8 ms·

It makes perfect sense. If many people are trying to BUY USDT (increasing demand for USDT) the price of USDT will increase. Tether tries to prevent this by prin

by sunsu 8y ago

It makes perfect sense. If many people are trying to BUY USDT (increasing demand for USDT) the price of USDT will increase. Tether tries to prevent this by printing more USDT (increasing supply). They are not "magicking" Dollars, they are magicking a commodity (USDT) pegged to Dollar. I'm not saying that I'm a big Tether fan or anything. However to say that it "doesn't make sense" when they print more Tether during market crashes is false.

Nursie 8y ago
> It makes perfect sense. If many people are trying to BUY USDT (increasing demand for USDT) the price of USDT will increase. Why? It's worth exactly one dollar. Which they have in an account. That's the point. The price of the other cryptocurrency will come down, and the value of USDT compared to that cryptocurrency will indeed rise, as it should when people want to sell to a market where there's more demand on dollars than the asset. > They are not "magicking" Dollars, they are magicking a commodity (USDT) pegged to Dollar. But it's supposed to be pegged to the dollar by a real dollar backing. In the scenario you're describing, it's a floating asset not backed by anything, with a value maintained purely by supply manipulation, and being issued to prop up an asset price. The opposite of what it's supposed to be. > However to say that it "doesn't make sense" when they print more Tether during market crashes is false. It still doesn't. I mean, it makes sense from a "lets conjure up some money to prop up the price of BTC" angle, sure, but that's not the same as it making sense for something that's backed by cash on a 1:1 basis. Tether should only be issued when people give dollars to the tether foundation. That's the claim on their front page, and the basis of their peg.
- perl4ever 8y ago
  I thought that what people call a "currency peg" is normally the same as what you are calling "maintained purely by supply manipulation". So I suspect you may be using words in a nonstandard way.
  - Nursie 8y ago
    Not here, not the way tether is set up. Its claim is that its peg is concrete and reliable in the way a floating peg is not, because every tether is backed by a real dollar in a bank account, and in theory is redeemable. Take a look at their homepage.
    - perl4ever 8y ago
      I'm saying that I have the impression that some countries have a currency that is pegged to the dollar, and they maintain dollar reserves, but not one for one. And people do not say that is "floating", but that it is not floating. So it becomes misleading if you start defining a peg as requiring one for one reserves and being "floating" otherwise. There's no downside to using terminology that is clear to other people, unless you are trying to be deceptive.
      - Nursie 8y ago
        I'm not making these claims you seem to think I am. I am 100%, absolutely, positively not saying 1:1 backing is required for a currency peg. I am saying that in the case of tether, that is the explicit claim they are making about their cryptocurrency. They are claiming that each and every one is backed by a dollar in their account. This is their value proposition, this is what you are buying when you buy tether. An open, audited, 1:1 backed US dollar token * . Please go and read their homepage if you have some sort of issue with this, it's right there at https://tether.to/ https://tether.to/ The idea is very much that you can park money in tether and it's not vulnerable to a run on the currency and it cannot drop below a dollar, because each one has a corresponding dollar in an account. (* unfortunately they are not very open and have never been audited)
    - anonymouz 8y ago
      I don't understand why you are getting downvoted, because this is indeed what Tether claims. From their homepage "100% Backed Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD." Whether Tether's claim is actually true is at best unclear, of course.
- paulie_a 8y ago
  There's zero proof they have anything in there account.
  - Nursie 8y ago
    Well indeed! But that's how it's supposed to work.
    - paulie_a 8y ago
      Completely fraudulent?
      - Nursie 8y ago
        Nobody outside of tether really knows until there's some sort of audit. But the secrecy, false claims of regular auditing etc. don't look good from here.
        sine 8y ago
        Bitfinex hired Friedman LLP to audit them. Friedman only gave a report explicitly specifying "THIS IS NOT AN AUDIT" because Bitfinex wouldn't provide the documents and access beyond simple statements. Friedman LLP recently removed all mention of ever having been involved with Bitfinex from their webpage. Previously visible here: http://archive.li/xbhxI http://archive.li/xbhxI http://www.friedmanllp.com/insights/auditor-engagement http://www.friedmanllp.com/insights/auditor-engagement The Bloomberg article states that Friedman was issued a subpoena from the CFTC, at the same time Bitfinex was subpoenaed. Friedman LLP, a New York-based auditing firm, was also subpoenaed by the CFTC after Tether hired it last year to assess claims that Tether held enough U.S. dollars, according to a person familiar with the matter.

by sunsu 8y ago

Nursie 8y ago

> It makes perfect sense. If many people are trying to BUY USDT (increasing demand for USDT) the price of USDT will increase. Why? It's worth exactly one dollar. Which they have in an account. That's the point. The price of the other cryptocurrency will come down, and the value of USDT compared to that cryptocurrency will indeed rise, as it should when people want to sell to a market where there's more demand on dollars than the asset. > They are not "magicking" Dollars, they are magicking a commodity (USDT) pegged to Dollar. But it's supposed to be pegged to the dollar by a real dollar backing. In the scenario you're describing, it's a floating asset not backed by anything, with a value maintained purely by supply manipulation, and being issued to prop up an asset price. The opposite of what it's supposed to be. > However to say that it "doesn't make sense" when they print more Tether during market crashes is false. It still doesn't. I mean, it makes sense from a "lets conjure up some money to prop up the price of BTC" angle, sure, but that's not the same as it making sense for something that's backed by cash on a 1:1 basis. Tether should only be issued when people give dollars to the tether foundation. That's the claim on their front page, and the basis of their peg.

perl4ever 8y ago
I thought that what people call a "currency peg" is normally the same as what you are calling "maintained purely by supply manipulation". So I suspect you may be using words in a nonstandard way.
- Nursie 8y ago
  Not here, not the way tether is set up. Its claim is that its peg is concrete and reliable in the way a floating peg is not, because every tether is backed by a real dollar in a bank account, and in theory is redeemable. Take a look at their homepage.
  - perl4ever 8y ago
    I'm saying that I have the impression that some countries have a currency that is pegged to the dollar, and they maintain dollar reserves, but not one for one. And people do not say that is "floating", but that it is not floating. So it becomes misleading if you start defining a peg as requiring one for one reserves and being "floating" otherwise. There's no downside to using terminology that is clear to other people, unless you are trying to be deceptive.
    - Nursie 8y ago
      I'm not making these claims you seem to think I am. I am 100%, absolutely, positively not saying 1:1 backing is required for a currency peg. I am saying that in the case of tether, that is the explicit claim they are making about their cryptocurrency. They are claiming that each and every one is backed by a dollar in their account. This is their value proposition, this is what you are buying when you buy tether. An open, audited, 1:1 backed US dollar token * . Please go and read their homepage if you have some sort of issue with this, it's right there at https://tether.to/ https://tether.to/ The idea is very much that you can park money in tether and it's not vulnerable to a run on the currency and it cannot drop below a dollar, because each one has a corresponding dollar in an account. (* unfortunately they are not very open and have never been audited)
  - anonymouz 8y ago
    I don't understand why you are getting downvoted, because this is indeed what Tether claims. From their homepage "100% Backed Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD." Whether Tether's claim is actually true is at best unclear, of course.
paulie_a 8y ago
There's zero proof they have anything in there account.
- Nursie 8y ago
  Well indeed! But that's how it's supposed to work.
  - paulie_a 8y ago
    Completely fraudulent?
    - Nursie 8y ago
      Nobody outside of tether really knows until there's some sort of audit. But the secrecy, false claims of regular auditing etc. don't look good from here.
      - sine 8y ago
        Bitfinex hired Friedman LLP to audit them. Friedman only gave a report explicitly specifying "THIS IS NOT AN AUDIT" because Bitfinex wouldn't provide the documents and access beyond simple statements. Friedman LLP recently removed all mention of ever having been involved with Bitfinex from their webpage. Previously visible here: http://archive.li/xbhxI http://archive.li/xbhxI http://www.friedmanllp.com/insights/auditor-engagement http://www.friedmanllp.com/insights/auditor-engagement The Bloomberg article states that Friedman was issued a subpoena from the CFTC, at the same time Bitfinex was subpoenaed. Friedman LLP, a New York-based auditing firm, was also subpoenaed by the CFTC after Tether hired it last year to assess claims that Tether held enough U.S. dollars, according to a person familiar with the matter.