FROM:
How We Can Tell That Tether Is Just “Credit For CryptoCurrencies”:
https://dmh.co/2018/08/07/how-we-can-tell-that-tether-is-just-credit-for-cryptocurrencies/<<But for USDT, the market effectively assumes that Tether is about 24 times overvalued. This means that USDT is effectively worth about 5 cents per USDT in real terms, according to the market. Simply put, the market cannot understand why there has been such a humongous issuance of USDT and is questioning the logic of there being so many USDT tokens in supply. If the cash really was there, the market seems to be suggesting, then it wouldn’t matter one way or another – USDT would need to be supported by $24 of Fiat USD to every Tether anyway in order to justify the additional risk premium on the Blockchain right now of there being so much “asset-backed cash” lying about in digital form. The more likely answer, clearly, is that Tether’s creators have been printing their own money to pump the market, running a digital currency Ponzi scheme whereby the recirculate the gains back into their pockets after temporarily pump-priming the market full of fresh liquidity.
This illustration of the risk premium ascribed to Tether by FUTR smart contract is startling. The market says that for a Tether-based FUTR to have equivalent minimum base value inside the MNY smart contract alongside the ETH ones, a buyer ought to be paying $83.67 per FUTR. As it happens, FUTR does rise to as much as $200 eventually, so this may be a utility of digital notes: that they can cushion what appears to be alrighty oncoming credit crunch. For effectively what the market is saying is the same thing certain analysts who were sharper than the others on Wall Street were saying by 2006 about the US housing market: this money is not money, it is just credit upon credit upon credit, pure and simple, with no real utility and no real function apart from making some very rich people much richer.
It came to tear the walls on Wall Street down to shreds sooner rather than later. Given Blockchain is such a nascent innovation, and this sort of scandal – a run on the Tether, that is – would likely set the whole industry back years, perhaps it is time to think about precautions now, before it is too late?>>
