Bitcoin is still early

[jacoavlu]

If you believe the Tether stuff, then it's either Chinese debt, or money that doesn't really exist (Tether is questionably backed by any currency). The lawsuit against them was slowed by COVID. There are also a number of people who take out loans against their crypto to buy more crypto.

There is also questionable liquidity behind USDC. Interest rates are high to encourage inflows of real money. But we only the true liquidity behind the exchanges if there is a run on them (when they all tend to shut down at the same time).

I know, I know- FUD.

tether released details of their treasury, quite a while ago.

no one knows if any of the current big exchanges are running fractional reserves. ie selling bitcoin they don’t have. it is for sure possible. basically what happened with mtgox

this is why holding your own keys is strongly advised

[xraygoggles]

tether released details of their treasury, quite a while ago.

no one knows if any of the current big exchanges are running fractional reserves. ie selling bitcoin they don’t have. it is for sure possible. basically what happened with mtgox

this is why holding your own keys is strongly advised

You are spewing exchange misinformation/fud. While ofc it's much better to hold your private keys, it isn't as bad as the old days of Mt Gox.

Gemini and Coinbase are completely legit - with full backing and regulation by the US financial apparatus. There may be funny business going on in the Cayman-registered exchanges, but that's not entirely surprising (looking at you Binance especially).

Need to separate the wheat from the chaff, so to speak.

[xraygoggles]

& in terms of stablecoins, the most secure and trusted ones are GUSD, USDC, and USDP. These 3 have complete (or near-complete) 1:1 backing by actual US greenbacks. Everything else is kinda shady, and best to be avoided.

[chucki]

You are spewing exchange misinformation/fud. While ofc it's much better to hold your private keys, it isn't as bad as the old days of Mt Gox.

Gemini and Coinbase are completely legit - with full backing and regulation by the US financial apparatus. There may be funny business going on in the Cayman-registered exchanges, but that's not entirely surprising (looking at you Binance especially).

Need to separate the wheat from the chaff, so to speak.

Yes they are legit, but the risk of your account being seized is non-zero. Self custody of your private keys solves this.

[jacoavlu]

You are spewing exchange misinformation/fud. While ofc it's much better to hold your private keys, it isn't as bad as the old days of Mt Gox.

Gemini and Coinbase are completely legit - with full backing and regulation by the US financial apparatus. There may be funny business going on in the Cayman-registered exchanges, but that's not entirely surprising (looking at you Binance especially).

Need to separate the wheat from the chaff, so to speak.

spewing misinformation/fud? i said "it is for sure possible" lol. binance just went through a brief period where they suspended withdrawals due to a "backlog". probably nothing. it seems like you and i are in agreement so not sure why youd take issue with what i said

[Brains428]

Yea- I read the Tether backing- not collateralized enough to warrant the "printing." Also, weird stuff with funds entering and leaving accounts.

I think you can believe in cryptocurrency and blockchain and still question the validity of many of the players in the space. It just so happens that Tether is quite a large influence in the space.

[Brains428]

Yes they are legit, but the risk of your account being seized is non-zero. Self custody of your private keys solves this.

There is the whole issue of what happens if the US bans it, where can you change your BTC or whatever back to fiat. Easier to open a foreign account if you're a business person- but you'd still have to come up with a reason to have a business in Georgia (country), or some other places that are friendly to foreign investors.

Anyways. The ER is pressing the CTA CAP button repeatedly. Back to work.

[jacoavlu]

Yea- I read the Tether backing- not collateralized enough to warrant the "printing." Also, weird stuff with funds entering and leaving accounts.

I think you can believe in cryptocurrency and blockchain and still question the validity of many of the players in the space. It just so happens that Tether is quite a large influence in the space.

yeah tether will be interesting to watch bc gov is gonna try to regulate stablecoins but tether is to some degree outside their reach. i dont use it bc theres really no need to

[nycEMMD]

You are spewing exchange misinformation/fud. While ofc it's much better to hold your private keys, it isn't as bad as the old days of Mt Gox.

Gemini and Coinbase are completely legit - with full backing and regulation by the US financial apparatus. There may be funny business going on in the Cayman-registered exchanges, but that's not entirely surprising (looking at you Binance especially).

Need to separate the wheat from the chaff, so to speak.

I totally agree with this. Need to separate the Tether FUD from other stablecoins. GUSD and USDC are pretty safe to use.

Thoughts on UST? I think the Terra/Luna system is pretty cool

[nycEMMD]

Yea- I read the Tether backing- not collateralized enough to warrant the "printing." Also, weird stuff with funds entering and leaving accounts.

What makes it even scarier is that people are borrowing USDT in large quantities. It's a smart move if you think about it. Borrow millions of dollars worth of USDT, invest it in something else. If Tether crashes, you just made a lot of money, can buy back the USDT you borrowed at a fraction of a price. By having large amounts of borrowers, it forces tether to issue more USDT and without the proper 1:1 backing, makes the situation worse/more likely to crash. This will not end well

[jacoavlu]

What makes it even scarier is that people are borrowing USDT in large quantities. It's a smart move if you think about it. Borrow millions of dollars worth of USDT, invest it in something else. If Tether crashes, you just made a lot of money, can buy back the USDT you borrowed at a fraction of a price. By having large amounts of borrowers, it forces tether to issue more USDT and without the proper 1:1 backing, makes the situation worse/more likely to crash. This will not end well

who and where borrowing millions in USDT, presumably uncollateralized because that is the implication of what youre saying?

as far as everything ive ever seen, crypto loans are always collateralized. you get the loan by depositing crypto of some sort. then you take a loan against that. the higher the loan to value, the higher the interest rate. but you cant pull your collateral off the platform. if the market moves against you, your loan to value increases and then if you cant post the necessary (more) collateral or pay down some of the loan, you will get automatically liquidated to pay off the loan, leaving the lender whole and the borrower rekt

bitcoin and other crypto assets are "pristine collateral" because the lender can precisely verify the collateral and can control the keys and can easily liquidate. not like taking a loan against your house.

the places where folks borrow at these ridiculous multiples posting only a small amount of collateral, those positions are highly sensitive to the price action and if the borrow is wrong about the movement they get rekt very quickly.

[nycEMMD]

who and where borrowing millions in USDT, presumably uncollateralized because that is the implication of what youre saying?

as far as everything ive ever seen, crypto loans are always collateralized. you get the loan by depositing crypto of some sort. then you take a loan against that. the higher the loan to value, the higher the interest rate. but you cant pull your collateral off the platform. if the market moves against you, your loan to value increases and then if you cant post the necessary (more) collateral or pay down some of the loan, you will get automatically liquidated to pay off the loan, leaving the lender whole and the borrower rekt

bitcoin and other crypto assets are "pristine collateral" because the lender can precisely verify the collateral and can control the keys and can easily liquidate. not like taking a loan against your house.

the places where folks borrow at these ridiculous multiples posting only a small amount of collateral, those positions are highly sensitive to the price action and if the borrow is wrong about the movement they get rekt very quickly.

Never said uncollateralized. They are borrowing millions of USDT and posting up the appropriate collateral. USDT won't go up in value, $1 is its top but if it crashes below $1, these people are making money hand over fist. THing about this, they borrow 1 million USDT, convert it to fiat and now have $1 million. Tether crashes the next day, value of USDT is now $0.10. They take $100k of that $1 million they just got, buy 1 million USDT and pay back their loan, keep their collateral and keep their $900k profit. As far as who is borrowing these large amounts of USDT? Whales:

https://www.ft.com/content/308a473c-...3-b1661bf94ebc

My point is that if you were to borrow stablecoins, your best bet would be to borrow USDT because it's the most likely to fail. By borrowing USDT though, you are also feeding into its demise which creates this spiraling loop that won't end well

[jacoavlu]

Never said uncollateralized. They are borrowing millions of USDT and posting up the appropriate collateral. USDT won't go up in value, $1 is its top but if it crashes below $1, these people are making money hand over fist. THing about this, they borrow 1 million USDT, convert it to fiat and now have $1 million. Tether crashes the next day, value of USDT is now $0.10. They take $100k of that $1 million they just got, buy 1 million USDT and pay back their loan, keep their collateral and keep their $900k profit. As far as who is borrowing these large amounts of USDT? Whales:

https://www.ft.com/content/308a473c-...3-b1661bf94ebc

My point is that if you were to borrow stablecoins, your best bet would be to borrow USDT because it's the most likely to fail. By borrowing USDT though, you are also feeding into its demise which creates this spiraling loop that won't end well

i think you put the odds of tether failing far far higher than i would.

[nycEMMD]

i think you put the odds of tether failing far far higher than i would.

I agree, they're pretty low but they just need to be higher than the odds of USDC or GUSD failing to make it a better proposition

[jacoavlu]

I agree, they're pretty low but they just need to be higher than the odds of USDC or GUSD failing to make it a better proposition

this is essentially a speculative attack analagous to borrowing usd and buying btc

but if you pull the thread on your scenario a little bit, you have to wonder where would the borrowers step in to capture the arbitrage. your example was a 90% drop. what stops someone else from doing it at 80% and your borrower miss the arb window? or 70%. or 2%. you see where this goes.

there are people who will play that arbitrage game for fractions of a penny. which is a stabilizing factor for stablecoins