For context, if 0.0013$ seems low, it was hovering between 0.9998$ and 1$ 7 days ago, it de-pegged 6 days ago and hit a low point of 0.95$ 5 days ago for a short time, and eventually climbed back to 0.9990$ where it's hovering right now.
For more context, redeeming USDT has at least a 0.1% fee meaning that when people are doing arbitrage via redemption 1 USDT can only ever reach up to $0.9990. It requires demand for Tether to go up for it to reach $1.
Tether’s operators have said the token is backed by a basket of dollar-based assets equal to the size of the tokens outstanding, but it has not released granular details of these reserves
Trust me, dude!
Meanwhile:
Stablecoin holders could not claim deposit insurance to recoup any losses and operators were not able to access bank standing facilities
This (the losing all of your money, thing) happened in 1929 to a lot of people. Yes, it is possible to lose all your money. Yes, this can go to zero. There is a long, long way down. I just don't see how anyone in their right mind has the appetite for risk to stay in Cryptosecurities right now.
Honest question: if you truly believe that, how do you account for the infrastructure required to mine it in a post-apocalyptic society? How do you guys envision a post-apocalyptic world where BTC is even remotely viable?
Because in a hyper-adversarial environment, the chances of a sufficiently worldwide internet seem extremely slim. The terms "hyper adversarial" and "mesh networks" don't match very well for example.
In a more bigger-picture sense; any society that struggles to keep up large scale power plants will definitely struggle maintaining a distributed system maintaining a copy of every transaction everywhere on each node. Blockchains trade in resource waste for decentralization, so they don't work well in resource constrained environments.
In a hyper adversarial environment we want guns, ammo, access to fresh water and land that can be easily protected. Any kind of trade will be done with someone who you can meet physically, and you will be either bartering or using some completely local currency.
To think that people would depend on a global distributed ledger is so incredibly stupid, it makes me wonder if you are not just trolling.
I don't like to assume ill intent so I'm going to say that it's possible to be delusional like that because I had girlfriend who turned out not to be joking about these kinds of fantasies. Those kind of delusions is how people lose their life savings on some scheme the rest of us can tell is insane right out of the gate.
A post apocalyptic society will lack the manufacturing ability to maintain things with microchips in them. Why would I store my wealth in something that requires microchips to be useful? What do I do when my computer breaks?
Things like Solar Panels, Deep Cycle batteries, CPU and GPUs are a product of globe spanning supply chains and resource hungry manufacturing processes (water is a key resource in them).
And in post apocalyptic scenario - I would imagine food and water to be far more important than some digital coin.
This is all techno-babble fantasy of a post-apocalyptic novel.
In the real world a post-apocalyptic world won't have enough food to sustain basic labour, all global supply chains will cease to exist and skirmishes for arable land and drinkable water will take over. Anything remotely needing cooperation on a greater scale than a local community will be absolutely broken.
Plenty of old hardware that will cease to function in 5-10 years won't help a post-apocalyptic society for long. Constant brown outs and blackouts due to a shortage of labour, maintenance capacity (parts and labour) will absolutely wreck any chance of mining using electricity. The scarce electricity, be it solar or some lingering power plant that can continue to function with lowered maintenance will be needed to sustain life, not trade.
Solar panels need a quite complex supply chain, photovoltaic cells are a high-technology product.
Bitcoin won't exist in a post-apocalyptic scenario. This is a teenager fantasy of how humans work, and a technocratic one at that...
Remove any one of those, and i think it wont work. Now there are different kinds
of apocalypses, here are some thoughts:
- It's a fair bet that electronics cannot be really manufactured in any kind
of scale, and most current consumer electronics are not especially long lived.
Give a decade, and most people will not have the gear to run Bitcoin.
- If you have Abundant power, i would use it grow potatoes in greenhouses,
or similar, not for crypto mining.
- How would the global networking, or even local, survive the apocalypse? Given
that is needed for the blockchain to sync, it seems it will stop working
more-or less immediately, or worse, fork.
- Which brings me to, how would people agree on which blockchain, or fork of bitcoin to use?
- And most of all, if modern education systems fail also, how would anybody understand any of this anyway?
On the other hand, everybody understands potatoes. Boil em, mash em, stick em in a stew. Now that is the currency of the apocalypse!
Bitcoin is a bet on the collapse of fiat money and central banks. It doesn't mean a collapse of everything. It will cause turmoil, but in the end things will be better.
People are increasingly realizing that central banks don't have any scientific reason to exist, and the economy actually runs better without them. Their only reason to exist is to give unlimited power to governments and funnel wealth from the poor to the rich. Bitcoin is the bet that what I said is actually true.
Central banks are backed by governments. And there is no way of at least western ones giving up the monetary control they offer... The results of such actions would ruin their electability for years or decades.
You talk as if governments are necessarily adversarial, and as if I as an average citizen would prefer that the monetary control lies with anonymous wealthy individuals rather than an electable body of representatives.
I mean specifically the modern inflationist central banking, which started in the 20th century, and more precisely in 1914 when British pound lost its 1:1 backing in gold, ending the era of the gold standard.
You must understand that monetary theft has always happened in many forms, in addition to central banking and fiat currency. For example, even in a gold coin economy, the rulers have always sought to debase the coins with various methods, such as mixing them with less valuable metals. In history, everyone understood that debasing gold coins was theft. Everything worked fine when central banks succeeded in defending the gold standard.
However, things changed and this theft became modern economics, and it's difficult to question, because it's "science".
I see. The issue with this line of argument is that the gold standard is not good for several of the things we want currencies to do, including the ability to control their supply. It might seem like simply debasing gold coins as you say, but it's not quite. We just went through two very weird years in which the economy went sideways, but we had no massive unemployment, no bread lines and no revolutions. There is a price for it, both in inflation and in unequal access to benefits, with richer people and companies having access to very cheap money. But it's a trade-off either way, not simply theft as you imply.
There's an argument to be made, that the relative stability here is bought from volatility and economic suffering in poorer countries, because the US dollar is the global reserve currency. In addition, there's a few other relatively strong currencies, which are used as reserves for weaker currencies. It seems that globally, the success in these countries is bought from weakening the currencies in poorer countries.
There's also a lot of historical inaccuracies and rewriting of history to defend this system. For example, the great depression is partly blamed on the gold standard, but in reality it happened exactly because the gold standard was already broken (since 1914), which resulted in wildly wrong speculative monetary practices and policies.[0]
As you said there's plausible rational arguments from both sides. But then again, are the central banks even following practices based on economics, or did they become politicized and corrupted, because of their central position in the economy? We see blatant monetary corruption happening in autocracies, but is it happening in western economies too, but it's just less obvious?
I have used years to study these issues and I'm becoming more convinced every day, that it's time for a hard money standard, i.e. Bitcoin. And, I think it's inevitable, because historically, people always vote for harder money in a free market.
> It seems that globally, the success in these countries is bought from weakening the currencies in poorer countries.
Perhaps, but the period since 1914 saw the rise of many peripherical countries, notably China, who also have a tight control over their monetary policy, and use it all the time for their economic plans. For your counterfactual to make sense, you would have to present an example of a country that developed using the gold standard.
> But then again, are the central banks even following practices based on economics, or did they become politicized and corrupted, because of their central position in the economy? We see blatant monetary corruption happening in autocracies, but is it happening in western economies too, but it's just less obvious?
There is corruption and inefficiency at every level, but I fail to see how that would change by going back to the gold standard or cryptocurrencies for that matter.
I am familiar with the Austrian line of argument, and I'm sure in your years of study you have come across many criticisms of it, so I won't bother, but let's just say I don't think this perspective has brought us tangible benefits at all. Meanwhile, the imperfect system we have has shown itself to be at least robust to major hiccups recently.
I'm not saying that economic development isn't possible with fiat currency. What I'm saying is that fiat currency is immoral; it's a form of slavery. It disincentivizes people from saving and taking responsibility, and accelerates consumption and throwaway culture. Because of this, people are overworked and the climate and the planet suffers. Meanwhile, wealth is siphoned to the elite.
If people are denied the use of gold as money, then they can't. There are many regions, where citizens are basically prisoned by their central bank, and can't use gold or US dollars.
Also, Switzerland used gold backed currency until 1999, and they are one of the richest countries per capita. There's no reason to believe that they would have done better with a fiat currency.
> There is corruption and inefficiency at every level, but I fail to see how that would change by going back to the gold standard or cryptocurrencies for that matter.
Self-custodied Bitcoin is impossible to inflate.
> Meanwhile, the imperfect system we have has shown itself to be at least robust to major hiccups recently.
Disagree. We are now entering a long period of depression.
There is no virtue in saving. Money that is hoarded reduces "consumption" but also reduces "meaningful" investments, no matter your definition of "meaningful" and "wasteful".
> Bitcoin is impossible to inflate, like gold.
Or Litecoin. Or Bitcoin Cash, or BSV. Individually, they are all "fixed supply", but as whole, any crypto currency that enters the market and gets traded should be counted as part of the asset reserves.
Unless, of course, we get some central entity to force everyone else to adopt the Highlander approach and claim "there can be only one"...
That stock market and real estate bubble is meaningful? It's better for the economy to let people save, instead of forcing them to invest just to escape inflation.
No, money has strong network effects an tends to one.
> That stock That stock market and real estate bubble is meaningful? and real estate bubble is meaningful?
Correlation is not causation. Japan has fiat currency and has not had significant inflation for decades. Housing is affordable. It's not just because most countries have "bad" monetary policy involving fiat currency that makes it impossible to have "good" monetary policy.
> money has strong network effects
In relation to currencies controlled by central banks? When used by governments as single legal tender? Perhaps.
But just look at any chart and see how BTC market cap relative to the rest of the crypto keeps going down. The number of Ethereum wallets is already larger than BTC. BTC is not the dominant chain anymore. Whatever advantage it had in terms of "network effects", it is evaporated.
BTC is a failed experiment. It failed as a currency and it never was a "store of value". And let's not even get on the topic of how BTC price is so heavily manipulated by Tether, to the point that exchanges should only display BTC/USDT if they honestly wanted to reflect their dependence on Tether's "fractional reserve".
We will wait until they crash to see how the maxis will be crying that Tether is too big to fail or something like it.
Bitcoin doesn't have competition. Ethereum isn't money, and doesn't try to be money.
Why would Bitcoin be the most affected by Tether? USDT is used on all markets. It seems that Ethereum, DeFi, NFTs etc. have way more of shady stuff going on.
I didn't say anything about "trying to be money", and for the purposes of the debate it doesn't matter. BTC already failed at what it tries to be, anyway, there is no point in arguing semantics.
Re: Tether. They were constantly touting that their reserves were in BTC. When it depegs, BTC is the first that is going to crater.
How can you say that it works as money, if (e.g) when Tesla announced they were accepting BTC for payments, but they would not return the same amount of BTC if a return request was made and the price of BTC changed since the payment?
> Tether should have USD equivalent reserves
Should, but they don't. At least since 2019 they already dropped all pretenses of having USD to back all USDT they minted. With the bull run started in 2020, they've used it as justification for all their wild minting with the price of the BTC. Whenever the price of BTC started to go down, they would "miraculously" mint a bunch of USDT and use to buy more BTC - in a clear attempt of market manipulation.
You are saying you don't care if they go bust, but you should at least be honest with yourself and be open to the possibility that all the market for crypto is built on a lie. The upcoming crash will be entirely on them.
Yes, I know it's volatile and has practical issues. It gets better every day, because it's just a matter of maturing in the market. The primary purpose of money is to be a store of value, which it has done very well, from 2009 to this day.
USDT minting means that someone buys USDT with USD. There's nothing funny going on. Most of the USD in this market is invisible, because it's on exchanges, not in stablecoins. There's also USDC and BUSD, which are combined as big as USDT. I hope Tether falls, if that means cheaper Bitcoin.
> Everything worked fine when central banks succeeded in defending the gold standard.
No, this is revisionism.
By the way, you could totally use a gold standard nowadays in a centralized communist country, but if you believe in debt, risk and all that liberalist stuff, better not go back to that.
In modern economies, as production and population increase, you need more money in the system. If money is not available (because backed by gold), you'll need to augment your fractional banking ratios. One minor banking crisis and it's 1797/1893 all over again.
Bitcoin doesn't need banks, because it can be practically self-custodied, and therefore the economy runs mostly on full reserve. Fractional banking is still possible, but the risks are contained within private banks and their private IOUs.
You don't need more money, because Bitcoin is infinitely divisible. It just means that the value of Bitcoin increases, when demand grows or productivity increases.
Again you're seeing it as some kind of investment. If anything BTC is not a reliable investment Do whatever you want with your money, but don't profess to preach it as a "canary in the fiat coal mine.". It's just irresponsible.
Honestly the last few crashes have shook my confidence a bit. BTC seems to be less of the hedge I thought it was. It seems to be pretty heavily correlated with other assets.
A speculative asset is... A speculative asset. Very few people joined the BTC bandwagon on principles, most of the space is crowded by speculators trying to get rich quick, it's been pretty obvious for the past 4-5 years at least.
I've held BTC for well over 5 years now. I already got much more out of it than I initially put in so I'm not really too worried.
I actually did invest based on my principles. My faith might be a little bit shaken, but at this point I feel like I might as well see the experiment out. Maybe I am a fool.
If you really believe in collapse, why not buy land, weapons, solar and wind assets? Why buy a crypto currency that's useless without a shit ton of energy and grids (that will also stop existing in a total collapse, right?). If there is a total collapse, why'd a person care that you have btc? Why'd anyone trade btc? Wouldn't everyone barter? Your point makes no sense given itself, and I suggest you start a tautology and self contradiction book club
Don't get Bitcoin for a bet on a collapse in which sufficient infrastructure remains for a global computing network - get privacy coins. If the ledger is public someone will figure you out and use it to attack you.
I say that having done the reasoning for my own portfolio and allocating some to a "privacy basket"; Bitcoin is just the first iteration of cypherpunk ideals for money, and it has successors now.
But really, most of my holdings aren't premised on a collapse but a hedge on uncertainty about what governments are doing next. The core premises that got Bitcoin started are still in effect. You can remove all the onramps and it's still the case.
"The order further finds that Tether and Bitfinex’s combined assets included funds held by third-parties, including at least 29 arrangements that were not documented through any agreement or contract, and that Tether transferred Tether reserve funds to Bitfinex, including when Bitfinex needed help responding to a “liquidity crisis.”"
Well, good thing that the cryptoenthusiasts are not fond of regulation so what you are suggesting is totally normal and ok for the cryptospace, let the market self-regulate wink wink.
It's overcollaterized but highly dependent on USDC/Circle. Last I checked, Circle has not gone through an audit for a long while, but they do make more frequent attestations and are regarded as more trustworthy than Tether.
So, if you are "just" holding DAI it makes little sense to use at the moment. But if you still want to have some exposure to more volatile assets (e.g, ETH) I'd recommend putting it an ETH/DAI liquidity pool from either Uniswap or Loopring. I wrote about the reasoning [0] before, but the short explanation is that such a liquidity pool softens the volatility swings and also allow you to receive a good amount through swap fees.
Financial institutions have to have enough safe liquid assets to offset their risk. This is reported and monitored regularly and required to operate. Some of your money deposited with them is also protected by governments, £85k per entity in the UK. Tether is not divulging their backing assets, referencing IP. No regulated authority would accept this, for good reason. Tether does not have adequate vanilla assets otherwise they’d just say so to diffuse the heat, especially right now. So even if they have magically worked out some secret sauce asset model, it inherently has more risk. There’s a run on Tether already, $7bn as of this morning’s press. This doesn’t mean it’s about to lose its peg like Terra did, they are very different models, but the risk of further run is very real and the assets they have to support that is shrinking. There’s a good chance Tether will ride this and it would have been a good test but it feels like a house of cards. Crypto needs to weed out the rubbish to get stronger.
An entity with a single purpose (accounting to issue no more of X tokens than they have Y tokens in another account) has a vastly easier challenge (both directly, and from audit/controls perspective) than a more-powerful entity with lots of conflicting needs. There are still incentives for people at a custodial stablecoin to steal/debase, but it is a relatively tractable problem compared to e.g. federal reserve dual mandate or a non-independent central bank with even more competing concerns.
My understanding is that Luna was crushed by an attack not unlike what Soros et al. did to the British pound in 1992. No, the pound did not go to zero like Luna did, but then the UK has tangible assets in a way that Luna did not.
To reiterate your point, if a
* G7 member
* Security Council member
* NATO member
* Nuclear power
etc., etc. could not defend the pound in 1992, why does anyone expect a crypto company to be able to do it?
If tether have sufficient and sufficiently liquid assets, they shouldn’t have a particularly hard time. The cases where it fails look like:
- tether runs out of liquid assets and must sell illiquid assets at a loss to meet redemptions
- tether / market participants are not willing/able to process redemptions fast enough and the price is dislocated for a long time
- tether never had enough assets and runs out of money and stops processing redemptions
If you think that tether has sufficient good backing then it’s a lot more like maintaining the ‘peg’ of a money market fund or an etf than a peg between two floating currencies.
It is conceptually very simple to maintain a currency peg: just store 100% of reserves in the currency that you want to maintain the peg to, and promise to honor redemptions from those reserves at any time.
What you describe as "difficult" is what Terra/Luna tried to achieve: maintain a peg without keeping 100% of your reserves in the pegged currency. That is what nation states also do, which is why even they can easily fail. But that is not what USDT or USDC proclaim to do. They proclaim to implement the "simple" variant. If that is actually true (for which there are some doubts in the case of USDT, but let's just assume for the sake of discussion that Tether is truthful) they shouldn't have a hard time doing what they plan to do.
Firstly it isn’t so easy to just ‘park’ billions of dollars. Even if they’re in a bank they can be lent out by the bank.
Secondly the point is sort-of that an organisation like tether doesn’t get the choice: their purpose is to hold dollars and issue equal amounts of their IOU, just like when a bank holds shares in Volkswagen and issues an equal amount of the ADR (the ADR represents the shares held by the bank but, unlike Volkswagen stock, can trade in US markets) because their job is to hold these two meant-to-be-equivalent things rather than to hold Tesla stock instead because they think that would be less of a waste of capital.
If people felt that it was a waste of capital to put money into tethers then maybe they wouldn’t do it (but of course if you have tethers you can lend them in crypto things rather than regular things and maybe you think that’s actually better so you don’t care what tether the company does)
It is trivially easy to maintain a currency peg. I could issue one hncoin tomorrow, peg it at a dollar, and hold a dollar in escrow and my coin is pegged.
It'd hard for governments because they have to manage an economy and politics either their currency. Stable coins could end up fitting the same description but not a of them do. If they choose to just peg peg coin with reserves of the underlying and make exchange easy the peg will stick.
The comparison to a government is irrelevant though.
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[ 4.4 ms ] story [ 143 ms ] threadhttps://news.ycombinator.com/item?id=16182423
Currently at $0.9987
https://trade.kraken.com/charts/KRAKEN:USDT-USD
Trust me, dude!
Meanwhile:
Stablecoin holders could not claim deposit insurance to recoup any losses and operators were not able to access bank standing facilities
This (the losing all of your money, thing) happened in 1929 to a lot of people. Yes, it is possible to lose all your money. Yes, this can go to zero. There is a long, long way down. I just don't see how anyone in their right mind has the appetite for risk to stay in Cryptosecurities right now.
Honest question: if you truly believe that, how do you account for the infrastructure required to mine it in a post-apocalyptic society? How do you guys envision a post-apocalyptic world where BTC is even remotely viable?
How many bitcoins for my turnip?
I say all of them, and also I say you are my slave now.
I think we just did a trade in a hyper-adversarial environment.
In a more bigger-picture sense; any society that struggles to keep up large scale power plants will definitely struggle maintaining a distributed system maintaining a copy of every transaction everywhere on each node. Blockchains trade in resource waste for decentralization, so they don't work well in resource constrained environments.
In a hyper adversarial environment we want guns, ammo, access to fresh water and land that can be easily protected. Any kind of trade will be done with someone who you can meet physically, and you will be either bartering or using some completely local currency.
To think that people would depend on a global distributed ledger is so incredibly stupid, it makes me wonder if you are not just trolling.
And in post apocalyptic scenario - I would imagine food and water to be far more important than some digital coin.
In the real world a post-apocalyptic world won't have enough food to sustain basic labour, all global supply chains will cease to exist and skirmishes for arable land and drinkable water will take over. Anything remotely needing cooperation on a greater scale than a local community will be absolutely broken.
Plenty of old hardware that will cease to function in 5-10 years won't help a post-apocalyptic society for long. Constant brown outs and blackouts due to a shortage of labour, maintenance capacity (parts and labour) will absolutely wreck any chance of mining using electricity. The scarce electricity, be it solar or some lingering power plant that can continue to function with lowered maintenance will be needed to sustain life, not trade.
Solar panels need a quite complex supply chain, photovoltaic cells are a high-technology product.
Bitcoin won't exist in a post-apocalyptic scenario. This is a teenager fantasy of how humans work, and a technocratic one at that...
- Abundant power
- Hightech personal electronics
- Electronics manufacturing
- Global and reliable networking
- Education to understand it all
Remove any one of those, and i think it wont work. Now there are different kinds of apocalypses, here are some thoughts:
- It's a fair bet that electronics cannot be really manufactured in any kind of scale, and most current consumer electronics are not especially long lived. Give a decade, and most people will not have the gear to run Bitcoin.
- If you have Abundant power, i would use it grow potatoes in greenhouses, or similar, not for crypto mining.
- How would the global networking, or even local, survive the apocalypse? Given that is needed for the blockchain to sync, it seems it will stop working more-or less immediately, or worse, fork.
- Which brings me to, how would people agree on which blockchain, or fork of bitcoin to use?
- And most of all, if modern education systems fail also, how would anybody understand any of this anyway?
On the other hand, everybody understands potatoes. Boil em, mash em, stick em in a stew. Now that is the currency of the apocalypse!
People are increasingly realizing that central banks don't have any scientific reason to exist, and the economy actually runs better without them. Their only reason to exist is to give unlimited power to governments and funnel wealth from the poor to the rich. Bitcoin is the bet that what I said is actually true.
You must understand that monetary theft has always happened in many forms, in addition to central banking and fiat currency. For example, even in a gold coin economy, the rulers have always sought to debase the coins with various methods, such as mixing them with less valuable metals. In history, everyone understood that debasing gold coins was theft. Everything worked fine when central banks succeeded in defending the gold standard.
However, things changed and this theft became modern economics, and it's difficult to question, because it's "science".
There's also a lot of historical inaccuracies and rewriting of history to defend this system. For example, the great depression is partly blamed on the gold standard, but in reality it happened exactly because the gold standard was already broken (since 1914), which resulted in wildly wrong speculative monetary practices and policies.[0]
As you said there's plausible rational arguments from both sides. But then again, are the central banks even following practices based on economics, or did they become politicized and corrupted, because of their central position in the economy? We see blatant monetary corruption happening in autocracies, but is it happening in western economies too, but it's just less obvious?
I have used years to study these issues and I'm becoming more convinced every day, that it's time for a hard money standard, i.e. Bitcoin. And, I think it's inevitable, because historically, people always vote for harder money in a free market.
[0] From this perspective, the Austrian School of economics has the correct explanation for the Great Depression. https://en.wikipedia.org/wiki/Great_Depression#Austrian_Scho...
Perhaps, but the period since 1914 saw the rise of many peripherical countries, notably China, who also have a tight control over their monetary policy, and use it all the time for their economic plans. For your counterfactual to make sense, you would have to present an example of a country that developed using the gold standard.
> But then again, are the central banks even following practices based on economics, or did they become politicized and corrupted, because of their central position in the economy? We see blatant monetary corruption happening in autocracies, but is it happening in western economies too, but it's just less obvious?
There is corruption and inefficiency at every level, but I fail to see how that would change by going back to the gold standard or cryptocurrencies for that matter.
I am familiar with the Austrian line of argument, and I'm sure in your years of study you have come across many criticisms of it, so I won't bother, but let's just say I don't think this perspective has brought us tangible benefits at all. Meanwhile, the imperfect system we have has shown itself to be at least robust to major hiccups recently.
If people are denied the use of gold as money, then they can't. There are many regions, where citizens are basically prisoned by their central bank, and can't use gold or US dollars.
Also, Switzerland used gold backed currency until 1999, and they are one of the richest countries per capita. There's no reason to believe that they would have done better with a fiat currency.
> There is corruption and inefficiency at every level, but I fail to see how that would change by going back to the gold standard or cryptocurrencies for that matter.
Self-custodied Bitcoin is impossible to inflate.
> Meanwhile, the imperfect system we have has shown itself to be at least robust to major hiccups recently.
Disagree. We are now entering a long period of depression.
There is no virtue in saving. Money that is hoarded reduces "consumption" but also reduces "meaningful" investments, no matter your definition of "meaningful" and "wasteful".
> Bitcoin is impossible to inflate, like gold.
Or Litecoin. Or Bitcoin Cash, or BSV. Individually, they are all "fixed supply", but as whole, any crypto currency that enters the market and gets traded should be counted as part of the asset reserves.
Unless, of course, we get some central entity to force everyone else to adopt the Highlander approach and claim "there can be only one"...
Oopsies.
No, money has strong network effects an tends to one.
Correlation is not causation. Japan has fiat currency and has not had significant inflation for decades. Housing is affordable. It's not just because most countries have "bad" monetary policy involving fiat currency that makes it impossible to have "good" monetary policy.
> money has strong network effects
In relation to currencies controlled by central banks? When used by governments as single legal tender? Perhaps.
But just look at any chart and see how BTC market cap relative to the rest of the crypto keeps going down. The number of Ethereum wallets is already larger than BTC. BTC is not the dominant chain anymore. Whatever advantage it had in terms of "network effects", it is evaporated.
BTC is a failed experiment. It failed as a currency and it never was a "store of value". And let's not even get on the topic of how BTC price is so heavily manipulated by Tether, to the point that exchanges should only display BTC/USDT if they honestly wanted to reflect their dependence on Tether's "fractional reserve".
We will wait until they crash to see how the maxis will be crying that Tether is too big to fail or something like it.
Why would Bitcoin be the most affected by Tether? USDT is used on all markets. It seems that Ethereum, DeFi, NFTs etc. have way more of shady stuff going on.
Re: Tether. They were constantly touting that their reserves were in BTC. When it depegs, BTC is the first that is going to crater.
Not true. Tether should have USD equivalent reserves, but I don't care about them. I don't care if they go bust.
> Tether should have USD equivalent reserves
Should, but they don't. At least since 2019 they already dropped all pretenses of having USD to back all USDT they minted. With the bull run started in 2020, they've used it as justification for all their wild minting with the price of the BTC. Whenever the price of BTC started to go down, they would "miraculously" mint a bunch of USDT and use to buy more BTC - in a clear attempt of market manipulation.
You are saying you don't care if they go bust, but you should at least be honest with yourself and be open to the possibility that all the market for crypto is built on a lie. The upcoming crash will be entirely on them.
USDT minting means that someone buys USDT with USD. There's nothing funny going on. Most of the USD in this market is invisible, because it's on exchanges, not in stablecoins. There's also USDC and BUSD, which are combined as big as USDT. I hope Tether falls, if that means cheaper Bitcoin.
No, it does not. Even themselves admitted it. They have minted before just based on the "value of their reserves", which no one can really verify.
If you continue with arguments that are provably false and blatant circular logic, I think I am done here.
No, this is revisionism.
By the way, you could totally use a gold standard nowadays in a centralized communist country, but if you believe in debt, risk and all that liberalist stuff, better not go back to that.
In modern economies, as production and population increase, you need more money in the system. If money is not available (because backed by gold), you'll need to augment your fractional banking ratios. One minor banking crisis and it's 1797/1893 all over again.
You don't need more money, because Bitcoin is infinitely divisible. It just means that the value of Bitcoin increases, when demand grows or productivity increases.
Spoken like someone who everyone should listen to. /s
I actually did invest based on my principles. My faith might be a little bit shaken, but at this point I feel like I might as well see the experiment out. Maybe I am a fool.
I say that having done the reasoning for my own portfolio and allocating some to a "privacy basket"; Bitcoin is just the first iteration of cypherpunk ideals for money, and it has successors now.
But really, most of my holdings aren't premised on a collapse but a hedge on uncertainty about what governments are doing next. The core premises that got Bitcoin started are still in effect. You can remove all the onramps and it's still the case.
https://www.cftc.gov/PressRoom/PressReleases/8450-21
Tether needs to get wiped out of the face of the Earth.
[0]: https://np.reddit.com/r/UniSwap/comments/l0l0cu/making_the_i...
To reiterate your point, if a
* G7 member
* Security Council member
* NATO member
* Nuclear power
etc., etc. could not defend the pound in 1992, why does anyone expect a crypto company to be able to do it?
- tether runs out of liquid assets and must sell illiquid assets at a loss to meet redemptions
- tether / market participants are not willing/able to process redemptions fast enough and the price is dislocated for a long time
- tether never had enough assets and runs out of money and stops processing redemptions
If you think that tether has sufficient good backing then it’s a lot more like maintaining the ‘peg’ of a money market fund or an etf than a peg between two floating currencies.
What you describe as "difficult" is what Terra/Luna tried to achieve: maintain a peg without keeping 100% of your reserves in the pegged currency. That is what nation states also do, which is why even they can easily fail. But that is not what USDT or USDC proclaim to do. They proclaim to implement the "simple" variant. If that is actually true (for which there are some doubts in the case of USDT, but let's just assume for the sake of discussion that Tether is truthful) they shouldn't have a hard time doing what they plan to do.
Secondly the point is sort-of that an organisation like tether doesn’t get the choice: their purpose is to hold dollars and issue equal amounts of their IOU, just like when a bank holds shares in Volkswagen and issues an equal amount of the ADR (the ADR represents the shares held by the bank but, unlike Volkswagen stock, can trade in US markets) because their job is to hold these two meant-to-be-equivalent things rather than to hold Tesla stock instead because they think that would be less of a waste of capital.
If people felt that it was a waste of capital to put money into tethers then maybe they wouldn’t do it (but of course if you have tethers you can lend them in crypto things rather than regular things and maybe you think that’s actually better so you don’t care what tether the company does)
It is trivially easy to maintain a currency peg. I could issue one hncoin tomorrow, peg it at a dollar, and hold a dollar in escrow and my coin is pegged.
It'd hard for governments because they have to manage an economy and politics either their currency. Stable coins could end up fitting the same description but not a of them do. If they choose to just peg peg coin with reserves of the underlying and make exchange easy the peg will stick.
The comparison to a government is irrelevant though.
Pretty obvious that it's mostly smokes and mirrors. props to George for asking the right questions
But Tether honored redemptions for large holders. This does not look like the beginning of a bank run or a Tether collapse to me.