My view on USD tether in reply to a post..
This is somewhat a reply to a few points in this article on Tether (USDT).
The history of tether is not new, it has been and is under investigation, yet it continues to operate. How is it allowed to do so?
How can exchanges that are supposedly regulated accept tether? Either all the biggest exchanges are not regulated or tether issuance (at least the recent one) must have already held some scrutiny.
Only around 5% are in assets whose value we know (cash, T-Bills).
...how much different is the balance sheet of a bank? Is it made of cash you know for a fact to be valued X or is it still made up of appraisals, predictions, contracts to be resolved in the future?
It has been known that Tether is tied in part to the future revenues of bitfinex (and its LEO token)
Stable coins peg is maintained by trades, just like any "stable" coin in the world..as nothing stops you to buy and sell currencies at whatever price you like...
If you buy X with the intent of storing value, of course you want your holdings to gain value, not loose it!, so the only thing you can do is tell others to buy to protect your holdings. From this it does NOT follow that X is a ponzi scheme. This is a logical fallacy, where you jump to a conclusion without all the required premises. A more correct logical statement for a ponzi scheme requires for the holder to be willing to get rid of their share, as soon as their share increases in value..but by how much? And here we are in what is essentially what trading looks like, you buy X, wait for it to accrue value, then sell. In fact you can say that the whole financial market is a ponzi scheme, and it is easy to find people that agree with this statement. Bitcoin is no different than other financial instruments.
Miners sell their rewards ASAP, is this true? It can verified on chain, by tracing where the pools payouts go after they are split. I think there are small/medium mining operations that are more interested in producing cryptocurrency untied to fiat, and they don't sell ASAP, and consider mining itself as a way to store value. Larger operations that rely full datacenters deal with some form of contracts, which I guess are pre-paid through other means or partially funded. In this case large miners want to pay their lease. They operate on timespans, like if I mine with X hashrate for X months, I will gain X with an energy cost of Y. Large mining operations are not "market dumpers" either, so claiming that BTC price must support miners sell pressure means that there would be strong correlation between BTC price and BTC hashrate on a hourly, or at least daily basis. Is this the case? AFAIK hasharate has always lagged the price, and has been influenced by other factors.
Tether struggles to find partners because it is under investigation, and nobody willingly looks for trouble.
Tether is not fully backed, this is the same for any bank with quantitative easing, the difference is that tether flow is VERY unlikely to be negative, meaning that money that enters the crypto markets, rarely exits it, whereas the cash flow of banks depends on the banks (or their health) themselves. Runoff scenarios are very unlikely with tether.
Defi didn't exist in 2017, the developement and publication on chain of the smart contracts that compose the ecosystem takes time, notably, the switch to multi collateral DAI happened in 2019, compound whitepaper is dated feb 2019.
I don't have a clue what I am saying, but it really strikes me as odd how much liberty tether has with how much new capital it can issue, and all apparently regulated exchanges be fine accepting it, if there are fundamental holes in tether supply. The crypto space is quite diversified, even if tether collapses (is it too big to fail?) there are nations with BTC reserves. And the willingness to get away from the USD as global monetary standard is real, China was fine with BTC threatening the USD, not so fine when it started threatening the CNY. I think there are different powers at play in the crypto space, between governments, industries, banks, exchanges, influences and retail. Pin pointing tether as the root of all evil leaves a bad aftertaste.
