Tether/Stablecoins are the hot air inside the Bitcoin bubble...their regulation will burst it

evil_g

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And if that's your assessment, that's fair enough. Then don't choose to access USDT - simples.

Yes. This is all very simple, and will have no knock-on effects beyond the direct participants in this get rich quick scheme.
 

tecate

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Yes. This is all very simple, and will have no knock-on effects beyond the direct participants in this get rich quick scheme.
I wasn't referring in that post to knock-on effects - that doesn't mean that I don't think there could be in a worst case scenario. A USDT unravel would be much messier than the Terra unravel we've experienced this week. However, the sector has broadened considerably over the past few years - there isn't total reliance on USDT. On that basis, it wouldn't spell the end of Bitcoin.

One way or another, there is going to be greater regulation year-on-year where centralised stablecoins are concerned. If there are gaping holes in Tether's reserves, then that will come to the fore at some stage. If there aren't then they have quite a sizable business at this point - so the chances are they will become more and more compliant going forward.
Algorithmic stablecoins could be a different kette of fish - but they'll have to find ways to build them robust enough that they can't be unhinged before they start absorbing really big money.
 
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Dublinbay12

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Bitcoin doesn't need a high price to survive. Investors just want a high price.

If Tether goes under it will have an impact on the price of bitcoin but it won't end Bitcoin.


stablecoins that are backed by real world assets such as US Treasuries will eventually be capped as there are only so many assets available to purchase. Obviously the market will find other ways to support stable coins like algorithm based coins. Stablecoins will remain a part but at a certain point the market will find alternatives
 

tecate

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Bitcoin doesn't need a high price to survive. Investors just want a high price.
Bitcoin has proven it can survive at a whole range of prices. As regards where that price eventually settles, the tokenomics that the project sets out relative to supply/demand has everything to do with that.

If Tether goes under it will have an impact on the price of bitcoin but it won't end Bitcoin.
Yup - all day long. We've seen that on a smaller scale this week and the panic that can cause on a shorter timeframe (albeit that UST implicated BTC as a reserve asset so that complicated matters further).

stablecoins that are backed by real world assets such as US Treasuries will eventually be capped as there are only so many assets available to purchase. Obviously the market will find other ways to support stable coins like algorithm based coins. Stablecoins will remain a part but at a certain point the market will find alternatives
The global bond market has a market cap of $119 trillion. I can't imagine we need to consider stables running out of assets to buy anytime soon. I really hope you're right and some algorithmic project can get the formula right such that its robust enough not to be vulnerable to being unhinged. Do you have anything specific in mind re. new alternatives to stables or do you mean a Fed-coin?
 
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Duke of Marmalade

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I Googled algorithm based stablecoins. This is my understanding. Say you have 100 abs priced at $1. The price is decided by supply and demand, no collateral backing; how it gets a price to begin with is a mystery. Anyway back to the example. Demand dries up and it falls to 50c. The protocol halves your number of abs to 50 so that the price rebounds to 1$. So you have had price stability but the same market cap volatility.
Please someone tell me that I haven't got this right; it is just too crazy to be true:oops:
 

Dublinbay12

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The global bond market has a market cap of $119 trillion. I can't imagine we need to consider stables running out of assets to buy anytime soon. I really hope your right and some algorithmic project can get the formula right such that its robust enough not to be vulnerable to being unhinged. Do you have anything specific in mind re. new alternatives to stables or do you mean a Fed-coin?

There is ultimately a ceiling for assets that can be purchased.

The $119 trillion represents the entire bond market, but assets that can support stablecoins are a smaller subset of that (UST, Short Term CP etc). The outstanding UST is $23 trillion of which $4bln have a maturity <1yr. Factoring in that Tether is competing with other market participants (China, Pension funds etc) and on average the US gov is selling $1.5bln of new treasuries a month there is a potential cap to growth for physically backed stablecoins. I am not saying this is an immediate issue just that this is a concern hence why it was one of the contributing factors for developing algorithmic stablecoins.

Regarding alternatives given that the majority of volume in USDT is on centralized exchanges used for trading as we move to a more regulated environment I don't see why users won't just park their cash in cash on the exchange rather than in a 3rd party asset backed by cash equivalent, doing that cuts out risk, without really impacting the market. Historically we had USDT because exchanges couldn't hold your cash.

Not an alternative idea but an enhancement, it looks like the UST crash was in part caused by a target very large trade, and in my opinion this is an opportunity to enhance the infrastructure of the market, something like a central clearing house leveraging the underlying public ledgers.
 

tecate

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An institution obfuscating its holdings, making misleading statements about it reserves & fearing transparency when its ‘holds’ the publics money…..is all the evidence sensible people would need.
So that's a guess then. And I fully acknowledge that there's enough in all of that to encourage people to be cautious and concerned (I raised this concern here on AAM long before anyone else ever mentioned it). Tether's history is such that it was locked out of the banking system early on with a view to strangling it. Furthermore, it's been targeted by short sellers more recently. It's not unreasonable to think that it doesn't want actionable info falling into their hands so they can work out how to destablise the token. From a joe public perspective, I agree that there needs to be more transparency, I agree that its opaque setup isn't a good look. However, this is not confirmation that they don't have the funds available to back up their tokens.

I'd imagine then that you'd far prefer an algorithmic stablecoin. Would you be in favour of an algorithmic stablecoin if it was robust enough in its design such that it couldn't be de-pegged?
 
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tecate

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Please someone tell me that I haven't got this right; it is just too crazy to be true:oops:
I'm not sure what your objection is, Duke. So we're talking about a stablecoin governed by code. Lets not even go into the technicals - that's what it is at its core. If the code and the stablecoin design relative to that code can maintain a peg against the US dollar (or euro, pound, etc), what issue could you possibly have with that?

The problem thus far is that a number of projects have not been able to devise an algorithmic stablecoin that doesn't have a vulnerability that leads to it being destablised and de-pegged. Obviously that's an issue. However, if they solve that problem, what issue could you possibly have with such a token?
 

tecate

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Your a very trusting person @tecate
I'd suggest you read my post again - because I'm anything but trusting. In fact, that's precisely the point. I don't assume in either direction. That leaves you as the trusting one.

You probably missed this ->

I'd imagine then that you'd far prefer an algorithmic stablecoin. Would you be in favour of an algorithmic stablecoin if it was robust enough in its design such that it couldn't be de-pegged?
 

Duke of Marmalade

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I'm not sure what your objection is, Duke.
Wasn't an objection - just looking for some assurance that my totally crazy interpretation is off the wall. You are not giving me that assurance.
So we're talking about a stablecoin governed by code. Lets not even go into the technicals - that's what it is at its core.
I have gone a bit more into the technicals and it gets crazier. It involves things like using mining activity as a proxy for price, it involves "bonds", it involves "taxing transactions" if velocity is deemed to be too high. For a start the lag factor in these methods rules out anything that might be called stability.
If the code and the stablecoin design relative to that code can maintain a peg against the US dollar (or euro, pound, etc), what issue could you possibly have with that?

The problem thus far is that a number of projects have not been able to devise an algorithmic stablecoin that doesn't have a vulnerability that leads to it being destablised and de-pegged. Obviously that's an issue. However, if they solve that problem, what issue could you possibly have with such a token?
Let's dispense with Ifs, If an algorithm could produce Rice Krispies then that would be a good thing. I presume the Alchemists used the If argument a lot to perpetuate their futile project.

I take it that If an algorithmic stablecoin could be produced you would support it. That surprises me for I thought your main mantra was to free us from the fraud that is the greenback (remember those pictures of its back) and yet here you seem to laud an algorithm which would have an indestructible peg to said greenback.

One thing really puzzled me. I understand the concept of managing supply and velocity to stabilise an exchange rate between foreign currencies. But it relies on the currencies having some intrinsic value in the first place. Where do these algorithmic stablecoins get their start up value? Why of course through an IPO of 100 million dollars worth to the lucky first in first served. This is Ponzi squared.
 

tecate

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Wasn't an objection

This is Ponzi squared.

Yes of course, it's not an objection! :D

Let's dispense with Ifs, If an algorithm could produce Rice Krispies then that would be a good thing. I presume the Alchemists used the If argument a lot to perpetuate their futile project.

Very enlightening Duke. With that attitude, nothing would ever be built and nothing would ever improve.

I take it that If an algorithmic stablecoin could be produced you would support it.
I asked you what issue could you possiby have with an algorithmic stablecoin that couldn't be de-pegged. I see a long tirade - and no answer. If you want to discuss the topic, you might answer the question.
As to your question, would I 'support' it - it depends on what you mean by support. What I can say is that its something that interests me - and it would solve a couple of things -
1. Remove trust issues re. the backing / lack of backing relative to a centralised / collateralised stablecoin.
2. Make for truly decentralised stablecoins without centralised points of failure.

That surprises me for I thought your main mantra was to free us from the fraud that is the greenback (remember those pictures of its back) and yet here you seem to laud an algorithm which would have an indestructible peg to said greenback.
You can deliberately mischaracterise my views all you wish - I don't much care at this point. Notwithstanding that, unlike you I'm prepared to look at difficiencies in the current system and recognise them as such. I haven't seen much in the way of honesty in these debates in acknowledging that there are items that can be improved upon.
Stablecoins are going to play a part in improving global payments.
As has been pointed out to you on multiple occasions, I'm not interested in tearing down the current system for the hell of it. I am interested in new innovations that can work with or in tandem with it - OR - totally separate systems that can run alongside it.


One thing really puzzled me. I understand the concept of managing supply and velocity to stabilise an exchange rate between foreign currencies. But it relies on the currencies having some intrinsic value in the first place. Where do these algorithmic stablecoins get their start up value? Why of course through an IPO of 100 million dollars worth to the lucky first in first served. This is Ponzi squared.
We've seen this time and time again from you and others. You'll just tar and feather every project screaming 'ponzi'. It's either ignorance or embittered defiance or both. Are there wayward projects out there? Plenty of them. Are there also genuine projects trying to innovate? Definitely.
 

Duke of Marmalade

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I asked you what issue could you possiby have with an algorithmic stablecoin that couldn't be de-pegged. I see a long tirade - and no answer. If you want to discuss the topic, you might answer the question.
That is just a big IF in the same space as would I think it good if we could make algorithmic rice krispies or if we could turn base metal into gold. The examples I have seen such as increasing the mining reward in response to the mining hash rate would be so crude and time lagged that they couldn't possibly lead to the sort of stability that a collateralised system provides. The pseudo scientific basis of these algorithms are just part of the Ponzi fraud to lure gullible punters into thinking they are on to the next bitcoin.
But since you insist I will give an answer. Do I think it would be a good thing if we could make algorithmic dollars out of thin air? It would certainly be a most incredible technical achievement on a par with lifting bald men by the hair. But no it would not be good for mankind if the Central Banks were unable to stamp it out. In fact it would spell the end of our current financial civilisation - won't happen so it doesn't worry me.
 

tecate

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That is just a big IF in the same space as would I think it good if we could make algorithmic rice krispies or if we could turn base metal into gold. The examples I have seen such as increasing the mining reward in response to the mining hash rate would be so crude and time lagged that they couldn't possibly lead to the sort of stability that a collateralised system provides. The pseudo scientific basis of these algorithms are just part of the Ponzi fraud to lure gullible punters into thinking they are on to the next bitcoin.
Really sounds like you're willing that issue not to be resolved as much as you may think there's a technical issue to resolve. :cool:

But since you insist I will give an answer. Do I think it would be a good thing if we could make algorithmic dollars out of thin air? It would certainly be a most incredible technical achievement on a par with lifting bald men by the hair. But no it would not be good for mankind if the Central Banks were unable to stamp it out. In fact it would spell the end of our current financial civilisation - won't happen so it doesn't worry me.
Interesting....insofar as you appear to be out of lockstep with your central banking buddies. Even the Fed and Swift (which could be disrupted itself by stablecoins and other digital assets) have acknowledged the innovation implicated in stablecoins in reports released over the past six months. But at least the peanut gallery is entertained with your bald men reference :D . Have I introduced you to the 'old man yells at cloud' meme?
 

Duke of Marmalade

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Really sounds like you're willing that issue not to be resolved as much as you may think there's a technical issue to resolve. :cool:


Interesting....insofar as you appear to be out of lockstep with your central banking buddies. Even the Fed and Swift (which could be disrupted itself by stablecoins and other digital assets) have acknowledged the innovation implicated in stablecoins in reports released over the past six months. But at least the peanut gallery is entertained with your bald men reference :D . Have I introduced you to the 'old man yells at cloud' meme?
The Central Banks most, most , most certainly will not be promoting algorithmic stablecoins. Either you know that and are using your usual diversionary tactics, or you don't understand what algorithmic stablecoins are which would somewhat disappoint me as I thought you were an expert, albeit a cultist believer.
 

tecate

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The Central Banks most, most , most certainly will not be promoting algorithmic stablecoins.
And I said that where exactly?

I thought you were an expert
I have never suggested or claimed such a thing.

albeit a cultist believer.
The only cultist believer here is you. It's precisely the point. Even the Fed and Swift are capable of at least acknowledging certain positive characteristics relative to stablecoins.
 

Duke of Marmalade

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The only cultist believer here is you. It's precisely the point. Even the Fed and Swift are capable of at least acknowledging certain positive characteristics relative to stablecoins.
Nonsense. Central Banks are contemplating Central Bank Digital Currencies. They are not in any way considering algorithms which will do their job of managing the price level. I conclude that you don't understand algorithmic stablecoins.
 

tecate

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Nonsense. Central Banks are contemplating Central Bank Digital Currencies. They are not in any way considering algorithms
And I said that where exactly?
the_dukes_lies.JPG
 
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