The business case is that people will buy their tokens/invest on their platform which will increase in value which will cause more people to buy in etc. If you look closely enough just about every successful blockchain project is a ponzi scheme on some level.
As far as I can tell, any defi project that isn’t an outright scam is just providing credit to people to speculate on cryptocurrencies. I’d be curious to see any counter examples. Otherwise it’s just turtles all the way down.
> providing credit to people to speculate on cryptocurrencies ... turtles
People do use it for leverage but who cares. It doesn't undermine the contracts, and certainly doesn't make the concept worthless. You can securely lend/borrow stablecoins globally with zero middlemen. What you do with the credit/interest is your own business.
That was the number provided by Bitfinex’s lawyers at a time when there were about 20 billion fewer Tethers in existence. I’d be shocked if it was over 10%. But since they won’t do an audit, we’ll only find out after everything collapses.
Given their lack of audits/transparency coupled with a Tether supply increase from 4 billion to 20 billion this year alone, I would by inclined to apply Occam’s Razor and view this as primarily market manipulation driven by Tether’s free money printer.
Yes, this has been discussed many times on HN, but I'd like to hear the specifics of the mechanism by which Tether actually influences the price of Bitcoin up and down.
According to [1] (2018) , actually getting down to the metal to track what happens in the tether blockchain isn't straightforward.
According to coincap [2] there is around 20B tether in circulation.
Also according to coincap, the Bitcoin market cap is around 380B.
Now, the question is one of market depth: can 20B be used to manipulate a 380B market.
What I would very much like to see is an aggregate market depth number for - say - the top 30 exchanges. Does anyone have a reference for this?
> Now, the question is one of market depth: can 20B be used to manipulate a 380B market.
I think the answer to this is yes, but I’d suggest a further specification: could it be used to manipulate a 380B market without breaking the dollar peg, which I haven’t been able to figure out a good mechanism for.
That said, I do think there’s a reasonably probable case where USDT unraveling is an existential threat to BTC: if a large portion of USDT reserves are actually in BTC, a run on USDT could cause Tether to start needing to sell BTC holdings at market to hold the peg, which would drive the prices down.
AFAIK Tether has not said that it is backed by USD, just by “assets”, and hasn’t completed an audit.
That's 20B of "money" supposedly going into the market. A market cap of 380B doesn't mean 380B went into the market. 20B of "money" could easily move such a market significantly.
If I have a billion coins, and I sell one for $1, it has a market cap of 1B, but only $1 went into the market.
A major chunk of Tether lives on Ethereum and is mostly being used for on-chain decentralized money-markets using smart contracts. (Eg Unisawp, MakerDAO, CurveFi and Compound)
Tether is issued on multiple blockchains. Omni is Bitcoin based, and recently most of it moved from Omni to Ethereum ($12.6 bil). Others include Tron ($6.4 bil), EOS ($90 mil), Liquid ($16.5 mil), and so on.
Just about everyone knows that Tether is a ticking time bomb waiting to blow up the cryptocurrency markets. But for now Tether makes number go up and currently that’s the only thing that matters.
I'm not a Bitcoin advocate, I just recognize the value the invention provided and I recognize that this whole cryptocurrency space relies on it being successful for long enough for anything else usurp it. If Bitcoin got hacked right now, everything crashes with it.
Compared to Bitcoin, there are consensus mechanisms that are a lot faster (3 orders of magnitude), cheaper (almost free transaction cost), near instant finality (seconds, not 1 hour) and leave almost zero carbon footprint. They just haven't been proven out at scale yet.
PoS and Sharding on ETH (part of ETH2) should theoretically allow it to surpass VISA's transaction bandwidth. (Visa Currently reported to be around 65k Tx/s, though average volume is somewhere in the 1-5k Tx/s)
Yes, and the production launch of that new consensus mechanism is what happened today on Ethereum. It runs on a minimum of 16K nodes, and last I checked had about 60% more than that.
I guess it depends on what you mean by cataclysmic scenarios. I can’t imagine many cataclysmic scenarios with working electricity and internet, to say nothing of mass-produced phones/personal computers.
Moving fast and breaking people is, horrifically, the status quo. Special interests in healthcare, enabled by heavy regulation, go great lengths to insulate doctors from the consequences of providing poor care and the rewards of providing excellent care. We all suffer as a result.
Your experience with healthcare might be different, but my own experience in the US has been this: I rarely see doctors that have later contacted me to see how the treatment they prescribed was working. Nearly every other service or product I purchase entreats me with a satisfaction survey at some point. I've asked myself: why don't doctors care about my outcome?
I have concluded that while I am the one with the sick body and paying money to fix myself, I am not the only customer. The regulatory agencies, credentialing schools, special interest groups, pharmaceutical companies, and healthcare unions are too.
There are a lot of cryptocurrency folks talking up Bitcoin as a hedge against inflation and Federal Reserve policies. But when it comes to Tether printing billions of counterfeit dollars every month to inflate the cryptocurrency markets... crickets.
Riiiiight, because no cryptocurrency folk has ever criticized Tether. That is sarcasm, it is a recurring topic for most of last decade till now.
Inductive reasoning suggests that Tether dollars are mostly and usually created accurately as they have weathered state actor lawsuits, some segments of the market itself choose competitors primarily for better transparency and a lack bad history.
Given the similar percentage growth of similar stablecoins like USDC and DAI, there just is a market for stablecoins where capital completely skips bitcoin to enter the digital asset market. USDC issuance size is just as large as Tether’s has been in the recent past, while Tether was weathering the exact same controversies as it has today. This suggests there is just a market for stablecoins, simple as that. This actually bolsters the general credibility of Tether functioning mostly as they always claimed it did where Tether was created only in response to deposits on Bitfinex (except when it wasnt, but usually).
So, there are problems with tether and other stablecoins, but they can and may well be regulated, as cryptoassets become more ingrained in the global financial systems. I am shocked that bitcoin is still around, and as I have said, the longer it is around, the more legitimacy it gains.
Keep in mind, the same cryptography that secures global banking system, is the same cryptography used to secure bitcoin transactions.
Tethers are not printed out of thin air. But me saying this doesn’t mean anyone on HN will believe it, although they similarly believe other random Internet strangers because it agrees with their preconceived desire that Tether is fraudulent.
Don't you see the irony of that? When the New York AG focused their lasers onto Tether not being back 1:1, it was because it became unbacked, which ironically squashes the assumptions people had for all those the years prior, because it was functioning as the company said it was the whole time, until it wasn't.
No, the authorities specifically said it was backed 1:1 like Tether said, until Tether became a self-referencing meme of itself and NY moved on them when it wasn't. Basically most of the time, people were wrong about Tether.
Is this defense more nuanced than "before they committed fraud they didn't commit fraud"? Yeah, i guess you could see that as a silver lining, but it puts it squarely in the past.
Its not a defense and the point is that people were wrong about tether most of its lifespan and most of the time even after they actually went fractional reserve.
If you said Tether was printing non-backed Tethers in 2017 and pumping the market, you were wrong.
If you said it in early 2018 you were wrong.
Afterwards you would have been mostly wrong.
The product does not offer transparency that competing products do. And thats it. You have no way of knowing if you are wrong or not until a filing shows up in court later and even then it is just part of an allegation.
Tether has a $17bn marketcap because about $17bn dollars were deposited into the Tether printer and are still there and that was true most of the time despite many people not wanting to believe it during the times that it was 100% true until ironically ceasing to be 100% true.
I’m not sure why you’re being downvoted. I’ve seen this happen to several talented but overly trusting people. Sometimes it’s best to just keep your head down and admit that institutional dysfunction is beyond your capacity to change.
All that and you still think housing records should be on a public blockchain? What happens if someone steals my private key? Do they now own my house? If we rely on public records and the legal system to sort it out then why have a decentralized and immutable database in the first place?
> All that and you still think housing records should be on a public blockchain? What happens if someone steals my private key?
Then you lose your house.
Here's the alternative: someone steals your house, and they didn't have to steal your private key first. It happens every few years. Usually the victims have been overseas for a while.
