It's been the most obviously sketch shit in the crypto space for the last 3 or 4 years since it was introduced, but nobody seems to give a fuck. Maybe this shock to the system will finally topple it? idk.

I'm not even sure if crypto people even know what Tether is.

  • comi [he/him]
    ·
    4 years ago

    Why would it collapse? It’s exactly fiat currency like, you don’t redeem tether into usd, you exit in exchanges

    • dapranker [he/him]
      ·
      4 years ago

      Basically:

      1. Create a tether (or a few hundred million). They say (or said really) that every tether was backed by 1 USD, but they haven't done any real audit or proof of this to a satisfying degree
      2. Take these tether worth 1 dollar, buy a bunch of bitcoin with it. Now your company has "assets" that are worth as much as you need to satisfy your backing requirements, and as long as BTC doesn't go down, you are technically correct
      3. A nice side effect of creating billions of your own USD to buy bitcoin, is it artifically inflates the price, which reinforces your own asset valuation

      Unfortunately the whole thing collapses if the price of bitcoin crashes and people want to redeem their tether back to USD, they only keep ~5% cash on hand so the last 95% are going to be fucked

      see more: https://www.singlelunch.com/2021/05/19/the-tether-ponzi-scheme/

      • comi [he/him]
        ·
        4 years ago

        You don’t see it as exact same gold believers argument? It doesn’t matter that the underlying is irredeemable, while fiat gates operate as if it is, it will continue to circulate and serve as it does

        • dapranker [he/him]
          ·
          4 years ago

          yeah sure maybe, I don't pretend to be positive about whats going to happen here but I assume this apocalypse scenario is presuming the 1:1 USD peg breaks, so if it doesn't then yeah what you're saying holds