What'll happen when USDT collapses?

[TheQuin]

from tether.to

Since April 18, 2017, all incoming international wires to Tether have been blocked and refused by our Taiwanese banks.  As such, we do not expect the supply of tethers to increase substantially until these constraints have been lifted.

well where are these 600Mio comming from? 

Many people are moving their funds from bitfinex, lets wait and see

https://bitinfocharts.com/bitcoin/address/3D2oetdNuZUqQHPJmcMDDHYoqkyNVsFk9r

As I pointed out to someone else recently in another thread, you rather conveniently forgot to quote the very next sentence in that statement from Tether.

For customers with bank accounts in Taiwan, we are currently experiencing no difficulties or delays in funds transfers in USD, with deposits and withdrawals functioning as expected.

Do you not think that both large institutional investors and wealthy individuals would have access to banking facilities in Taiwan or be more than capable of using a Taiwanese intermediary bank?

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[gentlemand]

As I pointed out to someone else recently in another thread, you rather conveniently forgot to quote the very next sentence in that statement from Tether.

Another thing that hasn't been mentioned much if at all is that it wasn't a Bitfinex specific problem, it was a Taiwanese banking problem. Okex had the exact same problem. That being the case it's possible getting USD into Taiwan might be a pain up the arse no matter which bank you're sending to. I don't know how many Taiwanese whales there are.

[TheQuin]

Another thing that hasn't been mentioned much if at all is that it wasn't a Bitfinex specific problem, it was a Taiwanese banking problem. Okex had the exact same problem. That being the case it's possible getting USD into Taiwan might be a pain up the arse no matter which bank you're sending to. I don't know how many Taiwanese whales there are.

I'm thinking more of hedge funds that would already have banks accounts in every country, no problem for them to get money in. Whales would go to the hedge funds. Another example in that last thread the other person pointed out that there was a Swiss Bank that was launching an ETF. Well, that needs to be backed by actual Bitcoins. How do they buy them? They probably have a branch in Tawain that can wire to Tethers bank and then buy them on the exchanges.

[squatter]

As I pointed out to someone else recently in another thread, you rather conveniently forgot to quote the very next sentence in that statement from Tether.

Another thing that hasn't been mentioned much if at all is that it wasn't a Bitfinex specific problem, it was a Taiwanese banking problem. Okex had the exact same problem. That being the case it's possible getting USD into Taiwan might be a pain up the arse no matter which bank you're sending to. I don't know how many Taiwanese whales there are.

I don't really buy that explanation. Yes, multiple exchanges made similar announcements about Taiwan's banking/AML reform, including Okcoin.com and BTC-e. But Bitfinex said many months ago that they had already moved most of their money outside of Taiwanese banks, so that doesn't explain it.

I actually think the Taiwanese banking reforms provided a nice cover for the simple fact that Tether has no interest in letting anyone (customers, regulators) know where their money is.

[1eth1]

https://bitcoinexchangeguide.com/bitfinex-tether-scam/

Here’s where things get scary for those of you with a lot of Tethers, or any funds deposited into the platform. Here’s what Tether’s terms and conditions has to say:

“PURCHASE AND REDEMPTION OF TETHERS: The Site is an environment for the purchase and redemption of Tethers. Once you have Tethers, you can trade them, keep them, or use them to pay persons that will accept your Tethers. However, Tethers are not money and are not monetary instruments. They are also not stored value or currency.

There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers.”

In other words, Tether’s service doesn’t promise to pay you anything in exchange for your Tethers. The company suggests that it will pay you money for your Tethers – but it doesn’t promise anything.

https://tether.to/legal/

[riethos]

The problem is that usdt(tether) is not redeemable directly for real usd. This can be seen from the total supply of usdt. If usdt was directly redeemable for usd  there would be random decreases in usdt supply. Instead there is only an exponential increase of usdt supply.

https://coinmarketcap.com/currencies/tether/

So when someone has usdt and wants to withdraw real usd, he has to  buy first some cryptocurrencies and then he must exchange the cryptocurrencies for usd in a crypto <=> fiat exchange and afterwards to withdraw the usd to his bank account. So real usd exits the system but usdt is being kept into the cryptomarket giving it a faulty inflated total market cap. It is the same thing as hyperinflation causes the prices to skyrocket

[ArnoldChippy]

According to the experts USDT is a scam it’s all a thin air printing with no real reserves of any fiat, they might have a little real US Dollars. It will surely stink if we do not feel it today we must feel it in future with the music. Even if we assume it for a while that it is not a scam and the reserves accounts they claim are real, it is even not trustworthy enough as it is vulnerable to hackers. Its easy example is the recent hack of $31million on 19 November.
It’s an alarming time for exchanges that are being backed by USDT and especially for those people who are trading or Keeping their money in USDT. It’s better to find regulated exchanges and pay some tax in order to keep your money safe.
The transaction delaying tactics has been used in past by Mt. Gox, which is now bankrupt with drowning people money of around $460million.
The USDT if proved to be a scam it will not only affect BTC but the whole market, for BTC it will be a short term price drop with creating a buying opportunity on cheap price. 

[TheQuin]

According to the experts USDT is a scam it’s all a thin air printing with no real reserves of any fiat

I think you are mistaking anonymous bloggers and tweeters with experts. All the evidence is that USDT is backed by real reserves. The last couple of posts also miss the point about whether they are redeemable or not. It really doesn't matter whether you can redeem them for USD at Tether, what matters is that they are tradable for their face value. As long as it is possible to buy $1 of BTC with 1 USDT then they are as valuable as USD.

[TimtheYoutuber]

This actually brings up a very interesting point that makes me a little nervous about the future. It is always good to look at every angle when you are investing and this is certainly something to think about. Especially in a market that is unregulated.

[squatter]

This actually brings up a very interesting point that makes me a little nervous about the future.

I'm not too concerned until the top is in. This kind of FUD doesn't usually catalyze a bear market; we still need the market to become exhausted. It's in the bear market that bad things usually start happening. For example, MT Gox shut down in February, long after the top was in.

According to the experts USDT is a scam it’s all a thin air printing with no real reserves of any fiat

I think you are mistaking anonymous bloggers and tweeters with experts. All the evidence is that USDT is backed by real reserves.

There isn't much evidence, though. The fact is that Friedman, LLP was very careful not specify their statement as an audit nor to make any guarantees on Tether's solvency, for good reason. They have no way of confirming whether Tether has access to the funds or whether those accounts are tied to obligations other than USDT redemption.

Personally, I think they have all funds in reserve, but I think they are terrified of regulators. They have no realistic way of redeeming USDT for anyone. You can only deposit to Bitfinex or altcoin exchanges and exit via crypto.

The last couple of posts also miss the point about whether they are redeemable or not. It really doesn't matter whether you can redeem them for USD at Tether, what matters is that they are tradable for their face value. As long as it is possible to buy $1 of BTC with 1 USDT then they are as valuable as USD.

The reason that Tether has a face value is because people believe they are redeemable, or at least that they will be someday. This is sustainable in a raging bull market because a lot more people are entering the market than exiting. When the market finally crashes and everyone wants USD -- and by that I mean real USD in their bank account -- I'm not so sure.

[Quickseller]

I would find it fairly unlikely that USDT will collapse in the medium future.

The bank balance of tether's bank accounts exceeded the number of USDT issued, per the blockchain, and matched what tether was claiming to have in the bank at the time, as of September 2017. The fact that tether can simply decline to redeem specific USDT, and the fact that money sent to tether before they issue USDT is not reversible (bank wires) means there are virtually zero scenarios in which tether gets hacked, resulting in losses to USDT holders.

[jerry0]

I don't get why exchanges like poloniex would suffer if USDT would disappear.

Because tens to hundreds of thousands of people are using it on exchanges to park their value. If it disappears then so does their wealth and it could happen with nauseating speed as well. No one's going to want that shit if it is truly problematic and it's not as if there's someone else who's going to step in and magic up hundreds of millions of real dollars.

When you say park your value, do you mean like having it at a usd value so you dont have any fluctuations when you are ready to buy btc or other altcoins?


So everyone says but low and sell high.  So after all these coins including btc went down, lot of people would be buying btc and altcoins.  My question is mainly for buying altcoins.  First off, when you buy these altcoins during dips, are you buying it with another altcoin?  Such as another altcoin, sell it for btc and then buy the altcoin you want?


Or do you just buy btc and then immediately buy the altcoin?  The big issue with this is if btc goes up and that altcoin goes up, well you are getting around same amount of the altcoin assuming they both increase the same.  The same can be said if its decreasing.


Im assuming the best option would be get btc first... immediately sell it for usdt.  Then wait for prices to drop.  Once prices drop and you are ready to buy the altcoin, then you immediately buy btc with the usdt... then immediately buy the altcoin with usdt right?  I ask this because when i notice altcoins drop and i want to buy, the first thing i would do is withdraw btc from a site.  The issue with this though it would take either an hour or even a day or more depending on the site because they take a while pay you out in btc.  Then by the time i get the btc, well the altcoin might have increased too high of a price to buy already.  So is this the proper strategy to not only buy altcoin during dips but also btc?  Thus make sure you have usdt?  The other thing is if you are using coinbase or gdax, well make sure you had a usd balance on hand to get ready to buy btc, eth or litecoin during dips right?

[jerry0]

Also I posted this in the trading thread and i got replies where im confused about investing in altcoins.  I had thought if you invest in an altcoin that is say 1 dollar.  Well if it goes to 2 doubles, well you double your money right?  Thus say you buy lisk at 5 dollars and say you buy 1000 of it for 5000 dollars plus trading fees.  If it doubles to 2 dollars, well you have 10000 dollars worth of lisk minus trading fees.  So you made 5k less trading fee profit right?  Well when i posted this, i was told look at the btc price.  For example if btc price for lisk is 0.0007 btc... and you were to sell lisk when it hits 6 dollars but btc went up, you could be selling lisk for 0.00065 btc.  They said because of that, you lost compared to holding btc.  At first i did not understand this but then they said you would have made more money if you held that btc as oppose to selling it for lisk.  That makes sense.  But i mentioned well in the example you still make 5k profit less trading fees right?  One person did say yes but others kept telling me that you lose money here.  First off, who is correct here?  I can understand you lose here in terms of getting less btc than you invested even though lisk goes up.  But in terms of profit... $ wise... which is the most important thing here right?  Then you are up money here?


This is what i posted in the trading thread and want it posted here since this is altcoin discussion and people want to know about coins that would 3x, 5x, 10x etc.




I am planning to use bittrex to trade altcoins.  I would first get bitcoin first as i need btc to buy altcoins.

So i have a question on this and want to know if im doing it right.

Let say I have $10000 in btc. 

Btc = 7837.34 usd now

1.28 btc = 10000 usd


I send that 1.28 btc to bittrex.  Lets just make it simple and say i want to buy lisk and its worth $5.  I know its much more than that now but i like to make it simple.  Let say i want to buy 1000 lisk so $5000 plus fees.  I know bittrex fees are 0.25%.  So that means buying 1000 lisk would cost me $5000 + $12.50 = $5012.50.  This is correct right?  So basically now my bittrex btc balance is around half which is 0.64 btc?  To make it simple i ignored the sending btc fee to bittrex.


So let say my goal is to sell it once i make 20 percent profit.  Thus i want to sell it once lisk hits 6 dollars.  Say lisk hits 6 dollars.  I then sell all of it for $6000 - $15 = $5985.  So in this situation I made $5985 - $5012.50 = $972.50.  Is that correct or not? 


So once I sell the lisk on bittrex, I'm getting back btc right since lisk is paired with btc and most altcoins are not paired with usd or usdt as they put it?  So here is what confuses me.  At that moment i will get paid whatever amount btc = $5985 right?  However... isn't it a good chance that i might not get more than 0.64 btc that i originally used to buy lisk assuming btc price went up as well?  Like for example at that moment i bought lisk with my btc...  $5012.50 is about 0.64 btc at that moment.  But now... when i trade $5985 worth of lisk for btc... couldn't i get even less than 0.64 btc?  Thus even though i made a profit of $972.50 in my example buying lisk and then selling lisk... i might get back 0.60 btc only and now my btc balance is only 0.64 btc +0.60 btc = 1.24 btc?  Or is there something wrong with what im calculating here?  I do know when you are investing in altcoins, you are basically betting against bitcoin.  But here in my example, well you need btc in order to buy altcoins almost all the time since theres maybe 10 coins that are paired against usd or usdt?


And if my calculation is wrong, can someone tell me where is my calculation wrong?


Because i believe the profit i calculated is right here.  And if it is right, how do i make sure to lock in these profits?  I know you realized $972.50 in profit here.  But say you dont sell the $972.50 worth of btc now... and wait... well btc price drops... that $972.50 profit could only be $800 or less etc right?  Or is my logic wrong here?  I want to know from daytraders on this as i know daytraders mostly buy low and sell high and make lot of these transactions.  Thus if your goal for lisk is 20 percent profit of 5000 dollars invested and your goal is to make about 1000 dollars on buying lisk minus the buy/sell fees of 27.50 for a total profit of $972.50... are you suppose to immediately send that exact profit $972.50 worth of btc OR WOULD IT BE THE BTC DIFFERENCE between the 1.28 btc you started with and what you have now... and then send it immediately to gdax or gemini and sell it to them and then you lock that $972.50 in profit immediately to your bank account?


The thing is if everything was paired with USD, then it would be very easy to calculate/profits and losses.  I know bittrex has usdt but that is only paired with btc and not many other coins.  So the other thing is would daytraders instead of sending it to gdax or gemini... they immediately turn that btc into USDT?  That way their profits are locked since you have usdt?  I know usdt is around 1 dollar but it cannot be a little less or more.  But i read its still an altcoin.  So i want to know exactly how daytraders lock in their profit after they lock in their profit from one coin.  And most importantly, is it even possible to have a lesser btc balance after buying lisk at 5 dollars and selling it at 6 dollars depending on the btc price.  Because this is very confusing to me.

[btcone111]

There would be some sort of "bank run" scenario where people rush to redeem USDT.
Then there will be huge loss among crypto holders who purchased USDT.
The whole crypto market would plunge into a deep correction with many people moaning about huge loss of their money in USDT.