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Author Topic: tether is allowed to trade on exchanges at various prices  (Read 102 times)
Samemagazine
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October 18, 2018, 10:36:24 AM
 #1

Anyone know why tether is allowed to trade on exchanges at various prices? If it's pegged to the dollar, shouldn't it always trade at $1? Is it because the value changes depending on what currency it's being traded with?

It seems like any exchange that has USD should value USDT at $1USD

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Imhomebody
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October 18, 2018, 11:04:51 AM
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We have had some pretty large moves. The volume of tether just in the past month has been reduced by something like 30%. When people sell off tether batches of it go back and are redeemed for US Dollars shrinking the supply . when US Dollars come in more tether is printed. Everyone knew tether had a lot of money in the bank but people question if they have a 100% ratio in the bank. If they don't, you want to get out early. Before the money goes dry.

There are also better options. Winkle coin has been doing really well. It does everything tether did only better. Also noteworthy there is nearly three times as much tether on the market right now as there was in December of 2017. There are a ton of people waiting on the sidelines with cash in hand.

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October 18, 2018, 11:05:38 AM
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its still a cryptocurrency, a pretty shady one tbh
so the price is changing too, eventhough its a “stablecoin”

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https://bitcointalk.org/index.php?topic=4975753.0
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October 18, 2018, 11:11:14 AM
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We have had some pretty large moves. The volume of tether just in the past month has been reduced by something like 30%. When people sell off tether batches of it go back and are redeemed for US Dollars shrinking the supply . when US Dollars come in more tether is printed. Everyone knew tether had a lot of money in the bank but people question if they have a 100% ratio in the bank. If they don't, you want to get out early. Before the money goes dry.

There are also better options. Winkle coin has been doing really well. It does everything tether did only better. Also noteworthy there is nearly three times as much tether on the market right now as there was in December of 2017. There are a ton of people waiting on the sidelines with cash in hand.


So I can sell back my USDT to Tether at any time and get dollars from them out of their reserve? I don't believe that's how it works. If it did, any time it dipped below $1 everyone could cash out and make easy money.

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October 18, 2018, 11:13:42 AM
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We have had some pretty large moves. The volume of tether just in the past month has been reduced by something like 30%. When people sell off tether batches of it go back and are redeemed for US Dollars shrinking the supply . when US Dollars come in more tether is printed. Everyone knew tether had a lot of money in the bank but people question if they have a 100% ratio in the bank. If they don't, you want to get out early. Before the money goes dry.

There are also better options. Winkle coin has been doing really well. It does everything tether did only better. Also noteworthy there is nearly three times as much tether on the market right now as there was in December of 2017. There are a ton of people waiting on the sidelines with cash in hand.


So I can sell back my USDT to Tether at any time and get dollars from them out of their reserve? I don't believe that's how it works. If it did, any time it dipped below $1 everyone could cash out and make easy money.


At stated value yes. That is not always 1 dollar. Tether pulls shares or redeems every so often just as they print on positive fiat flow

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October 18, 2018, 11:21:28 AM
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 #6

exchanges don't determine the price, USDT is traded just like any other coin so its actually the traders who determine it's price.

The difference with USDT is its backed by the 'promise' that it can always be redeemed for $1. depending on the confidence level in the promise, the closer the actual price will be to $1.

I suppose in that sense its not really a 'peg'. As you would expect a peg to mean somebody is always actively buying at the pegged value and preventing it going below.

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October 18, 2018, 11:24:58 AM
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exchanges don't determine the price, USDT is traded just like any other coin so its actually the traders who determine it's price.

The difference with USDT is its backed by the 'promise' that it can always be redeemed for $1. depending on the confidence level in the promise, the closer the actual price will be to $1.

I suppose in that sense its not really a 'peg'. As you would expect a peg to mean somebody is always actively buying at the pegged value and preventing it going below.


but what is the "promise". Can I sell it back to Tether for a dollar? I assume not. So I don't understand what the point of this "promise" is if it's traded on an exchange like every other coin

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October 18, 2018, 11:28:42 AM
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exchanges don't determine the price, USDT is traded just like any other coin so its actually the traders who determine it's price.

The difference with USDT is its backed by the 'promise' that it can always be redeemed for $1. depending on the confidence level in the promise, the closer the actual price will be to $1.

I suppose in that sense its not really a 'peg'. As you would expect a peg to mean somebody is always actively buying at the pegged value and preventing it going below.


but what is the "promise". Can I sell it back to Tether for a dollar? I assume not. So I don't understand what the point of this "promise" is if it's traded on an exchange like every other coin


In theory you can convert it back into USD at any time. As long as people believe that then it will stay close to US$1 through arbitrage. The price you see now is the market applying a risk factor on whether Tether is 100% backed or that you can actually redeem it for USD.

The reality is that like most things, Tether is trading on confidence and if confidence is lost then the value of Tether will collapse. If Tether.io actually had the US$2.x billion dollars needed then someone could make a lot of money as the price drops but the reality is that they probably have 10% of that (like most banks/ponzi schemes) and even if they did have it, there's no way either them or the bank(s) they're using/conning are going to give it up.

The more interesting thing is to see what the collapse of Tether does to the price of BTC. If there is a somewhat orderly exit from Tether (this is what is happening right now) and the position is unwound then when it does collapse the impact may not be significant. But if Tether lets go in a hurry, and it probably will, then expect to see some carnage. BTC is yet to prove it's worth as anything more than a gambling platform and if people don't think they can win at any odds then they probably won't want to play the game.
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October 18, 2018, 11:56:07 AM
 #9

but what is the "promise". Can I sell it back to Tether for a dollar? I assume not. So I don't understand what the point of this "promise" is if it's traded on an exchange like every other coin

Exactly. Which is why many have cautioned people to stay away from centrally issued stablecoins such as Tether.

There are also attempts at decentralized stablecoins, but it's not an easy problem to solve:
https://bitcointalk.org/index.php?topic=3421190.0



[...]

The more interesting thing is to see what the collapse of Tether does to the price of BTC. If there is a somewhat orderly exit from Tether (this is what is happening right now) and the position is unwound then when it does collapse the impact may not be significant. But if Tether lets go in a hurry, and it probably will, then expect to see some carnage. BTC is yet to prove it's worth as anything more than a gambling platform and if people don't think they can win at any odds then they probably won't want to play the game.

That depends which way the money leaves. People selling USDT does not equate people leaving crypto for good. Currently the majority seems to flow towards BTC, rather than USD:

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

Waradlain
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October 18, 2018, 04:39:21 PM
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Exactly. Which is why many have cautioned people to stay away from centrally issued stablecoins such as Tether.

Stablecoins are ok but not all of them.
As for USDT, I can say that this company was only a kind of temporary solution and in the next couple of years it will be ousted by competitors who are conducting an audit that will suit people. The same Paxos causes a higher degree of trust, so if I had a choice than to own USDT or Paxos, I'd definitely chose the second.
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October 18, 2018, 07:29:37 PM
 #11

Anyone know why tether is allowed to trade on exchanges at various prices? If it's pegged to the dollar, shouldn't it always trade at $1? Is it because the value changes depending on what currency it's being traded with?

It seems like any exchange that has USD should value USDT at $1USD

Only Tether and Bitfinex will redeem USDT for USD. That's where it's worth $1. All the other exchanges just allow you to trade with it, which means that it can -- and does -- fluctuate above and below $1.

That depends which way the money leaves. People selling USDT does not equate people leaving crypto for good. Currently the majority seems to flow towards BTC, rather than USD:

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

That's the interesting thing about this conundrum. Normally, we think of "FUD" as having a negative effect on price. With Tether FUD, it can drive cryptocurrency prices up as people exit back to BTC.

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