Instagram, for example. Instagram takes everybody's
| photos for free and intermixes it with ads. Facebook gets
| 100% of the revenue and personal data, and you as the
| person actually creating the photo gets...fuck all. A
| 100% tax. In return you get "likes" or "exposure".
| Instagram may change terms at will, bury your photos in
| favor of video, or simply deplatform you.
|
| I find this contradiction interesting. The Hackernews
| community rightfully challenges Big Tech on a daily basis
| yet refuses to spend a single thought cycle on the only
| concept that has the potential to break it down. Which is
| not regulation, it's the opposite: decentralization.
| Returning power and ownership to users.
| Imnimo wrote:
| >They can decide to sell 10 copies, and dictate that if
| they are resold, the photographer gets a 20% royalty.
|
| Suppose that I want to sell my copy, but do not want to
| pay the 20% royalty. What stops me from selling it for 1
| cent on-chain, but buyer paying me real price off-chain?
| How can a creator realistically expect to receive their
| royalty cut?
| CPLX wrote:
| I didn't say it was a scam, I said it was gambling.
|
| There are only two killer use cases for crypto:
| speculation and prohibited transactions.
|
| That's not snarky those are actually pretty great use
| cases that have massive demand and centuries of success
| behind them as a product category.
|
| A large part of crypto is scams, but it's clear not all
| of it is. You couldn't really argue that bitcoin, in
| general, is just a scam for example.
|
| But beyond that it's basically all gambling. People put
| money into crypto hoping to get more money out. Period.
|
| That's a _really fucking desirable product_ it should be
| pointed out. It 's so desired by people that you can
| build an entire city in a desert on the concept, it's
| common to all societies in all eras of history. People
| just absolutely fucking love to gamble.
|
| Every argument against this seems to be a variation on
| "Well sure, but one day they might..." and so on.
|
| Which is cool. You're absolutely right to say that. One
| day it might not just be gambling.
|
| But today, it is. That's why there's money in it.
| fleddr wrote:
| I superficially agree that most activity is speculation,
| which in some cases you might as well name "saving", or
| "investing". I also agree that actual breakthroughs in
| utility (DeFi, NFT, Metaverse, Web3) haven't materialized
| yet.
|
| I only disagree on details. Like the use cases you
| missed, some of a humanitarian nature.
|
| For example, still a significant part of the world is
| unbanked, and has no access to the financial system at
| all. Crypto, permission-less and only requiring the
| internet and a smartphone provides a solution.
|
| For people living under highly inflationary regimes
| (Turkey, Libya, etc), crypto can be an unconfiscatable
| asset to protect their savings.
|
| Immigrants often send money back to their home country,
| and by means of international banking, lose a whopping
| 30% in transaction fees. Crypto can do it for near-zero
| fees.
|
| A hardcore cynic may call these just variations of
| "gambling" but to me these details matter. Further, like
| you said, the very point of any asset is persist value
| and ideally grow in value. That's even true for just
| basic currency. So this deep moral outrage that people
| are trying to earn money is misplaced, it's the damn
| point of any participant in an economy.
| weq wrote:
| AS someone who has seen his friends for years toute crypto,
| but never bitten.. i did this year. (those friends have
| passive incomes in the 10k's per month now in crypto that can
| be readily exchanged for dollars)
|
| Parallel economies exist. In the mainstream economy, you
| mainstream interests who have every aspect of the market
| cornered.
|
| In the crypto economy, and yes, its a fully fledged economy
| and social network in 1.
|
| DeFi and the blockchain are allowing you to startup
| international companies in the blink of eye. Just the way
| tradtional companies outsourced to the 3rd world, then import
| these goods and sell to a premium in local markets - as a
| crypto enterprenour u can employ these same "call centre
| staff" to "play games for you" and you are able to pay them a
| HIGHER RATE then Apple or insert any any "tradtional stock"
| "traditional company".
|
| People forget that captialists have BUILT a system and
| REINFORCED that system to ensure THE STATUS QUO. Crypto is
| about giving those people the FINGER. Those people kicked and
| screamed, but not they are on board. Bloomberg isnt as
| effective at causing a dip then say Elon though.
|
| Sorry bloomberg, your consoles days of cornering the market
| as gone! Your traders now need to keep there ear to the
| ground, cause the crypto cultists are using there social
| networks to come for YOU.
| throaway6942 wrote:
| few things I do on Solana:
|
| 1. Lend USDC and earn higher interest rate than my bank using
| https://mango.markets.
|
| 2. Trustlessly swap crypto using app.saber.so/#/swap.
|
| 3. Occasionally buy NFTs from artists I want to support.
| ajkdhcb2 wrote:
| I find it ironic that people seem intent on holding Tether to a
| much higher standard than banks. I know there are certain legal
| guarantees applied to banks along with regulations, but all
| evidence points to Tether being in a much safer position than
| banks with their tiny fractional reserves. People are
| dissatisfied with anything less than fully-backed when it comes
| to 'crypto'.
| davidgerard wrote:
| > to a much higher standard than banks
|
| I strongly suggest you look into the sort of compliance banks
| have to do.
| jcranmer wrote:
| A bank having assets to _only_ cover 100% of its liabilities
| would be in violation of banking regulations. Since the 2008
| financial crisis, the general breakpoint you 're looking for is
| about 110% as the minimum asset-to-liability ratio for a viable
| bank.
|
| There's also this not-small matter of making sure that banks
| aren't relying on overly optimistic valuations that won't bear
| out, especially in a dire market (if you're a too-big-to-fail
| bank, the government looks at your books and run its own
| numbers assuming a pretty severe economic crisis). In this
| regard, Tether's non-transparency is ringing alarm klaxons.
| VirusNewbie wrote:
| Citation? I don't believe this is the case, I believe a bank
| needs liquid assets to cover a certain amount of its
| _expenses_ , not all liabilities?
| scrubs wrote:
| Well exactly. Big US banks are subject to deep scrutiny.
| [deleted]
| graeme wrote:
| Tether is more like a money market fund. It has much worse
| disclosure and much less stringent regulations than money
| market funds.
|
| Money market funds are 100% backed
| pionar wrote:
| Tether says (or at least used to) that they have 1USD in the
| bank for every tether issued.
|
| They say they're fully-backed, so they better be.
| impostervt wrote:
| People have been yelling about Tether for years, myself included.
| But nothing seems to stop it. Not lawsuits, not major news
| articles. The conclusion I draw is that, yes, the game is rigged
| - AND EVERYONE IS OK WITH IT. As long as it's making everyone
| money, no one will really complain. What I also find interesting,
| is that if tether ever DOES crash, the result _might_ be a big
| boost for Bitcoin. If you hold Tether, and you want to cash out,
| the path leads through Bitcoin.
| arcticbull wrote:
| Re your first claim it just takes time.
|
| Re your second claim, that's a common misconception. The price
| of bitcoin would skyrocket against USDT but pancake against
| USD.
|
| Who in their right mind would sell their (actually worth USD)
| Bitcoin for your worthless Bahamian IOUs? Absolutely nobody. So
| you'll see a massive skyrocket against USDT and as soon as
| people realize what's going on, it'll go no-bid. RIP.
|
| Then the ensuing panic will cause selling on USD markets, arb
| bots will turn off, and that selling will be accelerated by the
| few who got BTC from their USDT piles as they run for the exit.
| Then exchanges will go down for "maintenance."
|
| You don't need to believe me, this happens with every exchange
| insolvency. It happened at Gox and it happened at Quadriga.
| jkhdigital wrote:
| You bring up a _very_ important but often overlooked point
| about market panics: the problem is not really everyone
| rushing for the door, it is market makers pulling bid
| liquidity so that "normal" selling volumes tank the price
| (which triggers the avalanche).
| qeternity wrote:
| What? Who told you this? Market makers, especially in
| crypto, do not have long holding periods. The big moves in
| crypto are because of coordinated manipulation to trigger
| stops and liquidations (forced, price insensitive buying
| and selling).
|
| I don't know if this is /r/wsb leaking but markets do not
| tank because market makers pull back...that's just not the
| business they are in.
| quickthrowman wrote:
| If tether crashed I guarantee every MM would pull their
| bid, nobody wants to be left holding the bag. I don't
| care if they're obligated by contract to provide a
| bid/ask at all times--if USDT went bust, BTC/USDT
| liquidity would evaporate very quickly. The contract
| would be irrelevant since the exchange would die.
|
| Either that, or their bid will be 0, like on 0DTE options
| that are far out of the money.
| qeternity wrote:
| Yes, I agree. But if all MMs withdrew but you had lots of
| other stickier liquidity, spreads might widen but it
| would cause a crash. Of course if Tether implodes, all
| the long term buyers will evaporate, which is my point:
| medium/long term price is dictate by swing and positional
| traders, not market makers.
|
| > Either that, or their bid will be 0, like on 0DTE
| options that are far out of the money.
|
| What? This doesn't make any sense. 0dte options are often
| some of the most actively traded. But I'm not really sure
| you get this stuff.
|
| Source: career hedge fund options trader
| trident5000 wrote:
| I think it would increase as tether would need to dump into
| btc on exchanges like bitfinex and most know this dynamic by
| now. But who even cares. If it craters like it did during
| covid from fear selling it just comes back in a month or so.
| impostervt wrote:
| I hope you're right. I think the major tipping point would be
| a major exchange deciding to no longer accept it.
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