For everyone not familiar with Tether, here's a quick run down......
In a nutshell, Tether is a stable cryptocurrency which is "supposed" to have one US Dollar ($1) backing each USDT that is created. These Tether currencies are then traded on exchange markets which don't have bank connections...thereby effectively allowing traders the option to trade from crypto's back into cash to prevent market corrections and such.
Tether emerged in the late summer of 2016. What's interesting about this is that it was right after the big Bitfinex hack which saw over 100,000 BTC's get stolen (mine included). Now, the general consensus is that the Bitfinex team created Tether in order to generate money to pay back the issued BFX tokens which it issued to the customers of Bitfinex for their losses.
Where does this get hairy? Well, Tether is supposed to have an equal amount of US dollars for the number of issued USDT tokens. If Bitfinex used the money to back Tether to pay back owners of their BFX tokens, this could of course create a realistic problem.
For anyone who remembers Mt. Gox, there was a similar scandal speculation behind it after the hack.
Some of the current theories about Bitfinex as well is that they were taking all of the money that was used to back Tether and instead of holding it to back it, they used that money to buy Bitcoins.
...again, I'm sure we can all see where the problem is.
Now, back in 2013, the Mt. Gox fiasco broke user confidence in the crypto system. This lack of confidence took BTC from above $1,200 to below $200.
There's many more news stories regarding this recent subpoena. The WIRED had a great article today here
"Crypto Investor" on YouTube made a case for this several months ago, hinting that this scandal scenario could get exposed and be a catalyst to pop the markets (even further at this point).
As always, stay safe and be patient!! Please let me know your thoughts on the Tether/Bitfinex situation.
This Tether scandal caused so much FUD... Forced us into a bear-market basically. I'm definitely hoping this won't cause a huge crash, if it does there are more dark days to come... I'm HODLing everything, are you?
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We were already in a bear market before this....this definitely will perpetuate it, especially as news gets released about it.
Not HOLDing (you spelled it wrong), I'm usually liquid in cash and go in on breakouts or oversold bounces.
Gave you a follow :)
I’ve thought a lot about that and even sat out of crypto during the massive bull run of btc 7k-15k because of it.
I think now though it’s different times. In 2013 the crypto market was wayyy more speculative than it even is now. Bitcoin or companies weren’t even close to any real world use.
While we’re still a bit of ways off from mainstream adoption and use of cryptocurrency, it’s far more in the public awareness than it was in 2013. Also, there are legitimate companies with real partnerships who have a viable use for their tokens. Big mainstream companies such as Starbucks are speaking publicly about the viability of cryptocurrency/blockchain technology.
Tether may or may not cause a bit of a crash, but I believe that if it does, it won’t take years to recover this time. Just protect yourself and don’t invest more than you can realistically afford to lose :)
One of the benefits of being a trader and not a holder is I usually stay liquid in cash :)
Yea you're definitely right about that. Yea my perceptions from back then impacted me getting in on the end of the fall/winter bull run.
I think a lot of places are currently talking about it because it's all over the news and it's the hype. I think once it dies down not as many people will care about mentioning it for the publicity. Unless they are creating their own blockchain and currency, I don't see any integrations with other stuff.....no benefits currently.
The wired article was amazing.
So, how long do we have?^^
Yea, I'm a fan of WIRED. IDK how long we'd have....ultimately depends on the outcome.
Now a day later I'm not so sure it will have a very strong impact. the market cap ratio to total market cap in cryptos seems tiny.
But Tether reeks for sure, I am guessing the official structures have something to do with it.
Talking about tether having no backing but claiming the dollar is anything different is kind of short-sighted. But super popular still, so many people say so.
Guess we'll see what comes out of this. But I do not believe that it will practically kill cryptos or their viability in the public perception. If anything probably a temporary dip and a wave of mistrust until it picks up again.
Since its inception, the company has not passed a single audit, and therefore it is not clear exactly how the dollar is backed by USDT. If in fact the company has that kind of money? As soon as the regulators will find something illegal or not sufficiently transparent in the actions of the Tether company Limited, all virtual coins, the company will lose value. In this case, the victims are inevitable. Lose or those who hold coin, accumulating for the purchase of bitcoin or other cryptocurrencies, or those who just sold their BTC and ETH for the wrappers.
Yea, might be a case for cryptos to rally if people want to get out of USDT...
Upvoted ☝ Have a great day!
Thanks! You as well.