[fmela]

By trading tether issued out of thin air for BTC.

[RexetBlell]

Why would anyone want to exchange their Bitcoins that are worth over $10,000 each on Coinbase (and can be converted to real dollars) for some tokens that are backed by nothing?

[cantrip]

Tether are, ostensibly, backed by $1 in a bank somewhere.

Having a dollar token is very useful, since you can move in and out of crypto trading positions into a stable store of value, good old USD.

Converting to real money takes a long time so you can't react to the market, and is also taxable and often has other fees on top.

[michaelchisari]

> backed by $1 in a bank somewhere.

Are we sure about this?

[runeks]

No, that’s the point, no one is sure about this. For a token that’s supposed to be redeemable in USD, the tether is extremely opaque.

[cantrip]

Yeah you took out the word ostensibly when you quoted me.

[tehlike]

Converting to another coin is also taxable. Similar to selling a stock.

[corysama]

It’s used to move large amounts of dollars between exchanges that don’t want to deal with the regulations involved in moving large amounts of dollars.

[runeks]

In my experience, no one has a satisfying explanation for this. Nor why this would affect the USD price of bitcoin.

[tehlike]

Also you can trade among yourself and create the illusion of hot market, suck a lot of people in, and use the funds from these people to stay afloat.

[tehlike]

Bitfinex can become insolvent, which means people cannot cashout their usdt's. Prices may crash.

[Zpalmtree]

Good place to park your gains when the market's volatile.