[petertodd]

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.

[hw]

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.

[0]: https://www.coindesk.com/tether-confirms-relationship-audito...

[1]: https://coinmarketcap.com/currencies/tether/#charts

[gruez]

>They've also just printed $600m in tether a few hours ago.

when? https://omniexplorer.info/default.aspx?filter=grant

[ceejayoz]

I've seen this claim floating around a lot.

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.

[bhouston]

Nouriel Roubini:

"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."

https://twitter.com/Nouriel/status/957623357708668928

[panarky]

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?

[dharma1]

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.

[Grangar]

That's what I'm expecting to see. An initial run up in crypto value, followed by exchanges collapsing because they relied on USDT in place of fiat.

[panarky]

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?

[ceejayoz]

Only if anyone's willing to take Tether at a non-zero price.

[bradleyjg]

> they haven't taken any steps to convince people that's actually true

The best way of convincing people of that is to provide a facility that allows people to trade the one currency for the other at par.