Is anyone else starting to become a bit worried? mod note in first post

False Prophet

Worrying time bomb



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

seannash

False Prophet wrote: »

Worrying time bomb



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

Towards the end he states the following


"It was still possible that retail demand for Bitcoin was driving real USD into Tether Ltd. through some unknown mechanism; that Tether Ltd. was issuing Tethers in exchange for those dollars; and that those issued Tethers were then being used to buy Bitcoin. Under that scenario, Tether’s rise was being caused by Bitcoin’s demand, and Tether might be fully backed by dollars after all"


I'm playing devils advocate here but why isn't this a possibility. The appetite for Altcoins is huge and as a result Coinbase doesn't cover all bases.
Take me for example. I deposit euros into Binance and if necessary I convert to tether. I'd say this is very common.



Further more isn't there other stable coins out there now that could and should step in to take tethers place if something happens to Tether

cnocbui

False Prophet wrote: »

Worrying time bomb



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

If I wanted to short bitcoin or cause a dump allowing me to buy back in, I might write something like that, which seems to have involved a lot of unpaid work to anonymously, out of the goodness of someone/s heart/s, to warn the poor schucks to watch out.

The epiphany where he/she/they are catching up with their friend 'Bob', who is such a good friend, yet they don't have the slightest clue about Bob's interest and involvement in crypto? If Bob is real, I'm your uncle.

I admit I haven't quite fully grasped the model behind the scam; the scale of trading on dodgy Binance is an order of magnitude greater than the scale of trading on legit Coinbase, and yet the latter is being used as the outlet for all that scammed money, but it surely is but a trickle?

You'd be a fool to be milking a Tether scam for USD, as that is very hard to leep out of the reach of the US government.

Bob24

cnocbui wrote: »

The epiphany where he/she/they are catching up with their friend 'Bob', who is such a good friend, yet they don't have the slightest clue about Bob's interest and involvement in crypto? If Bob is real, I'm your uncle.

At least he didn’t say Bob24! ... glad to be off the hook as the imaginary friend who does all the dodgy stuff one needs to back their case with ‘evidence’ that things have gone mad.

seannash

cnocbui wrote: »

If I wanted to short bitcoin or cause a dump allowing me to buy back in, I might write something like that, which seems to have involved a lot of unpaid work to anonymously, out of the goodness of someone/s heart/s, to warn the poor schucks to watch out.

The epiphany where he/she/they are catching up with their friend 'Bob', who is such a good friend, yet they don't have the slightest clue about Bob's interest and involvement in crypto? If Bob is real, I'm your uncle.

I admit I haven't quite fully grasped the model behind the scam; the scale of trading on dodgy Binance is an order of magnitude greater than the scale of trading on legit Coinbase, and yet the latter is being used as the outlet for all that scammed money, but it surely is but a trickle?

You'd be a fool to be milking a Tether scam for USD, as that is very hard to leep out of the reach of the US government.

I'm not sure that's the motive but I feel Bob could certainly be ficticious.
He probably does want so notoriety for the piece.


Whats stopping people with bitcoin transfering to Coinbase and cashing out? Wont Coinbase be in a similar position of not having enough cash on hand to cash people out. Their assets would be tied up in bitcoin which is what Tether currently has. It has a portion of its assets in Bitcoin and the majority in USD allegedly

grindle

seannash wrote: »

Whats stopping people with bitcoin transfering to Coinbase and cashing out? Wont Coinbase be in a similar position of not having enough cash on hand to cash people out.

There's a huge difference between people cashing out via CB - BTC's price would drop significantly if there was a run to exit, they'd be selling to people buying until there was no liquidity left - versus people being able to claim 100% of the 24,734,696,756 Tether that are meant to be backed 1:1 with USD. If they're backed, all good. If they're not, very very bad.

seannash

grindle wrote: »

There's a huge difference between people cashing out via CB - BTC's price would drop significantly if there was a run to exit, they'd be selling to people buying until there was no liquidity left - versus people being able to claim 100% of the 24,734,696,756 Tether that are meant to be backed 1:1 with USD. If they're backed, all good. If they're not, very very bad.

Gotcha,
That makes sense

Mucashinto

That $24bln Tether - that's should match only to Tether that's being held at a given time right? Like as soon as someone makes a USDT/EUR sell, those coins should be burnt up and removed from circulation or something?

Edit: Sorry, maybe only removed if bought by Tether themselves?

Edit 2: Or if technically Tether themselves were actually holding $10bln of those coins, those wouldn't actually need to be back by cash at all? They only have a kind of temporary value, when they're directly matched to a transaction?

Bob24

Mucashinto wrote: »

That $24bln Tether - that's should match only to Tether that's being held at a given time right? Like as soon as someone makes a USDT/EUR sell, those coins should be burnt up and removed from circulation or something?

Edit: Sorry, maybe only removed if bought by Tether themselves?

Edit 2: Or if technically Tether themselves were actually holding $10bln of those coins, those wouldn't actually need to be back by cash at all? They only have a kind of temporary value, when they're directly matched to a transaction?

Only Tether can mint and burn coins (and at least in theory, for every coin they mint they add $1 to their bank deposits and for every coin they burn they remove $1).

If you are selling USDT for euros on an exchange, there is a counter-party on the other side of the trade which is buying those USDTs from you (i.e. that counter-part gets to keep them - they are not being destroyed). So it doesn't change the quantity of bank reserves required for Tether to back the coins.

Mucashinto

Right.

Hmm, I can easily see Tether having cut corners tbh because, well crypto, but equally if they used those 15 months of stalling to actually do more dodginess as the article suggests rather than try and get their house in order by whatever means...that’s a ballsy move with the US gov looking over your shoulder :eek:

It seems like a stable coin could be an ideal example of a coin/the technology as well. Surely you could have one where everything is transparent on the blockchain, even the bank account and reserves, so you could follow every coins creation and a matching dollar all the way through its existence if you wanted maybe.

grindle

Mucashinto wrote: »

It seems like a stable coin could be an ideal example of a coin/the technology as well. Surely you could have one where everything is transparent on the blockchain, even the bank account and reserves, so you could follow every coins creation and a matching dollar all the way through its existence if you wanted maybe.

That already exists, DAI from MakerDAO.

makeorbrake

Here's the Deputy CEO of Deltec (Tether's bankers) and what he has to say on the subject. From what I've gathered, Tether failing won't be fatal for the rest of the industry. I'm sure they cut some corners over the years (some of them they were given no choice but to take given the way they were shut out). However, with all the heat on them and with what is now a huge business on their hands, why would they put a foot wrong?

Meanwhile, it's not coincidental that those that accuse them are anti-crypto to begin with. Either they produce the evidence or they should sling their hooks. Its interesting how crypto has stood accused of manipulation when the greatest manipulators come from the conventional financial services world....pot calling kettle black.

Bob24

makeorbrake wrote: »

Meanwhile, it's not coincidental that those that accuse them are anti-crypto to begin with. Either they produce the evidence or they should sling their hooks. Its interesting how crypto has stood accused of manipulation when the greatest manipulators come from the conventional financial services world....pot calling kettle black.

I also noticed on fintweet that a lot of crypto-skeptic influential people have all gone after Tether exactly at the same time (it started about 3 weeks ago). Strange for all of them to wake-up all at the same time given that it has been ongoing for years and there hasn’t really been anything new recently.

I think it is just a herd-driven narrative which will go away as quickly as it came once they have all received the public exposure they are looking for (I am not denying there might be something wrong with Tether, more questioning the relevance of this latest wave of concerns which aren’t bringing anything new to the table).

grindle

It's been in the news a lot more lately with the NYAG deadline, expect it to be the same for the next 4 weeks as they rifle through over 2.5m documents. Hopefully it's good news, handing documents over knowing that you're going to get crucified at the end seems pointless.

cnocbui

grindle wrote: »

It's been in the news a lot more lately with the NYAG deadline, expect it to be the same for the next 4 weeks as they rifle through over 2.5m documents. Hopefully it's good news, handing documents over knowing that you're going to get crucified at the end seems pointless.

Handing over the documents is necessary to avoid legal penalties and is not in itself any indication of innocence. It's not done voluntarily. You stand to face severe, probably worse penalties for not complying, that's why you do it, irrespective of what you think your case is like. That's how penalties work, otherwise no one would comply with legal discoveries if what was provided wasn't helpful to them.

grindle

cnocbui wrote: »

Handing over the documents is necessary to avoid legal penalties and is not in itself any indication of innocence. It's not done voluntarily.

I know that, but if there is evidence of wrongdoing they'd be better off just holding their hands up now and taking their punishment. The more they claim or infer innocence before being found guilty the harsher any judge will view it.

crushproof

BTC seems to have become quite stable over the past few days

Thargor

Cant decide whether or not I should try another big trade in ETH, wouldn't shock me to see another 20-30% drop from here.

grindle

Thargor wrote: »

Cant decide whether or not I should try another big trade in ETH, wouldn't shock me to see another 20-30% drop from here.

Risky, could go to 2k or it could halve in a week. Be patient.

Thargor

That should have been in the excited thread, definitely not worried whatever happens.

celtic_oz

excellent interview .. TLDR start @ 23 minutes in for crypto

https://www.youtube.com/watch?v=RYfmRTyl56w

Mucashinto

celtic_oz wrote: »

excellent interview .. TLDR start @ 23 minutes in for crypto

I don't know much about this guy, Ive no doubt his track record is impressive, and only watched the crypto part but there's nothing much there for me.

Personally, I bought Gold at the same time I bought BTC and wanted them both to do the same function for me but didn't know which was best. When BTC didn't move much I was annoyed I put it in crypto, when crypto took off I regretted the gold. Neither of my feelings prove anything though really.

The things he says are the basic opinions anyone putting money in would consider, and whichever way you come down on them will only be a reflection of your own beliefs rather than some external truths imo.

So gold has 12,000 years of history, crypto only c.15, a lot of which is boom and bust...so that means history is going to repeat/continue then? Or maybe we should move on from gold as, well, it's obviously a bit outdated? Again, not trying to come down one way or the other, the result is far out of my control, I'll just have to wait and see.

But if you imagine a future of smart homes and autonomous vehicles and zoom/VR conferencing then surely gold seems completely anachronistic and out of place and it might ultimately drop to nothing? Or maybe crypto is just an extension of a bloated asset speculation system and it could easily collapse to nothing as the asset bubble finally, disastrously bursts after 'kicking the can down the road' for the majority of this century?

Honestly I've given up trying to 'know' and am just trying to get myself in a position where if certain things happen, I might be somewhat inured from overly disastrous consequences.

The one thing I will agree on - I didn't like when BTC/crypto tanked along with the rest of the stock market in March, it didn't look like much of a hedge then. However, that might not repeat. That was panic stations and before the crypto as safe haven narrative really took off in the public consciousness imo. Could just as easily rise if the markets crashed again I believe.

Again I don't know and it's out of my hands so I'm happy to wait and see.

unkel

Great post, Mucashinto.

celtic_oz

schiff is the perpetual doom monger .. and he doesn't pull his punches on bitcoin .. 7 mins in.

https://www.youtube.com/watch?v=M6k0QEnYpSQ

Mucashinto

celtic_oz wrote: »

schiff is the perpetual doom monger .. and he doesn't pull his punches on bitcoin .. 7 mins in.

This one's worse for me tbh, maybe just because he talks more.

INTERVIEWER: Do you think BTC is taking money from Gold?
SCHIFF: No, if anything institutions are confused by the debate and deciding not to invest in either, and going for other commodities or stocks.

Dafuq. Really. Institutions where they NEED to have x percent of their portfolio as inflationary hedges, who are also getting hammered by their big clients to get some of their portfolio into these hedges NOW, are going "yeah, we couldn't decide whether BTC or Gold was best so we just bought Tesla shares instead". Laughable.

Again, there are 100s of worries to have about investing in BTC, as there are investing in anything, but if these are the best arguments against coming from outside...well my experience the criticism is a lot better from inside. It isn't all fanaticism/greed/irrational exuberance as some would like to suggest in my experience, this is people's real earned money they're putting in and they are doing a lot better analysis and due diligence imo. You can look on this forum at people who are invested in a big way but they'll offer much more insightful/thoughtful/valuable warnings than either of these imo.

EDIT: Also, someone should tell them to stop using "it has no real use" as an argument against BTC when their next sentence is "buy Gold instead". It sounds ridiculous.

Daithi40

Mucashinto wrote: »

This one's worse for me tbh, maybe just because he talks more.

INTERVIEWER: Do you think BTC is taking money from Gold?
SCHIFF: No, if anything institutions are confused by the debate and deciding not to invest in either, and going for other commodities or stocks.

Dafuq. Really. Institutions where they NEED to have x percent of their portfolio as inflationary hedges, who are also getting hammered by their big clients to get some of their portfolio into these hedges NOW, are going "yeah, we couldn't decide whether BTC or Gold was best so we just bought Tesla shares instead". Laughable.

Again, there are 100s of worries to have about investing in BTC, as there are investing in anything, but if these are the best arguments against coming from outside...well my experience the criticism is a lot better from inside. It isn't all fanaticism/greed/irrational exuberance as some would like to suggest in my experience, this is people's real earned money they're putting in and they are doing a lot better analysis and due diligence imo. You can look on this forum at people who are invested in a big way but they'll offer much more insightful/thoughtful/valuable warnings than either of these imo.

EDIT: Also, someone should tell them to stop using "it has no real use" as an argument against BTC when their next sentence is "buy Gold instead". It sounds ridiculous.

Yeah, am about 25k invested in Crypto about 5 yrs ago, yeah read all the P Schiff stuff and yeah, still believe he shills his own stuff - that's all... I'm almost 50 and thank god I tink that I believe that I can see the chaff for the wheat...... he may be proved right, who knows but really, the millionaire in your class is usally the same as you but he made a lucky bet

As always, only put in what you think will or could go to zero, ffs, this rule applies to everyone.... you are not different or smarter.... only lob in extra money - your money for your deposit on a house etc etc DONT YOU DARE..... just in case you havent been listening

Stormington

Mucashinto wrote: »

The one thing I will agree on - I didn't like when BTC/crypto tanked along with the rest of the stock market in March, it didn't look like much of a hedge then.

Ding ding ding. We have a winner.

Being a hedge is a narrative. BTC and crypto have been strongly correlated with the SPX for some time. The only hedges in March 2020 were a big bag of USD or a share of Vixxy.

Don't complain about Schiff: we need him to keep people from arriving sooner so they buy bags after BTC and crypto goes parabolic. He can keep saying the same thing for the next 8 or 9 years and he may eventually be right, but that gives everyone time to make money in the meantime.

makeorbrake

celtic_oz wrote: »

schiff is the perpetual doom monger .. and he doesn't pull his punches on bitcoin .. 7 mins in.

https://www.youtube.com/watch?v=M6k0QEnYpSQ

celtic_oz wrote: »

excellent interview [Jeremy Grantham]

https://www.youtube.com/watch?v=RYfmRTyl56w

So both of these come from the intrinsic value side of the debate although I suspect Schiff knows better at this stage. He can't possibly say anything good about btc as it could potentially eat golds lunch (and his whole business centres on gold).
There's no such thing as bad press and Schiff has been building his profile online through his obstinate dismissal of bitcoin. Smart move though to contrive to have his son appear as pro bitcoin - the Schiff's are hedging their bets.

Both Schiff & Grantham say ....'Gold has been around for thousands of years - bitcoin hasn't'. I'll use Michael Saylor's analogy - wooden ships were around for thousands of years - steel ships weren't. Yet one replaced the other as steel presented with several advantages over wood.
The interviewer puts Grantham right on his first couple of points i.e. you can't eat gold either and neither does gold produce a revenue stream. On gold being round for years - see above. On it not tarnishing - it's the very same point he's making re. gold being around and being durable. Bitcoin is equally as durable - it doesn't tarnish either - it just doesn't have the long track record of gold is all.

However, it's simply wrong for Grantham to park it up at that. He doesn't consider the advantages bitcoin has over gold - and it's clear that it does possess certain advantages. It's much easier and less expensive to store (once you know what you're doing). It is divisible where as gold isn't easily divisible. That means gold can't be used as money. Bitcoin can be used as a settlement layer - easily facilitating larger transactions. Use for micro-transactions (the cup of coffee purchase) remain outside of its scope right now but that may come into play through a layer 2 solution.
It can be transmitted digitally - you can send it anywhere on the planet, you can cross borders with it without the opportunity for anyone to confiscate it.

On the notion of it getting found out at the next stock market crash - in crash conditions, everything goes south. In the 2008 financial crisis, gold dropped 30%...and later recovered. In the 2020 covid-induced drop, gold dropped too. In those conditions, investors/traders need to draw down $ to cover losses. They don't care where that $ comes from. Would btc get sold off before gold? Of course it would - it's the more volatile asset and it's still proving itself in the digital gold role.

Daithi40 wrote:

I'm almost 50 and thank god I tink that I believe that I can see the chaff for the wheat

Same vintage but it's a very interesting point. Although they exist in lesser numbers as we go along, there are a list of notable people who insist that bitcoin is a nothing burger. People who otherwise have to be respected such as Munger and Buffett. However, It's a proven fact that the degree to which we have an ability to accept and adapt to change is a function of age. There are otherwise smart people who can't get their heads round bitcoin on that basis.

Daithi40 wrote:

he may be proved right, who knows but really, the millionaire in your class is usally the same as you but he made a lucky bet

Another good point. It reminds me of Raoul Pal making this very point a few months back....i.e. it's usually one thing/position/venture, etc. on which people make it. Along with the rest of the rationale he presents with, it feeds in to him being 'irresponsibly long' on bitcoin.

Bruno Mannheim

Theta waking up

unkel

makeorbrake wrote: »

He doesn't consider the advantages bitcoin has over gold - and it's clear that it does possess certain advantages. It's much easier and less expensive to store

That reminds me of a scene from "Gomorra" where your man, a capo from a mafia clan in Naples, goes to London to buy a company and pays for it in gold bars (a van full of them)