Tether: not even a scam

[Twipple]

I was thinking of using Tether as a dollar proxy in trading swings in BTC and others.
That should work better when most cryptos go up and down at the same time.
It has 100 million units and good volume. Should be fine for risking small amounts of
money for a few days between buying/selling other cryptos.

Someone just pointed me out to a clause in their Terms and COnditions, saying that it should not be used for money laundering. I am unsure what all does that cover. But if they have the ability to pull out coins from someone's wallet who does that, then it would be the most stupid investment ever.

[CoinHoarder]

But if they have the ability to pull out coins from someone's wallet who does that

To my knowledge... the Omni layer, which is what Tethers are issued on, does not have this feature.

[Twipple]

But if they have the ability to pull out coins from someone's wallet who does that

To my knowledge... the Omni layer, which is what Tethers are issued on, does not have this feature.

You are right. Someone just answered my question about Tether on another thread here: https://bitcointalk.org/index.php?topic=1956181.msg19428993#msg19428993

Actually it is indeed screwed up. Can't trust them with my btc it seems.

[CoinHoarder]

I think the safer decentralized USD-pegged assets at the moment are bitUSD and the STEEM dollar... because they are at collateralized and autonomous.

However, Tether does trade at a smaller spread. So, if you are day trading (or day+ trading) Tether is probably the best option. If you are a longterm bear though, bitUSD/SDdollar is probably a better option. It is yet to be seen if Tether can hold up in the bearish of bear markets.

[ulhaq]

See my above post on bitUSD. It is not stable. Neither are Steem dollars, there is no way for them to maintain the peg. That's why the usage of both of these are minimal.

To those of you asking why the price of tether fluctuates, it is simple - supply and demand. No one can say, "ok, I am creating a currency and it has a fixed value of $1.00 for each unit of the currency." If that were the case, then anyone can create billions of dollars out of thin air by making a cryptocurrency. Read the tether whitepaper if you want more information, and there are few other threads like this one. They are taking actions to make sure that the peg is maintained, but it is not foolproof.

If you cannot convert your USDT into USD, then obviously it cannot have a value of 1 USD each. That's why the price fell below $1, when there were problems with American banks. When ppl want to quickly cash out BTC and others into something stable, ppl convert it into USDT. But if there is not enough supply of it to meet that demand, then the price has to go up, which is why you have periods when it is above $1.

[Bancorholder]

I'm actually worried that almost any day now the crypto Market will crash. Which exchanges actually use USD and not USDt?

[CoinHoarder]

See my above post on bitUSD. It is not stable. Neither are Steem dollars, there is no way for them to maintain the peg. That's why the usage of both of these are minimal.

You can say what you want, but historical price graphs show both being quite stable compared to other cryptocurrencies and crypto assets... I prefer to analyze them based on historical data rather than conjecture.

The usage of both is slowly growing, the spread is slowly getting smaller, and liquidity is slowly rising. It takes a while for such a design to mature, but it has come a long ways since its conception.

[ulhaq]

See my above post on bitUSD. It is not stable. Neither are Steem dollars, there is no way for them to maintain the peg. That's why the usage of both of these are minimal.

You can say what you want, but historical price graphs show both being quite stable compared to other cryptocurrencies and crypto assets... I prefer to analyze them based on historical data rather than conjecture.

The usage of both is slowly growing, the spread is slowly getting smaller, and liquidity is slowly rising. It takes a while for such a design to mature, but it has come a long ways since its conception.

To analyze solely on the basis of historical data in any financial market is a big mistake. Past performance is not indicative of future performance. With such low market caps, it is easy to maintain a peg. That does not imply underlying soundness. When there is very little or poor quality data, it is better to throw it out then to make decisions based on it. You mention "conjecture" but I have clearly stated the analysis that underlies the rationale in previous posts. You have not pointed out any flaws in the reasoning.

[European Central Bank]

You can say what you want, but historical price graphs show both being quite stable compared to other cryptocurrencies and crypto assets... I prefer to analyze them based on historical data rather than conjecture.

for something claiming to be what they are, there should never be the slightest question of price variance. if they can't offer a rock solid peg then they serve zero purpose. pegs don't survive. those two have already blown it, tether won't be an exception either.

[CoinHoarder]

See my above post on bitUSD. It is not stable. Neither are Steem dollars, there is no way for them to maintain the peg. That's why the usage of both of these are minimal.

You can say what you want, but historical price graphs show both being quite stable compared to other cryptocurrencies and crypto assets... I prefer to analyze them based on historical data rather than conjecture.

The usage of both is slowly growing, the spread is slowly getting smaller, and liquidity is slowly rising. It takes a while for such a design to mature, but it has come a long ways since its conception.

To analyze solely on the basis of historical data in any financial market is a big mistake. Past performance is not indicative of future performance. With such low market caps, it is easy to maintain a peg. That does not imply underlying soundness. When there is very little or poor quality data, it is better to throw it out then to make decisions based on it. You mention "conjecture" but I have clearly stated the analysis that underlies the rationale in previous posts. You have not pointed out any flaws in the reasoning.

My opinion is not based off of purely historical data, but also logical reasoning. In my mind, you have not proven why bitUSD will not work. Half of the things you posted stemmed off of misunderstanding how bitUSD works, and the other half is conjecture based off of incomplete information. bitUSD has been thoroughly analyzed and tweaked over the course of several years by the Bitshares community. There are many hundred page long threads of discussion analyzing the merits of such. You just started trying to udnerstand it a week ago...

I don't have a lot of time to spend on the forums nowadays. I am working two jobs and developing a web site in my spare time... effectively I am working three jobs. I have nothing to gain by trying to convince you otherwise, so I prefer just to let the free market prove you wrong over time. (As it has the past few years, but apparently that isn't a big enough sample size for you...)

[ulhaq]

Not weeks ago, months ago. Initially you stated I was misunderstanding it, but then I posted the link which confirmed what I said. But I think the free market will prove me right. So we will see in a few years who is right. We disagree on the interpretation of the past few years. It has 3 times been below $.80 and almost always is trading about $1.00 or below $1.00. I do not call that stable.

[CoinHoarder]

Ok... it seems there is some things I still need to clear up.

Not weeks ago, months ago. Initially you stated I was misunderstanding it, but then I posted the link which confirmed what I said. But I think the free market will prove me right. So we will see in a few years who is right.

You were wrong in stating people need to pay $2+ to get $1 of bitUSD. People don't need to pay $2 for $1 worth of bitUSD unless they want to bet on the price of the Bitshares token rising against the dollar. If they don't want to do that, then they can simply purchase $1 of bitUSD off of exchanges for approximately $1.

We disagree on the interpretation of the past few years. It has 3 times been below $.80 and almost always is trading about $1.00 or below $1.00. I do not call that stable.

You can say what you want, but historical price graphs show both being quite stable compared to other cryptocurrencies and crypto assets.

Compare the stability of bitUSD compared to other cryptocurrencies and crypto assets.... the difference is obvious. They might not be stable enough for your liking, but they seem to be stable enough for a lot of people based off of usage statistics.

Apparently, bitUSD, bitCNY, etc. (plus all other smartcoins) are stable enough to garner $1,861,211 worth of volume, and a combined smartcoin market cap exceeding $14,788,736. The volume metrics do not even account for trading against user issued assets like Open Ledger's IOUs. A large percentage of volume is therefore not tracked on Coin Market Cap, and the total Bitshares DEX's volume is $9,741,567.

https://coinmarketcap.com/exchanges/bitshares-asset-exchange/
Click on each asset to see the Market Cap of each tracked Smartcoin.

More accurate volume statistics:
https://cryptofresh.com/assets

In summary, although they might not always trade $1 to $1, Smartcoins are sufficiently stable enough for their respective use cases (hedging cryptocurrency investments, ecommerce, etc.)

But I think the free market will prove me right. So we will see in a few years who is right.

Many people have said the same for the past few years, and they are slowly being proved wrong. You are late to make such accusations IMO. Preston Byrne and company are slowly but surely being made to look silly for such conjecture.

[ulhaq]

We will have to agree that we disagree, except that I stand corrected on needing $2 for $1 in bitUSD. I do not know why you are comparing bitUSD to other crypto. The only comparison that makes sense is to USD and to other pegged assets like USDT. If you look at historical prices of USDT vs. bitUSD there is massive volatility in bitUSD while there are only a few instances in which tether is not exactly $1.00.

Right now it is off 1.7%! That is not a small amount when we are talking about an asset whose only purpose (as European Central Bank pointed out above) is to maintain parity with the dollar.

As to whether people are being proved wrong over the past few years, that is conjecture on your part. The way to evaluate bitUSD is to look at its market cap compared to the total market cap of crypto, and to evaluate it over time. If the total crypto market cap doubled, there should be twice the need for bitUSD. If bitUSD as a percentage of total crypto decreases over time, then the market is proving that bitUSD is flawed. A second way to evaluate it is to compare it to other "pegged" USD assets, such as USDT. Because if ppl feel less of a need to get out of crypto, the value of all pegged assets could fall. But a comparison among them is fair. Right now the data are:

bitUSD: 3.95 x 10^-3 percent of total crypto market cap ($107 billion), bitUSD market cap of $4.2 million
USDT: 0.12% of total crypto market cap, $130 million

Right now tether has 31x the market cap of bitUSD.

Let's see what happens to these numbers over time. I predict relative market cap of bitUSD will shrink, both in relation to tether and overall market cap.

Adding up all the other pegged assets, other than USD, does not really have relevance, because we are talking about pegging to USD. Naturally the number will be higher if all the other pegged assets are included.

[xbiv2]

Tether is good, but not for investment.

[CoinHoarder]

You claim a more fair comparison is bitUSD versus Tether, but that is an unfair comparison. You can't compare Tethers to bitUSD... they are two completely different things.

One is fully decentralized, and pegged by free market dynamics on a decentralized exchange.

The other is fully centralized, and pegged by a promise from a company to maintain the peg on centralized exchanges.

There are some big differences there.

Even comparing Tether adoption versus bitusd adoption is flawed. Tether started with a large amount of private investment capital, and was able to instantly use that to create a large amount of liquidity. I speculate that it also used that to gain trading pairs on some exchanges, because it almost instantly became a "base" pair on some of the biggest exchanges trading against multiple cryptocurrencies on each one.

bitUSD on the other hand has to slowly and organically grow over time due to its free market based peg. As usership grows, market depth and liquidity will increase, which will also reduce the spread and volatility. But it will take a while to reach "critical mass" where the design works optimally.

The way to evaluate bitUSD is to look at its market cap compared to the total market cap of crypto, and to evaluate it over time. If the total crypto market cap doubled, there should be twice the need for bitUSD. If bitUSD as a percentage of total crypto decreases over time, then the market is proving that bitUSD is flawed.

By your own stated metric, bitUSD is actually doing pretty well.

Oct 2014:
bitUSD:
Market Cap: $392,539
Bitcoin:
Market Cap: $5,241,480,575

Today:
bitUSD:
Market Cap: $4,252,534 +1083%
Bitcoin:
Market Cap: $41,066,547,811 +783%

But your metric is flawed because it doesn't account for market dynamics. Right now there is higher demand for bitUSD and Tethers due to the bearish nature of the cryptocurrency market, as evidenced by ballooning market caps of both in recent time. When the cryptocurrency market is bullish, their market caps will shrink. This metric will be different if taken at a bearish or bullish time in the market.

Not to mention the combined network effects of all cryptocurrencies (and even Bitcoin alone) is exponentially larger than the network effect of bitUSD, therefore they will grow at a faster rate. Bitcoin's (and other cryptocurrencies) usage, value, and market cap growth is effectively 98% based on its network effect.

You keep citing that bitUSD is highly volatile, but fail to see that it is way more than stable enough for one of its main uses (which is the main reason why people use Tether too) is to hedge from cryptocurrency volatility or a cryptocurrency bear market. Comparison versus crypto was meant to show that it is quite stable over the long run... which again is backed up by historical data. It always comes back towards $1 even though there might be small fluctuations in its value away from $1, and thus it is a good asset to hedge against a bear market. It serves this purpose well.

[bhokor]

Well tether idea is quite good, the problem is the way it have been done, the last post they did is about they are getting problems with banks for usd withdraws, it is not good, second problem is they have a % of his reserves at BTC and in this way they are getting a big volatility risk, and thirs one and more important for me, they are not being capable of get the peg stable



the only way to do it is to get listed in a full licenced exchange which allow usd/usdt pair and get the 100& of the reserves in usd

of course it is only an opinion

[ulhaq]

My understanding is that there are no reserves in BTC. People can trade BTC with USDT as they see fit. But only USDT are created for USD in reserve. Can you clarify if this is not the case?

[sp_skeptic]

My understanding is that there are no reserves in BTC. People can trade BTC with USDT as they see fit. But only USDT are created for USD in reserve. Can you clarify if this is not the case?

Suggest you read the post that started this thread.

[whale_shark]

Why Bitbay implement their rolling peg people will not use Tether as with Bitbay's peg wallet owners can vote to decrease or increase the frozen coins supply therefore owners of Bitbay can  see their 'peg' price increase!

[Ucy]

Thought tether wasn't meant to increase or decrease in value. It was meant to be equal to US dollar or tether to the dollar or something. Very confusing.