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

[letitroll]

MicroStrategy

That lunatic, Michael Saylor, is going down with the ship no matter what happens & the bond holders will end up with his company in the process......even if it was revealed Jimmy Saville was Nakamoto tomorrow Saylor would double down........dont ever forget his public advise when it was $69k.....sell everything you own, sell your business, your family business and borrow money to buy bitcoin. Reckless & beyond reproach...he may have an IQ of 160 but the people who listen to him I assure you dont and listening to demonstrably intelligent people can be intoxicating for the average Joe - a not insignificant amount of people I can assure you listened to his advice to disastrous results

institutional investors will continue accumulating or not?

Institutions are but the servants of their customers........when bitcoin was going up up & away, institutions customers got interested in it and started asking Fidelity / Blackrock 'JPM etc. about it for their own accounts, FOMO is a very strong emotion.........so like any good business that wants to serve their customers (& not lose customers to others) they began to offer it (didn't hurt that commissions/brokerage fees are outrageous in this space as compared to equities i.e. high margin product).

This recent institutional participation in crypto.....which crypto bros take as a sign of legitimacy & that their 'visions' are coming true.....has got it wrong & back to front............the naïve see a Fidelity & say look they're getting 'into it', they're smart and they are now blessing & anointing it, it must be legit..........but the inverse is true.......institutions are only as smart as their customers, not the other way around. Remember Bank of Ireland's leadership knew developer lending/mortgage lending had lost control in the mid/late 2000's.....they held back as Anglo/AIB et al went crazy....their growth suffered and the institutional "me too" urge to participate in a mania gets to be too strong.....and even the prudent BOI began to lose its mind in 05/06/07 with lending, having resisted the urge for so long. Its not easy for say a Fidelity to stay on the sidelines think about Coinbase stealing their pension customers etc. So even the mighty Fidelity cracked.......so I would see institutional participation in crypto as the beginning of the end, as opposed to start of the beginning (but I would then )

But back to post #136..........whats the interest level in an asset class, with no intrinsic value or cash flows, after it drops say 90% in value peak to trough..........approximately 0 I would say.............So do institutions keep accumulating, only if their customers are unlike my Mark Twain cat above....and they like sitting on hot stoves even AFTER they've been burned.

 

[Rasputin]

Lets take your thinking on this a stage further. You 'develop an algorithmic stablecoin that is so robust that it can't be depegged'. At that stage, such USD stablecoins function as (programmable) USD do they not?

Excuse my ignorance on what probably sounds like a really stupid question, but if an algorithmic stablecoin was developed that was pegged to the $ and couldn't be depegged, why not just use $'s. I mean - what's the point, where is the value in that, and how is that better than just using $'s ?

 

[letitroll]

Excuse my ignorance on what probably sounds like a really stupid question, but if an algorithmic stablecoin was developed that was pegged to the $ and couldn't be depegged, why not just use $'s. I mean - what's the point, where is the value in that, and how is that better than just using $'s ?

You nailed it in a very common sense way.....be wary of derivative abstractions & complexity & cleverness where none need exist.......the complexity is there to benefit the promoters, not users/customers.......and to the extent the complexity is warranted in stablecoins, the use case for it is to avoid regulations/laws/AML/KYC.......put bluntly stablecoins are the functional equialvent of going into an offshore unlicensed Casino & exchanging money for Casino issued chips that represent legal tender (but arent!)

 

[Duke of Marmalade]

Excuse my ignorance on what probably sounds like a really stupid question, but if an algorithmic stablecoin was developed that was pegged to the $ and couldn't be depegged, why not just use $'s. I mean - what's the point, where is the value in that, and how is that better than just using $'s ?

@letitroll explains it very well. So a typical activity would be sell XYZ crypto and buy ABC crypto. Apparently it is more convenient to park the proceeds of the sale in crypto space rather than going out into the real world and back again into crypto space.

 

[letitroll]

The other interesting thing about crypto "markets" that shouldn't be lost on people........is they are open 24 hours day, they literally never close....other such 24 hour 'establishments' outside of petrol stations...........casinos & whorehouses

 

[Brendan Burgess]

Can you not buy sterling and dollars 24 hours a day somewhere in the world?

I can't see how that is relevant in any way.

Brendan

 

[CuriousGeorge11]

The other interesting thing about crypto "markets" that shouldn't be lost on people........is they are open 24 hours day, they literally never close....other such 24 hour 'establishments' outside of petrol stations...........casinos & whorehouses

The casino comparison is a good one because that's what crypto is for a lot of people.
Online gambling is illegal in America but crypto allows people to gamble

 

[tecate]

Can you not buy sterling and dollars 24 hours a day somewhere in the world?

I can't see how that is relevant in any way.

Brendan

You have Burgess PLC based out of Dublin - with international subsidiaries all over the place. Wouldn't international settlement be much simpler if it was direct from HQ to subsidiary company? The conventional settlement process might involve a number of intermediaries, implicate settlement risk and take a few days and cost a lot. It doesn't have to. Furthermore, you're finding that you have trapped liquidity in various currencies that's proving to be a wholly inefficient use of capital.
Example 2 - you've just moved to where-the-hell-istan - the local government has implemented capital controls that say that any USD that enters the country will automatically be converted to where-the-hell-istan dollars. The local currency debases faster than a melting ice cube. Wouldn't a USD stablecoin be useful?

Use case goes well beyond that - but we'll start with the above.

 

[DazedInPontoon]

That lunatic, Michael Saylor, is going down with the ship no matter what happens & the bond holders will end up with his company in the process......even if it was revealed Jimmy Saville was Nakamoto tomorrow Saylor would double down........dont ever forget his public advise when it was $69k.....sell everything you own, sell your business, your family business and borrow money to buy bitcoin. Reckless & beyond reproach...he may have an IQ of 160 but the people who listen to him I assure you dont and listening to demonstrably intelligent people can be intoxicating for the average Joe - a not insignificant amount of people I can assure you listened to his advice to disastrous results



Institutions are but the servants of their customers........when bitcoin was going up up & away, institutions customers got interested in it and started asking Fidelity / Blackrock 'JPM etc. about it for their own accounts, FOMO is a very strong emotion.........so like any good business that wants to serve their customers (& not lose customers to others) they began to offer it (didn't hurt that commissions/brokerage fees are outrageous in this space as compared to equities i.e. high margin product).

This recent institutional participation in crypto.....which crypto bros take as a sign of legitimacy & that their 'visions' are coming true.....has got it wrong & back to front............the naïve see a Fidelity & say look they're getting 'into it', they're smart and they are now blessing & anointing it, it must be legit..........but the inverse is true.......institutions are only as smart as their customers, not the other way around. Remember Bank of Ireland's leadership knew developer lending/mortgage lending had lost control in the mid/late 2000's.....they held back as Anglo/AIB et al went crazy....their growth suffered and the institutional "me too" urge to participate in a mania gets to be too strong.....and even the prudent BOI began to lose its mind in 05/06/07 with lending, having resisted the urge for so long. Its not easy for say a Fidelity to stay on the sidelines think about Coinbase stealing their pension customers etc. So even the mighty Fidelity cracked.......so I would see institutional participation in crypto as the beginning of the end, as opposed to start of the beginning (but I would then )

But back to post #136..........whats the interest level in an asset class, with no intrinsic value or cash flows, after it drops say 90% in value peak to trough..........approximately 0 I would say.............So do institutions keep accumulating, only if their customers are unlike my Mark Twain cat above....and they like sitting on hot stoves even AFTER they've been burned.

I disagree with pretty much everything here, but I appreciate having this post quoted for posterity.

 

[DazedInPontoon]

Excuse my ignorance on what probably sounds like a really stupid question, but if an algorithmic stablecoin was developed that was pegged to the $ and couldn't be depegged, why not just use $'s. I mean - what's the point, where is the value in that, and how is that better than just using $'s ?

Wow this question honestly blows my mind. I guess we're still that early.

1) You no longer need to worry about whether today starts with an 'S' when making a transaction and considering when it will arrive.
2) Geography becomes irrelevant for transactions.
3) You can self custody your digital dollars without counter-party risk.

The real question is if the perfect stable coin for dollars existed why would you ever use non-stable-coin dollars again? I would be closing all my bank accounts.

 

[Duke of Marmalade]

The real question is if the perfect stable coin for dollars existed why would you ever use non-stable-coin dollars again? I would be closing all my bank accounts.

Exactly. If money trees actually existed folk could simply plant a few (one would be enough actually) and nobody need ever work again. Crypto paradise - bring it on.
Actually an algorithm which created indestructible links to the dollar out of nothing would be far superior to money trees as the latter would presumably involve some effort in plucking the dollars off the trees.

 

[Duke of Marmalade]

That lunatic, Michael Saylor, is going down with the ship no matter what happens & the bond holders will end up with his company in the process......even if it was revealed Jimmy Saville was Nakamoto tomorrow Saylor would double down........dont ever forget his public advise when it was $69k.....sell everything you own, sell your business, your family business and borrow money to buy bitcoin. Reckless & beyond reproach...he may have an IQ of 160 but the people who listen to him I assure you dont and listening to demonstrably intelligent people can be intoxicating for the average Joe - a not insignificant amount of people I can assure you listened to his advice to disastrous results



Institutions are but the servants of their customers........when bitcoin was going up up & away, institutions customers got interested in it and started asking Fidelity / Blackrock 'JPM etc. about it for their own accounts, FOMO is a very strong emotion.........so like any good business that wants to serve their customers (& not lose customers to others) they began to offer it (didn't hurt that commissions/brokerage fees are outrageous in this space as compared to equities i.e. high margin product).

This recent institutional participation in crypto.....which crypto bros take as a sign of legitimacy & that their 'visions' are coming true.....has got it wrong & back to front............the naïve see a Fidelity & say look they're getting 'into it', they're smart and they are now blessing & anointing it, it must be legit..........but the inverse is true.......institutions are only as smart as their customers, not the other way around. Remember Bank of Ireland's leadership knew developer lending/mortgage lending had lost control in the mid/late 2000's.....they held back as Anglo/AIB et al went crazy....their growth suffered and the institutional "me too" urge to participate in a mania gets to be too strong.....and even the prudent BOI began to lose its mind in 05/06/07 with lending, having resisted the urge for so long. Its not easy for say a Fidelity to stay on the sidelines think about Coinbase stealing their pension customers etc. So even the mighty Fidelity cracked.......so I would see institutional participation in crypto as the beginning of the end, as opposed to start of the beginning (but I would then )

But back to post #136..........whats the interest level in an asset class, with no intrinsic value or cash flows, after it drops say 90% in value peak to trough..........approximately 0 I would say.............So do institutions keep accumulating, only if their customers are unlike my Mark Twain cat above....and they like sitting on hot stoves even AFTER they've been burned.

I agree with pretty much everything here and we should all appreciate having this post for the here and now, to paraphrase @DazedInPontoon.

 

[tecate]

Exactly. If money trees actually existed folk could simply plant a few (one would be enough actually) and nobody need ever work again. Crypto paradise - bring it on.

Totally disingenuous, Duke. You know well that was in no way his suggestion.

 

[tecate]

I agree with pretty much everything here and we should all appreciate having this post for the here and now.

Almost? Can you not extend to a full endorsement? If not, where's the variance?

 

[Duke of Marmalade]

Anybody like to disagree that an algorithm that produces digital entries out of thin air with an indestructible link to the $ (in cult language seigniorage) is at least as good as, nay better than a money tree.

 

[Duke of Marmalade]

I do have a minor quibble with post #141. Institutions are servants of themselves which they achieve by pretending to be servants of their customers.

 

[tecate]

Anybody like to disagree that an algorithm that produces digital entries out of thin air with an indestructible link to the $ is at least as good as, nay better than a money tree.

Hilarious with what goes on in the conventional world, NOW in this example you have an issue with who benefits from seigniorage!

There are seigniorage-based algorithmic stablecoins and collateral-based algorithmic stablecoins. So if the latter is the one that cracks it, no doubt you will come up with some other reason to be negative about it, right?

 

[Rasputin]

Wow this question honestly blows my mind. I guess we're still that early.

1) You no longer need to worry about whether today starts with an 'S' when making a transaction and considering when it will arrive.
2) Geography becomes irrelevant for transactions.
3) You can self custody your digital dollars without counter-party risk.

The real question is if the perfect stable coin for dollars existed why would you ever use non-stable-coin dollars again? I would be closing all my bank accounts.

Wow, such unnecessary condescension - I guess you must be the smartest guy in the room.

1) I never worry about whether there is an S in the day when I'm making any transactions. It really has never impacted my life in any meaningful way. I have no idea why stock markets being open 24/7 is a good thing. I think there are more than enough hours in the day for speculative transactions.
2) Global trade happens every day, and most of the barriers to global trade aren't to do with currency
3) I don't actually want to self-custody my assets. I'd rather self-custody hard cash under my mattress than leave it lying in a digital wallet somewhere where that I have no idea what it will be worth when I wake up in the morning. Counter-party risk is relatively small for the average person if they are sensible about where they keep their assets. I say relatively small, as compared to the risk of holding crypto, which in my view (not the smartest guy in the room) is very, very, very high risk.

 

[tecate]

1) I never worry about whether there is an S in the day when I'm making any transactions.

I'm sure you'd agree that your experience is not likely to be representative of every individual or corporate entity everywhere in the world in this respect. Why should we restrict ourselves if the ability exists to transact all days - not some days?

2) Global trade happens every day, and most of the barriers to global trade aren't to do with currency

According to your first point, it doesn't happen every day. On barriers to trade, are capital controls barriers? Is access to international banking a barrier? (and before you consider that, step out of your own shoes and consider that from the point of view of folks in the developing world). There's certainly friction in the current system. Do you think its reasonable for me to pay $100 for a wire transfer that takes an age as I did some months back? Why should we involve intermediaries that add fees and slow down transaction time if we can do so ourselves directly in real time?
If you're a corporate treasurer managing money and find that there's liquidity trapped in various countries and in various currencies just so that payments can be made, isn't that a problem you would solve if a solution presented itself? The same with counterparty risk relative to the settlement process.

3) I don't actually want to self-custody my assets.

I'll refer you back to my response to your first point on that one.

I'd rather self-custody hard cash under my mattress than leave it lying in a digital wallet somewhere where that I have no idea what it will be worth when I wake up in the morning.

That might be relevant in another discussion but not in a discussion on an algorithmic stablecoin that can't be depegged. Other than that, your mattress storage comes with its own risks.

Counter-party risk is relatively small for the average person if they are sensible about where they keep their assets.

How about assets kept in a sovereign currency that fails when its impossible to store in a leading fiat currency such as USD, Euro, etc (due to the implementation of capital controls)? What about the failure of banks? Each to their own but I'm with DiP on this one. Once there's no more need, I'll pull away from banks entirely and self custody.

As compared to the risk of holding crypto, which in my view (not the smartest guy in the room) is very, very, very high risk.

I'm not sure if you're referring to risks relative to self-custody. If so, I agree that there's great responsibility in that instance. However, once more user friendly products based on multi-sig - where there are a number of signers required to effect a transaction - are introduced, that risk will go away also.

 

[letitroll]

"Show stopper" @tecate....your not reading or understanding my posts.........I'm trying to help you understand that there will be no showstopper moment that the BTC crowd can rally against.......no Joe Biden in the Rose Garden saying Bitcoin is banned because of ransomware attacks....no link I can point you too....get that idea out of your head and certainly dont assign it to me or my posts.........the way 'the system' works is by slowly constricting and starving its target of oxygen using the various apparatuses of the state......DOJ, FTC, SWIFT, FED, FINRA, SEC, ECB, ESMA, FCA..........your comment on the ebbs & flows of regulation is interesting.......you havent spotted the change in the mood music since Colonial/JBS & HSE attacks.....see BTC/crypto has been a sideshow & the ebb and flow you mention is because frankly, up until this point, regulators / leaders had better things to do than take a philosophical position on BTC. The change I've detected is because national security has been threatened, more importantly US national security...........& the USA's return to multilaterlism & global institutions has brought global coordinated action back in fashion (see global minimum tax rate). I can assure you that regulators/political leaders have now been forced to take a view on BTC/cypto and that view is being led by US leadership and it isnt positive ..............Operation Constriction has begun.................I can assure you.

'Operation Constriction' playing out @tecate as I said it would in 2021. The wheels of justice move slow....but its relentless. The final destination here is clear.

Binance has been taken to the woodshed by the US government (DOJ, treasury & SEC next)......its toast and likely functionally bankrupt over time.....in a very real sense all Binance is now is a data repository for the US government to collect historical intelligence information for the flow of illicit funds globally over the last number of years (Hamas etc.). Its an AML depository. CZ has thrown his main customers (criminals & money launders) under the bus to try and save himself.

Inside Binance sits the evidence needed to bring about the demise of Tether.....and what is uncovered inside Binance & with CZ as cooperating witness will be sufficient to bring Tether down for its facilitation of terrorists, ransomware and money laundering...as well as the broad market manipulation that it facilities across the crypto ecosystem.

Tether is now on borrowed time........I give it probably max 18 months from here. They will until then print USDT's with reckless abandon now in this period to allow insiders to exit with whatever real money exists inside the crypto closed loop ecosystem. See the price you see on your screen @tecate in this world for every coin & token incl. BTC.......is a fantasy. Facilitated by wash trading and painting the tape across exchanges with this funny money created by three guys in the British virgin islands called USDT.

Before the tired crypto talking point trope is rolled out by you - which says - "well cash is ALSO used for illicit activity you gonna ban that......the internet is used for ilicit you gonna ban that....phones are used for ilicit activity you gonna ban that. The wheel, you gonna ban that "

That is, as your realizing already I'm sure, one of the great false equivalencies of our time which is becoming increasingly laughable as FTX, Binance etc collapse and crypto 'building' delivers no mass market products that are used at scale by anybody....cash facilitates global commerce and trade.....an amazing net positive, the Internet facilitated a revolution in communication, knowledge and connectivity, the smart phone connected 6 billion people....what an amazing contribution to civilisation....whatever negatives they've created (and they have) are deeply outweighed by the positive contribution to society and humanity that they provide.

Put simply the ledger is overwhelming weighted towards the positive for these inventions.

Crypto, almost a decade and a half into its life.....a sufficient period to see if there is any 'there,there', has a positive/negative ledger that is overwhelmingly weighted towards negatives....that it fails the technology advancement test and so you are seeing governments move against it.

Its killer application.....remains to this day 15 years later.....gambling, securities fraud, extortion & money laundering.

Look forward to popping back once Tether blows up. My thesis is playing out nicely - my 2030 wager with you on BTC price is already in the bag I feel......before 2030 & tether's blowup of course I'll pop back in the interim when Coinbase's is found guilty in court of the charges the SEC has brought i.e found guilty of running an illegal exchange, listing unregistered securities and acting as an unregistered broker-dealer and clearing house in the US.

The dream is over @tecate hope your seeing that. Forget what Coindesk & Crypto news channels are telling you.....they're job is to keep you at the Casino table until the insiders take all YOUR money off the table.