George Soros broke the Bank of English's attempt to maintain a minimum exchange rate for the Pound against various other European currencies.
It was this experience that taught me that you can not cost free fix the exchange rate between currencies unless you are using "magic". And USDT has always seemed magical to me.
No, it's very easy to fix the exchange rate between currencies: make them actually be the same currency.
Tether is supposed to be be 100% backed by USD on a 1:1 basis. If that's true, while it may temporarily go higher and lower, and should always return to normal as actual USD moves in and out of the system.
The controversy about Tether is very simple: they haven't taken any steps to convince people that's actually true, and the default assumption you should make with such systems is they're scams that aren't actually backed by the currencies they claim to be backed by.
It doesn't help that Tether requested an audit but ended up severing ties with that audit firm [0]. It's likely Tether wanted a quick audit but the audit firm didn't want to sign their name to it so quickly without doing a deeper dive into the accounts.
They've also just printed $600m in tether a few hours ago. Hopefully that's backed by actual $600m in new customer deposits.
Edit: Market cap of Tether jumped $600m in the past 24h [1], but the Tether were granted over a period of 7 days. Looks like CMC doesn't update the market cap every day.
Seems to be just https://coinmarketcap.com/currencies/tether/ getting delayed data - it jumps from $1.6B to $2.2B at 01:14 UTC on Jan 28, but Tether was printing $100M chunks during the period it shows as flat.
"Like any not credible fixed exchange rate regime that is not backed by enough reserves, Tether/USDT collapses when they run out of true dollar reserves. And since Tether/USDT 1:1 peg to the US$ is the mother of all scams it will soon collapse taking Bitcoin down with it."
If traders lose confidence in Tether, won't they sell Tether to buy other cryptocurrencies, thereby driving the price of Tether down and the price of other cryptocurrencies up?
Initially yes, but I think we would also see a flight from cryptos in general shortly afterwards because of the risks posed to the whole space by a collapsing/fraudulent Tether.
Why would exchanges collapse if Tether goes to zero? They wouldn't collapse if Ripple or Iota went to zero.
To an exchange, Tether is just another cryptocurrency. Traders deposit Tether, other traders deposit Ripple or Iota, then the traders trade and the exchange takes a cut.
If any of these goes to zero traders might get wiped out, but how exactly does the exchange go bankrupt?
You say that, but Bretton Woods worked for 26 years - the pegs were based on trade balances, and were adjusted occasionally as needed - no magic involved.
Free floating currencies are more reactive, but fundamentally operate in the same fashion, albeit with far more volatility.
Tether is supposed to be be 100% backed by USD on a 1:1 basis. If that's true, while it may temporarily go higher and lower, and should always return to normal as actual USD moves in and out of the system.
The controversy about Tether is very simple: they haven't taken any steps to convince people that's actually true, and the default assumption you should make with such systems is they're scams that aren't actually backed by the currencies they claim to be backed by.