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Tether (USDT) is credit created by Bitfiniex (?) and is pegged to the USD. If there is one thing we all know about pegs, its that they never last. 

The short story here is that someone creates lots of USD-credit (USDT), uses it to buy assets (basket of crypto), which leads to price increases and an increase of exchanges and people holding that USD-credit (USDT). When people believe that there is an insufficient amount of actual dollars for conversion to USD, people to exit the market in the form of a "bank run" as everyone attempts to sell everything simultaneously as the market price of the USD-credit and associated assets collapses towards 0. 

However, most exchanges have fierce capital controls, which may reduce the possibility of a run. Secondly... ? I don't have a secondly. 

I'm guessing that the tether implosion will happen along with the stock market next year as the Fed raises rates, probably around the time time of Brexit. Or there's nothing to see here and I can go stick my head in the sand. :connie_hooked:   

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Tether works, until it does not.

If you think you can trade 1 USDT for 1 USD, then it works. And why not, makes life easy.

The backing is an interesting question, because do you think your FIAT bank is similarly geared? They also could not afford to repay every customers their balance tomorrow either (they've lent a whole bunch out as loans, mortgages etc).

Lack of confidence will be what kills tether (if at all). As soon as enough people (or one whale) loses faith to the point they sell at 1 or 2 cents under $1... then it all falls apart from there. 

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Look at the 24h volume, Tether is second and has been second for a while now.

 

USDT provide liquidity what will happen when said liquidity is gone and major exchanges seized for participation in massive money laundering operation?

 

My bet is that I'm gonna see MtGox all over again.

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9 minutes ago, IdzieWojnaIdzieWojna said:

Look at the 24h volume, Tether is second and has been second for a while now.

 

USDT provide liquidity what will happen when said liquidity is gone and major exchanges seized for participation in massive money laundering operation?

 

My bet is that I'm gonna see MtGox all over again.

Great buying opportunity

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21 minutes ago, woytow said:

Great buying opportunity

That's how I see it (but only for handful of tokens as the rest of them will simply exit scam).

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57 minutes ago, XRP-JAG said:

The backing is an interesting question, because do you think your FIAT bank is similarly geared? They also could not afford to repay every customers their balance tomorrow either (they've lent a whole bunch out as loans, mortgages etc).

Lack of confidence will be what kills tether (if at all).

This! 

Do exchanges have enough fiat when there’s the equivalent of a bankrun on them?  And why would people run? 

Lack of confidence in crypto I guess. And why that? 

We’re in a risky business, with many “ what ifs” . So is life. What if I get a heart attack tomorrow? 

Until it’s proven that Bitfinex ( and other exchanges) won’t be able to sustain a stress test regarding a run on USDT/USD , this “what if” is by definition spreading Fear Uncertainty and Doubt. 

Although it might not be the case, I’m living my life assuming I’m still alive tomorrow. 

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IMO they are not backed 100%. I mean 1.3B USD?

The answer can only come from an external audit, but in the last try they weren't able to complete it because of lack of collaboration with Tether.

I think there is something fishy...but time will tell.

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22 minutes ago, tulo said:

 

I think there is something fishy...but time will tell.

Yes I'm pretty confident there is a lot fishy with Tether.  But I think the last few months of pump and dumps after the Testher issue became more prominent has given those involved time to de-leverage it to a large extent if not completely.  Perhaps not.

As you say...  time will tell.

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18 minutes ago, tulo said:

IMO they are not backed 100%. I mean 1.3B USD?

The answer can only come from an external audit, but in the last try they weren't able to complete it because of lack of collaboration with Tether.

I think there is something fishy...but time will tell.

The question is : do they legally have to be backed 100%?  As we all know banks don’t have ( and are legally not bound to have) all savings backed 100%. Even if ( only) 10% of all savings is (attempted to be) withdrawn in 24 hours, there’s a huge problem ( mainly for all clients...).

Authorities are raising the liquidity thresholds and stress test minimum, but a bankrun, and fail, can always happen if confidence falls down for one reason or another.

So maybe the question if 100% is backed is legally interesting, the real question is if it’s really necessary in normal and/or in worst case scenario’s to have a 100% backing. And if not: how much is enough and how do they meet up to that number? 

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6 minutes ago, Ripple-Stiltskin said:

The question is : do they legally have to be backed 100%?  As we all know banks don’t have ( and are legally not bound to have) all savings backed 100%. Even if ( only) 10% of all savings is (attempted to be) withdrawn in 24 hours, there’s a huge problem ( mainly for all clients...).

Authorities are raising the liquidity thresholds and stress test minimum, but a bankrun, and fail, can always happen if confidence falls down for one reason or another.

So maybe the question if 100% is backed is legally interesting, the real question is if it’s really necessary in normal and/or in worst case scenario’s to have a 100% backing. And if not: how much is enough and how do they meet up to that number? 

I think legally they are not, BUT since they claim to be 100% backed it's a matter of thrusting them.

At the end all crypto value was "created out of thin air", so in comparison USDT is better :) 

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13 minutes ago, tulo said:

I think legally they are not, BUT since they claim to be 100% backed it's a matter of thrusting them.

At the end all crypto value was "created out of thin air", so in comparison USDT is better :) 

Every time I give a company a credit-line of say 10 million, I’m “ creating money out of thin air” as a banker....

But you’re saying that their trustworthyness ( is that English?) lies in their statement being true or not. Are they telling the truth or not? A fair question because indeed it’s all about trust where money ( and love..) is involved.

I know bankers don’t always tell or have told the truth....( sometimes with the argument that the truth would be harmful for the general trust in banks...haha). 

 

Edited by Ripple-Stiltskin
It’s trustworthiness

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9 hours ago, Ripple-Stiltskin said:

Every time I give a company a credit-line of say 10 million, I’m “ creating money out of thin air” as a banker....

But you’re saying that their trustworthyness ( is that English?) lies in their statement being true or not. Are they telling the truth or not? A fair question because indeed it’s all about trust where money ( and love..) is involved.

I know bankers don’t always tell or have told the truth....( sometimes with the argument that the truth would be harmful for the general trust in banks...haha). 

 

Except you're not, because if you give a company a line of credit you better be willing to pay them that 10 million when they ask for it. Otherwise it's not a very good line of credit. So you need to be able to back that loan with cash on hand. 

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