Jump to content

Will The Tether Scandal Hurt Ripple?


Recommended Posts

I’ve been reading a lot about the Tether printing and how it is pumping prices on a lot of these exchanges. Does this concern anybody here? Do we think, if this scandal comes to light, it’ll have a significant impact on Ripple and crypto in general?

(I’m a long-term XRP #hodler and I don’t day trade, so this isn’t FUD, just general concern over some of the allegations I’ve been reading.)

 

Link to post
Share on other sites
  • Replies 79
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

Popular Posts

I've kept an eye on Tether for quite some time.. never posted about it for whatever reason. personally, i believe the entire crypto market is going to be blindsided by a behemoth tidal wave of 'someth

If Tether goes down it''s gonna get real ugly, real fast. Copied from another thread:  Keep in mind that this is simplified for explanation purposes, but is roughly the idea: 1) People reali

Yep - saw that news. But if the reaction is anything like the Bitfinex "hacked" accounts from August 2016 or the tether "theft" from last Nov, then we only have about, oooh, 3 or 4 days before we see

4 minutes ago, TrulyRaNd0m said:

Does this concern anybody here?

nope. 

as time goes on, i think more and more projects/tokens will separate themselves from one another (and this is already beginning to happen). xrp is completely different than tether, and they've gone to great lengths to create greater market confidence (ie. escrow lockup, contracts for founders selling their holdings, etc). not to be biased, but ripple/xrp is honestly one of the most legitimate and transparent companies/projects in this space.

 

Link to post
Share on other sites

If Tether goes down it''s gonna get real ugly, real fast.

Copied from another thread:  Keep in mind that this is simplified for explanation purposes, but is roughly the idea:

1) People realize that 1 USDT is not equal to 1 dollar.

2) People who hold tether begin selling all of their USDT for other crypto at deeply discounted rates. As more people sell, the sell price of Tether on exchanges goes down at an increasingly fast rate because less people are willing to buy tether at anywhere near $1.

3) All or most of the margin lending on Bitfinex and other exchanges is done through Tether. This means that all of the futures contracts on exchanges also go to zero since they are getting paid in useless tether instead of USD. This is even worse because this process is largely done with loaned money and thus represents a lot bigger volume in "USD" that is lost. (Hard to explain if you don't know what leverage is, but try looking it up.)

4) A tremendous amount of assets which before were seen to have value now have little or no value. People notice and begin to panic. People start moving their coins to FIAT exchanges and sell for cash.

5) The exchanges go down under tremendous volume contributing more to the panic. More people decide to move out of crypto. The perceived value of crypto begins to plummet.

Note: There is no underlying asset to stabilize this price. If we were talking about gold for instance, there would at least be some amount of people who USE gold to make jewelry for instance. The same with stocks because it actually represents ownership in a company that has assets. If the price of gold or stocks were to plummet, there would at least be SOME buyers buying things up for them to use. In crypto this is not the case.

6) If and when the exchanges come back up, they don't have 100% of the entire market cap on hand (in fact, they have an obscenely low amount. The total capital investment into crypto is around 10 billion dollars vs. the market cap of 700 billion I can speak more about why in another post.)

7) Fiat buyers stop buying crypto at market price and instead start paying extremely discounted rates to people looking to leave. This is to keep themselves from going out of business. All cryptocurrency prices plummet.

8) People see prices dropping and further panic, and the process continues. Since the value in a cryptocurrency is not tied to its utility (the value is solely in the price tag at an exchange. There is very little you can go out and purchase directly with crypto. 99% of the transactions for Fiat or goods and services are through buying/selling through exchange.) This means that the value will plummet much harder than a FIAT currency if this were to happen.

Link to post
Share on other sites

I'm wondering how we get from 1 to 2 in the list above?

Personally I don't understand how tether works but it is obvious to anyone that it isn't worth the same as a dollar, as it has a price in dollars. Why would people suddenly begin dumping their tether based on information they already know, unless perhaps their was an avalanche of articles trying to convince them to do so?

Edited by elias
Link to post
Share on other sites
25 minutes ago, elias said:

I'm wondering how we get from 1 to 2 in the list above?

Personally I don't understand how tether works but it is obvious to anyone that it isn't worth the same as a dollar, as it has a price in dollars. Why would people suddenly begin dumping their tether based on information they already know, unless perhaps their was an avalanche of articles trying to convince them to do so?

Let's say people try to cash out.  They would go from BTC > USDT>Fiat.  The problem is if there isn't actual fiat backing it the way it's supposed to be, the exchange won't have enough money in reserve to cash everyone out.  So if they are continually making more USDT out of thin air, eventually during a crash the **** will hit the fan and people will try to cash out 100s of billions of their USDT but the exchange will only have a fraction of that.  Does that make sense, I know I jabbered a little?

Link to post
Share on other sites

XRP would not be immune from cross-contamination if the scenario described above were to go down.  If I worked for Ripple, I would honestly contemplate cost vs benefit of allowing XRP to be cross-traded against CCs tied to Tether (i.e. BTC).  In my opinion, the only way to limit fallout would be by ensuring that XRP can only be exchanged for Fiat as that would ensure that valuation was backed by hard currency rather than by air.  Tether collapse in that scenario would still adversely impact the token value due to adverse market sentiment, but fallout would be limited by strong fundamentals and sound foundation built on Fiat.

Now - whether this would be practical or not, that's another story...

In short - any CC that has any exposure to Tether - regardless of underlying fundamentals - is presently at risk.

Link to post
Share on other sites
57 minutes ago, Gorgalosk said:

If Tether goes down it''s gonna get real ugly, real fast.

Copied from another thread:  Keep in mind that this is simplified for explanation purposes, but is roughly the idea:

1) People realize that 1 USDT is not equal to 1 dollar.

2) People who hold tether begin selling all of their USDT for other crypto at deeply discounted rates. As more people sell, the sell price of Tether on exchanges goes down at an increasingly fast rate because less people are willing to buy tether at anywhere near $1.

3) All or most of the margin lending on Bitfinex and other exchanges is done through Tether. This means that all of the futures contracts on exchanges also go to zero since they are getting paid in useless tether instead of USD. This is even worse because this process is largely done with loaned money and thus represents a lot bigger volume in "USD" that is lost. (Hard to explain if you don't know what leverage is, but try looking it up.)

4) A tremendous amount of assets which before were seen to have value now have little or no value. People notice and begin to panic. People start moving their coins to FIAT exchanges and sell for cash.

5) The exchanges go down under tremendous volume contributing more to the panic. More people decide to move out of crypto. The perceived value of crypto begins to plummet.

Note: There is no underlying asset to stabilize this price. If we were talking about gold for instance, there would at least be some amount of people who USE gold to make jewelry for instance. The same with stocks because it actually represents ownership in a company that has assets. If the price of gold or stocks were to plummet, there would at least be SOME buyers buying things up for them to use. In crypto this is not the case.

6) If and when the exchanges come back up, they don't have 100% of the entire market cap on hand (in fact, they have an obscenely low amount. The total capital investment into crypto is around 10 billion dollars vs. the market cap of 700 billion I can speak more about why in another post.)

7) Fiat buyers stop buying crypto at market price and instead start paying extremely discounted rates to people looking to leave. This is to keep themselves from going out of business. All cryptocurrency prices plummet.

8) People see prices dropping and further panic, and the process continues. Since the value in a cryptocurrency is not tied to its utility (the value is solely in the price tag at an exchange. There is very little you can go out and purchase directly with crypto. 99% of the transactions for Fiat or goods and services are through buying/selling through exchange.) This means that the value will plummet much harder than a FIAT currency if this were to happen.

So, this is what looks like a sequence of eight events or situations, cascading from one to the next.  8 follows from 7 which follows from 6 which...

Now think of something else, i.e. the many possibilities existing at any point in time regarding what may happen.  As an analogy, think of a tree with many, many branches. Every branch has a number of smaller branches. And on and on.  At the end of many of these smaller branches is an outcome.  The sequence of eight steps proposed here is but one of many possibilities, one path of many through the 'tree.'  In fact, some steps list several events, but I will gloss over that here. At every step, the step that immediately follows in this list is but one of many that could occur. We don't know how many possibilities exist at every step.  Neither does the original poster.  In other words, is step 4 really the only thing that can happen after step 3?  If not, how likely is it?  What else could happen?

Furthermore, as when making a plan, things do not remain static once you come face to face with the enemy.  As a consequence of any of these steps actually occurring, other (additional possibilities) get added to the list of alternatives.  For example, some government intervenes, which in itself causes the number of branches at later steps to grow in unforeseen ways. In decision trees, you need information as to the relative likelihood of every branch to understand what the likelihood is of different outcomes at the end of a number of paths.  You also need to understand how truly dependent events are on one another, and whether you are dealing with correlation or causation. 

This list is but a single path, with no evidence presented by the original poster as to the likelihood of the next step along that path occurring relative to others at any decision/branching point.  While it may well be what happens, it is quite another thing to view the entire sequence as likely or unavoidable once the first step occurs.

Many doomsday scenarios have inevitability built in, which is in part what makes them ominous to begin with and appeals to many in a morbid way. 

I have said it before, 'if you're going to forecast, forecast often.'

   

Link to post
Share on other sites
5 minutes ago, gomoku said:

So, this is what looks like a sequence of eight events or situations, cascading from one to the next.  8 follows from 7 which follows from 6 which...

Now think of something else, i.e. the many possibilities existing at any point in time regarding what may happen.  As an analogy, think of a tree with many, many branches. Every branch has a number of smaller branches. And on and on.  At the end of many of these smaller branches is an outcome.  The sequence of eight steps proposed here is but one of many possibilities, one path of many through the 'tree.'  In fact, some steps list several events, but I will gloss over that here. At every step, the step that immediately follows in this list is but one of many that could occur. We don't know how many possibilities exist at every step.  Neither does the original poster.  In other words, is step 4 really the only thing that can happen after step 3?  If not, how likely is it?  What else could happen?

Furthermore, as when making a plan, things do not remain static once you come face to face with the enemy.  As a consequence of any of these steps actually occurring, other (additional possibilities) get added to the list of alternatives.  For example, some government intervenes, which in itself causes the number of branches at later steps to grow in unforeseen ways. In decision trees, you need information as to the relative likelihood of every branch to understand what the likelihood is of different outcomes at the end of a number of paths.  You also need to understand how truly dependent events are on one another, and whether you are dealing with correlation or causation. 

This list is but a single path, with no evidence presented by the original poster as to the likelihood of the next step along that path occurring relative to others at any decision/branching point.  While it may well be what happens, it is quite another thing to view the entire sequence as likely or unavoidable once the first step occurs.

Many doomsday scenarios have inevitability built in, which is in part what makes them ominous to begin with and appeals to many in a morbid way. 

I have said it before, 'if you're going to forecast, forecast often.'

   

I don't disagree with you at all.  I'm just trying to give an example of how this could possibly go down so people have a better grasp of the situation.  There are many variables and tons of different outcomes.  If I come off as paranoid or being a FUD spreader than I apologize but this situation is something i'm passionate about as I think it can have potentially catastrophic effects on the entire sector.  People are obviously free to have their own opinions and make their own decisions.  The massive danger associated with the USDT situation is simply my opinion.

Link to post
Share on other sites
Just now, Gorgalosk said:

I don't disagree with you at all.  I'm just trying to give an example of how this could possibly go down so people have a better grasp of the situation.  There are many variables and tons of different outcomes.  If I come off as paranoid or being a FUD spreader than I apologize but this situation is something i'm passionate about as I think it can have potentially catastrophic effects on the entire sector.  People are obviously free to have their own opinions and make their own decisions.  The massive danger associated with the USDT situation is simply my opinion.

No need to apologize. And there are no bad questions. Except 'when moon'? perhaps. ;-) 

I am also just giving an opinion as to scenarios that are sometimes presented as quasi-inevitable.

Link to post
Share on other sites
1 hour ago, Gorgalosk said:

I don't disagree with you at all.  I'm just trying to give an example of how this could possibly go down so people have a better grasp of the situation.  There are many variables and tons of different outcomes.  If I come off as paranoid or being a FUD spreader than I apologize but this situation is something i'm passionate about as I think it can have potentially catastrophic effects on the entire sector.  People are obviously free to have their own opinions and make their own decisions.  The massive danger associated with the USDT situation is simply my opinion.

I guess the question is...would XRP and crypto in general recover? 

Link to post
Share on other sites
23 minutes ago, invest2lose said:

why do people have to go through tether to go to fiat? can't they just go through btc or ethereum to fiat?

I believe that traders were moving in and out of USDT as a substitute for going to fiat, trying to avoid triggering a taxable event. The creators of tether have avowed that there is a one-for-one backing of tether with USD... at least that's my understanding.

Link to post
Share on other sites
×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.