Tether

[Wind_FURY]

Tether is just a mere part of Bitcoin’s price discovery to 6-digits. Without Tether, I believe it would be something else, simply because Bitcoin is useful to the entities involved, whether to HODL, moving value, scamming, buying heroine, trading profits, so on and so forth.

[Porfirii]

And there will be always FUD about it. In fact, the more people are planning to use it, the more likely this FUD will be spread.

I remember that, back in 2017's top, one of the most reasonable strategies was to take some profits via Tether. I remember that, this last quarter of the year and first of 2018, the FUD about it being a scam was everywhere (I follow various crypto-journals, and received these kind of news almost every day, and the same happened in crypto-twitter). Because of that, many members I know didn't take profit, because hodling BTCitcoin was more safe, and then came the dump.

Well, most of us know the story. What I want to explain with that is the thesis from the first sentence, and if I'm not wrong, the higher the FOMO, the higher will be the FUD about Tether too, regardless of the real reasons behind that fear, that could be real.

[malevolent]

What are the statistics, now vs. 2013 when Silk Road was taken down? At the time, there weren't that many services and as I recall SR was considered a very important part of the economy.

Then (2012):
https://www.cylab.cmu.edu/_files/pdfs/tech_reports/CMUCyLab12018.pdf

Silk Road transactions correspond to about 4.5% of all transactions occurring in exchanges

Now:
https://blog.chainalysis.com/reports/darknet-markets-cryptocurrency-2019

The percentages are even lower but they were never high to begin with.

Narrative wise, I believe the government shutting down Silk Road gave Bitcoin the sort of legitimacy that began getting the attention of serious investors and even hedge funds. It was no longer just a currency for drug traffic. That was the narrative anyway.

Bitcoin was on its way to a 2nd bull run that year after the previous bubble collapsed a couple months earlier. Seizure of SR may have contributed to the rise in price, but there were other factors:

https://royalsocietypublishing.org/doi/10.1098/rsos.180643#d3e1959
See articles 3.1 & 3.2.

Ignoring short term effects, I believe the same dynamic would play out if the ecosystem's shadier elements (like Tether) were shut down. The SEC implied as much in their commentary on why ETFs were rejected in the past.

I don't know if the death of Tether alone would have been enough, but it certainly looks like a major impediment...

Not sure I follow, but I don't mean to say there wouldn't be demand for no-KYC secondary markets. I'm just saying the SEC has complained they are an avenue for market manipulation, money laundering, etc. and this is an impediment to an ETF approval.

Banking problems and regulations most exchanges have problems dealing with is the only reason something like Tether came to fruition. It wouldn't have been created if there was no demand for it. If there had been no demand, the price, global interest, etc. would have been so low no one would be thinking about any Bitcoin ETFs.

[adaseb]

Well January 15th came and went and bitcoin didn't crash and USDTUSD didn't go to 0. So FUD as usual. Most people didn't even know what the Jan 15th date was about. It was just about submitting documents to the NYAG.

Seems its very easy to create FUD these days. If you looked at the USDTUSD and USDCUSDT pairs yesterday you would see that people were actually selling their Tether in exchange for USDC just in case there was some negative reaction. The %'s difference was very little however.

[exstasie]

What are the statistics, now vs. 2013 when Silk Road was taken down? At the time, there weren't that many services and as I recall SR was considered a very important part of the economy.

Then (2012):
https://www.cylab.cmu.edu/_files/pdfs/tech_reports/CMUCyLab12018.pdf

Silk Road transactions correspond to about 4.5% of all transactions occurring in exchanges

Now:
https://blog.chainalysis.com/reports/darknet-markets-cryptocurrency-2019

The percentages are even lower but they were never high to begin with.

So is it your contention that investors didn't care that Silk Road got taken down, because it was so small and nobody cared about it?

Or are you suggesting that nobody cared that Bitcoin's image was being cleaned up, including all the illegal activity being FUD'd about in the media? It was irrelevant to the bubble?

At the time, American Congresspeople were demanding a crackdown on Bitcoin and the Silk Road.

It's easy to erase this stuff in hindsight, but Silk Road was a very big deal at the time. You can say it was only 5% of transactions, but that's a big deal, honestly.

Narrative wise, I believe the government shutting down Silk Road gave Bitcoin the sort of legitimacy that began getting the attention of serious investors and even hedge funds. It was no longer just a currency for drug traffic. That was the narrative anyway.

Bitcoin was on its way to a 2nd bull run that year after the previous bubble collapsed a couple months earlier. Seizure of SR may have contributed to the rise in price, but there were other factors:

https://royalsocietypublishing.org/doi/10.1098/rsos.180643#d3e1959
See articles 3.1 & 3.2.

Now you're shifting the goal posts. Wasn't your claim that Tether being taken down will cause a bear market?

[malevolent]

So is it your contention that investors didn't care that Silk Road got taken down, because it was so small and nobody cared about it?

Or are you suggesting that nobody cared that Bitcoin's image was being cleaned up, including all the illegal activity being FUD'd about in the media? It was irrelevant to the bubble?

At the time, American Congresspeople were demanding a crackdown on Bitcoin and the Silk Road.

It's easy to erase this stuff in hindsight, but Silk Road was a very big deal at the time. You can say it was only 5% of transactions, but that's a big deal, honestly.

The media will peddle whatever brings in clicks, FUD or not. The kind of entities that would stay away from Bitcoin due to its potential use for DNMs stay away to this day. Whatever institutions that are investing nowadays aren't investing because Silk Road got taken down but because it's easier, and most importantly because the entire ecosystem is significantly larger. To give a sense of perspective, in late 2011 a $20k buy or sell was enough to move the market by 10% on Mt. Gox, the biggest exchange.

Grossly overstated is what I'm saying, 5% estimate is a far cry from saying Bitcoin was only used for drugs, there were thousands of places already (mostly small online businesses) accepting Bitcoin by the time of SR's seizure, and its major usage wasn't too far off from today, namely speculation.

Now you're shifting the goal posts. Wasn't your claim that Tether being taken down will cause a bear market?

I'm not outright saying it will, only that it may.

[Wind_FURY]

Tether FUD is very enticing. But is Tether pumping Tesla also? No. So there's probably something else at play here.

Not probably, there IS actually something at play here. The Tether truthers have probably missed the golden opportunity to buy and HODL Bitcoin because “Tether bad”, then have torturously watched it surge to $20,000, $30,000, then $40,000 next. Tether is simply a creative way to infuse capital in Bitcoin, if not Tether it would be another way.

[exstasie]

Grossly overstated is what I'm saying, 5% estimate is a far cry from saying Bitcoin was only used for drugs, there were thousands of places already (mostly small online businesses) accepting Bitcoin by the time of SR's seizure, and its major usage wasn't too far off from today, namely speculation.

So what? What really matters is news media and popular perception. That there was a popular narrative (in the news media, among politicians, etc.) that Bitcoin was primarily a currency for criminals and drug dealers in its early days is pretty undeniable. I lived through it.

Narratives are extremely important to market trends. Nobody cared what actual percentage of Bitcoin transactions were used on the Silk Road. What mattered is that Bitcoin (in the media, in the legal system) was previously painted as illegitimate, and was being made legitimate by shutting down criminal entities like the Silk Road.

There exists a similar narrative today that Tether is an illegitimate, criminal entity, one of the primary ones casting a shade over the entire Bitcoin market. A boogeyman just like Silk Road was in the early years. The USD values in question are larger, but then again, so is overall Bitcoin market liquidity.

The Tether truthers have probably missed the golden opportunity to buy and HODL Bitcoin because “Tether bad”, then have torturously watched it surge to $20,000, $30,000, then $40,000 next. Tether is simply a creative way to infuse capital in Bitcoin, if not Tether it would be another way.

Exactly. Tether is just a way to bridge the gap between fiat exchanges and secondary markets. It doesn't matter whether USD flows into Tether or Coinbase. Either way, it's going to push crypto prices up.

[adaseb]

From what I understand the process works like this. At least it was this way back in 2017. No idea if its the same as today.

Someone wires money into Bitfinex, they don't want to trade any USD pairs on Bitfinex but want to send the USD elsewhere to buy alts like on Binance. So then Bitfinex converts the USD to USDT. Then that individual withdraws this USDT and sends to any exchange they want that accepts USDT. Right now Bitfinex has USDT pairs however back in 2017 they didn't actually trade Tether on their exchange. Their BTCUSD pair was actually against USD and not USDT.

When the individual sells their alt back for tether, they send their tether back into Bitfinex and Bitfinex converts it back into USD or you could go to the Tether.io website and have the funds sent into your bank account. I never tried the latter because the Tether.io function to withdraw was disabled and you could only trade better back into BTCUSDT, then sell that BTC on another exchange like Coinbase or Gemini for USD and withdraw that. Was annoying due to the fees involved.

[exstasie]

When the individual sells their alt back for tether, they send their tether back into Bitfinex and Bitfinex converts it back into USD or you could go to the Tether.io website and have the funds sent into your bank account. I never tried the latter because the Tether.io function to withdraw was disabled and you could only trade better back into BTCUSDT, then sell that BTC on another exchange like Coinbase or Gemini for USD and withdraw that. Was annoying due to the fees involved.

After Bitfinex and Tether's banking troubles in 2017-2018, they realized it wasn't sustainable to service high volumes of small customer withdrawals. Tether basically stopped servicing individuals directly. They only interface with whales, companies, institutions. Last I heard, the minimum withdrawal amount was $50K. Bitfinex followed suit in 2018, raising the minimum fiat withdrawal amount to $10K.

It was a smart move and kept them in business. Making small customers do their fiat banking elsewhere drastically reduced the load on their withdrawal network. At the same time, the ability for whales to redeem large amounts of USDT for USD from Tether kept the markets pegged very effectively. All downward pressure on USDT (or Bitfinex USD) prices from retail customers cashing out gets absorbed by Tether's arbitrage whales.

Love them or hate them, the people running iFinex are very good at what they do.

[MoneyCryptor]

So I think even if FUD, the tether story has sufficient noise in the net to affect the price.

I had been expecting tether to die a few years ago. The fact that it hasn't is plus in my book that tether is legit.

HOWEVER

the fact they have not been audited makes me think they are fractional reserve.

I also think most exchanges are fractional reserve in crypto.

In fact, except for signed addresses/crypto and dex/uni swap every other financial instrument is fractional, it's just a question of how much.

We have faked USD chaseing faked btc, so it should probably even out, excepting that real BTC is likely undervalued

I kinda wish tether would just go, take the BTC hit an carry on. However that's just wishful thinking, a new FUD will be invented and the cycle will continue.

Every Epoch will have its Gox.

I read this article which says that all the volumes is basically USDT based in non-US exchanges. If you takeout USDT volumes then nothing much is left with regards to volume.

https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3

[adaseb]

It seems that the Tether FUD is still ongoing. People are panicking like crazy on Crypto Twitter and people are Reddit are getting their posts deleted because there is too much posting of claims without evidence. I am actually surprised that so many people are talking about Tether this week because I would of assumed that tether was so 2017ish.

Either way, there is a post going around Twitter that 3 days before they handed in the documents that the tether prints stopped. So its been 5 days and no tether prints yet. Looking at the market cap for tether, they usually did a print every few days or so. So its either a coincidence, especially that its a weekend now or if there are no prints for the next few days or weeks. People will start to panic because they will think "Why did the printing stop " and maybe sell their BTC in anticipation of a crash.

[pooya87]

It seems that the Tether FUD is still ongoing. People are panicking like crazy on Crypto Twitter and people are Reddit are getting their posts deleted because there is too much posting of claims without evidence. I am actually surprised that so many people are talking about Tether this week because I would of assumed that tether was so 2017ish.

"China banned bitcoin" is also so 2013is FUD but still we hear it even today, they even get creative sometimes and replace the word "China" with some other country to make the FUD look new. Tether FUD is no different from that or any other old FUD. As long as people pay attention to them and they can cause weak hands to panic sell, they will be repeated over and over again.

[Wind_FURY]

I believe some of those people spreading the Tether Truthers’ FUD, might also the same people who have lesser than $30,000 bids placed. Sorry, but it would take MORE to get these Bitcoins from these two strong hands.

[ene1980]

So I think even if FUD, the tether story has sufficient noise in the net to affect the price.

I had been expecting tether to die a few years ago. The fact that it hasn't is plus in my book that tether is legit.

There is still time for that, the authorities will scrutinize the entire market in the next 5 years and it is inevitable, if i am not wrong investigation regarding Tether is going on and i am sure they will be audited and then we will get a clear picture about how they are minting billions worth of coins whenever the price of bitcoin starts rallying. 

[el kaka22]

So I think even if FUD, the tether story has sufficient noise in the net to affect the price.

I had been expecting tether to die a few years ago. The fact that it hasn't is plus in my book that tether is legit.

There is still time for that, the authorities will scrutinize the entire market in the next 5 years and it is inevitable, if i am not wrong investigation regarding Tether is going on and i am sure they will be audited and then we will get a clear picture about how they are minting billions worth of coins whenever the price of bitcoin starts rallying. 

What the authorities are "investigating" is not the market, it is the companies. What the crypto people are afraid of right now is the fact that their crypto will be investigated and regulated and all but that is not happening, not going to happen neither. What happened was XRP which is a token was free and nobody cared about it, the Ripple company however? That was investigated, same with tether, the USDT was fine nobody cared about that, but Tether company? That was investigated.

Since bitcoin doesn't have a company like that behind it, we can safely assume that it is going to be fine and you do not have to worry about it. Those are the difference, check a token or a coin you want to buy and if you see there is an organization or a company behind it then you should stay away from them, if there is none then you can be fine about it as well.

[samson]

Tether FUD is very enticing. But is Tether pumping Tesla also? No. So there's probably something else at play here.

Not probably, there IS actually something at play here. The Tether truthers have probably missed the golden opportunity to buy and HODL Bitcoin because “Tether bad”, then have torturously watched it surge to $20,000, $30,000, then $40,000 next. Tether is simply a creative way to infuse capital in Bitcoin, if not Tether it would be another way.

Agreed

[darewaller]

At the end of the day if one day Tether company is found guilty on american soil, they will not be used by any american exchange at all and that is an important development. I know that Tether is not an american company and what they are doing is working with Bahamian banks and all by the guise of "USA wants everyone to obey, Bahama gives us freedom" but the reality is that they do not want ot be found guilty of anything so they ran away and opened an off-shore account as their main account and that's it. It wasn't to make sure usa doesn't get involved unfairly, it was to get away from fair audits so that is why they are there.

Hence when one day USA decides that Tether is bad business and nobody can work with them, all their american partnerships will end, and all the american exchanges will delist them, which is why it is quite important that they have a plan for that situation.

[pixie85]

I don't get why some of you think that those who suspect Tether of foul play have their own agenda and are spreading FUD.

People who run Tether were lying about their reserves and being backed 1:1.
I always support transparency but if a business is not transparent it's their choice. It's going to limit the number of clients and make people suspicious but it's fine if they choose to go this way. What I can't stand is lying. When they finally admitted that rumors of them not being 100% backed by USD or even any fiat were true on their site it still said that USDt is backed 1:1. I remember it because when the news came out I went there to check if this information was changed or not.

Now it says:

Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties

So if they make a few more tethers (not backed) and lend them to someone, they can say these tethers are backed by IOU. This is a very smart way to make value from debt and get people to sell them real bitcoins for their USDt that is backed by other USDt loaned to other people for a promise of return.

[adaseb]

I think unless you work at Tether its difficult to prove whether they are fake or not exactly backed 1:1. When crypto crashed in 2018, there actually was some tether which was redeemed back to US dollar however it was a small amount that would of not been proof whether they are solvent or not. Well it went from $2.8B to $1.8B so about $1B, not exactly small however if there was issues redeeming tether back then, somebody would of made claims.

So it proved that they at least had 33% in reserves which we all knew in 2019 when it was proved it had 75% in reserves. Hence even if BTC crashed to $5K again, and 33% of all tether was removed from circulations, it still wouldn't prove a "tether bank run" since it wouldn't remove enough reserves to make them run out of money.

I think eventually people will just switch from Tether to USDC or DAI and call it a day. Eventually in a few years, Tethers market cap can be replaced with USDC. USDC grew alot in the last year and still minting every day.