Tether(USDT) and the crypto world

[modi2017]

I guess that, by now, everyone has heard the rumour about tether artificially inflating the price of cryptocurrencies.
Nothing new here. I'm also thinking that the temptation to use/invest what you got in exchange for all that tether(2.5B$) is too strong to overcome.

This is all speculation and we would probably not find out the truth very soon.

However, what I want to understand is in a different direction.

Suppose you're Bitfinex and you've convinced the others to use/adopt this "superuseful" new token. You start to spread it all over the place, convincing people to use it and in exchange you receive 2.5B$ worth of BTC, altcoins and FIAT.

On the opposite side of the table, as a client, you have some crypto and you try to speculate some opportunity, and you sell it for USDT(since most of the exchanges only allow crypto - USDT trading, and not FIAT), then, at some point, I guess you have to sell your USDT back for crypto, since you can't use USDT in the real world as FIAT or BTC, nor you can wait for it to rise(it is supposedly pegged 1:1 with USD).

First question that begs to be asked, why would you want to mid/long-term hold USDT instead of BTC or FIAT?
Second question, who would want to hold 2.5B USDT? Where is 2.5B USDT stored right now?

I cannot imagine that there is a 2.5B$ mass of people thinking that BTC or alts are going down, and decides to hold USDT for months or years, waiting for the market to recover. You want to hold FIAT instead, in this scenario.


2.5B USDT is huge, it is 30-40% of the whole FIAT money that would be needed to create a 300B$ marketcap.
According to JP Morgan, roughly 6B FIAT $ were invested in the crypto world, in order to create a 300B$ marketcap:

http://jamescrypto.com/the-difference-between-inflow-and-market-cap-and-how-it-relates-to-tethers/


So, who is holding 2.5B USDT tokens and what do the masses do with USDT(other than short-term[1-2 days] transfer of value)?

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[butka]

So, who is holding 2.5B USDT tokens and what do the masses do with USDT(other than short-term[1-2 days] transfer of value)?

That's a very good question. I guess nobody in their right mind would use USDT for anything else but short term trade.

Here is another question: Who is holing $2.5B that correspond to the 2.5B Theter tokens? If USDT is 100% backed by USD, there should be the equivalent of dollars somewhere. I remember some time ago Bitfinex even admiting that USDT is not backed by USD. So everyone holding this so called cryptocurerncy should consider themselves warned.

[modi2017]

That's another hot topic, but I don't think we'll find out the answer to that question very soon.

Coming back to the topic, it is beyond my comprehension, why would the masses hold 2.5B USDT in exchanges, instead of cashing out to FIAT.
Unless, it's not the masses the ones that hold it.

[dinoloverpete]

If people believe in USDT then it's the same as USD almost. There's far more than 2.5bn of USD being held across the globe so 2.5bn isn't really surprising. Many may leave USDT in their accounts in order to capitalize on short term volatility that they would not be able to do so if trying to use fiat because of the delays involved. Given that the whole market cap is 200bn it means only a little over 1% is in Tether at any one time, personally i don't feel that is too much at all.

[Maestro75]

So, who is holding 2.5B USDT tokens and what do the masses do with USDT(other than short-term[1-2 days] transfer of value)?

That's a very good question. I guess nobody in their right mind would use USDT for anything else but short term trade.

It is a complex situation indeed. Even the short term you mention is not defined. Is short term one week? One month? Three? Six? One year? Nothing is clearly defined n cryptocurrency. What is short term to you can be long term to another. I have to say that I love the idea of exchanges providing tether. It serves a means of preventing loss during crash. I do not care about the mathematics of it.

[modi2017]

If people believe in USDT then it's the same as USD almost. There's far more than 2.5bn of USD being held across the globe so 2.5bn isn't really surprising. Many may leave USDT in their accounts in order to capitalize on short term volatility that they would not be able to do so if trying to use fiat because of the delays involved. Given that the whole market cap is 200bn it means only a little over 1% is in Tether at any one time, personally i don't feel that is too much at all.

People fail to understand that USDT quantity is not marketcap. And they keep on calculating ratios between USDT quantity and marketcap.
USDT is supposedly pegged to USD, 1:1, stable coin.
Ratios should be calculated between USDT quantity and the inflow of FIAT money in the crypto world, which is as I said, roughly 6B$ for a marketcap of 300B$.

So, 2.5B USDT out of 6B$ inflow, how does this ratio sound to you?

So, who is holding 2.5B USDT tokens and what do the masses do with USDT(other than short-term[1-2 days] transfer of value)?

That's a very good question. I guess nobody in their right mind would use USDT for anything else but short term trade.

It is a complex situation indeed. Even the short term you mention is not defined. Is short term one week? One month? Three? Six? One year? Nothing is clearly defined n cryptocurrency. What is short term to you can be long term to another. I have to say that I love the idea of exchanges providing tether. It serves a means of preventing loss during crash. I do not care about the mathematics of it.

It says there "short-term[1-2 days]".

I asked a question about what do the masses do with so much USDT, not about what is important to you or what do you think about it or its matematics, or how do you feel about it. Try to read the post.

[modi2017]

This topic isn't about what do you trust, what do you care, what short-term means to you or to others and so on.
I don't understand why you are trying to "hijack" this thread.

Please read what I've stated and what I've asked.

[talkbitcoin]

I guess that, by now, everyone has heard the rumour about tether artificially inflating the price of cryptocurrencies.

if this was true then price of cryptocurrencies should not have dropped at all. specially like this huge dumps that we keep on seeing like ETH going down from $1500 to $200 (-86% dump).

So, who is holding 2.5B USDT tokens and what do the masses do with USDT(other than short-term[1-2 days] transfer of value)?

USDT is one of the shadiest altcoins out there that people keep on using. but looking at the 24 hour trading volume of it, there was $2.4 billion volume only today! it is not about holding it, it is about  circulation. there are lots of trades taking place in the market every day and many of them are with USDT.

[figmentofmyass]

First question that begs to be asked, why would you want to mid/long-term hold USDT instead of BTC or FIAT?

rationally, you wouldn't. there is simply too much counterparty risk in bitfinex and tether. you shouldn't hold USDT for the mid/long-term for the same reason you shouldn't store funds on exchanges for the mid/long-term. tether could be shut down by regulators or fined into insolvency, they could exit scam or get hacked. it's much more sensible to sell on the exchange (or OTC) and wire USD into your bank account.

the exception is those that are dodging taxes or KYC. if you need to hedge the USD value of your coins without leaving paper trails to your bank account, USDT markets can be an option. binance comes to mind.

Second question, who would want to hold 2.5B USDT? Where is 2.5B USDT stored right now?

i imagine exchanges hold most of it. binance and a slew of other altcoin exchanges have fairly liquid USDT markets.

[Supercrypt]

Main reason to have 2.5 billion tether is not for people to change it to fiat and use it, its purely trading reasons to have it at all. They keep tether on their accounts because they believe the price will fall for crypto currencies.

Hence, if you believe your bitcoin will fall in price, than you sell your bitcoins for tether (which is just an easier way for you to turn to fiat without actually turning to fiat on your bank account) and when the price drops you exchange your tether back to bitcoin when you think its about to go up.

It is not a commodity itself, it is just making trading easier because turning bitcoin to dollar is not an easy thing to do for everyone (specially people who are outside of US).

[fernandoclause]

Second question, who would want to hold 2.5B USDT? Where is 2.5B USDT stored right now?

well I will only guess 2.5B USDT is now saved by a secret organization, by the elite cryptocurrency group, because USDT is made into tokens and not coins

[dinoloverpete]

If people believe in USDT then it's the same as USD almost. There's far more than 2.5bn of USD being held across the globe so 2.5bn isn't really surprising. Many may leave USDT in their accounts in order to capitalize on short term volatility that they would not be able to do so if trying to use fiat because of the delays involved. Given that the whole market cap is 200bn it means only a little over 1% is in Tether at any one time, personally i don't feel that is too much at all.

People fail to understand that USDT quantity is not marketcap. And they keep on calculating ratios between USDT quantity and marketcap.
USDT is supposedly pegged to USD, 1:1, stable coin.
Ratios should be calculated between USDT quantity and the inflow of FIAT money in the crypto world, which is as I said, roughly 6B$ for a marketcap of 300B$.

So, 2.5B USDT out of 6B$ inflow, how does this ratio sound to you?

I didn't think of it in such a way before, however my immediate thought would be that a similar thing applies to tether. Just because there is a circulating supply of 2.5bn does that mean that at all times 2.5bn of it is on the market, would that not be the case also?

[carlisle1]

REALLy?I dont care about this shitcoin because it has no future lol

Tether is one coin that never be trusted and must be eliminated before many becomes a victim of this coin,my friends already withdrawn their support from this one because of no longer plans from the dev