[teknopurge]

Fractional reserve banking has the same problem, yet provides a real, functional purpose for finance.

Tether has a purpose - to be a savings account is not that purpose.

[gamblor956]

You can exchange your bank savings account for dollars (or Euro, or whatever).

Hundreds of millions of people do this every day around the world without issue, because this is a solved problem.

[teknopurge]

Everyone cannot actually withdraw their balance to fiat all at once - this would be a bank run and wouldn't actually be allowed to occur.

[gamblor956]

True, but you can actually withdraw your balance.

You cannot withdraw your Tether balance. They literally do not allow that. The best you can do is get an intermediary coin that some places might let you change into cash or another crypto.

[spurdoman77]

As I understand tether allows direct conversions to fiat, you just need big enough amount. Also it is very easy to convert to bitcoin, which is very easy to convert to fiat.

[jki275]

You should read the article -- this is addressed in it.

[lawn]

The minor difference is that you can withdraw your balance from banks, but you cannot redeem Tethers to what it's supposed to be backed by: U.S. dollars.

[teknopurge]

Everyone cannot actually withdraw their balance to fiat all at once.

[lawn]

You're right, due to fractional banking and if people do a bank run will happen and the bank will fail (unless someone saves it).

But it's at least possible to withdraw from banks. Redeeming Tethers is impossible.

[ticmasta]

... and earned that acceptance over a very long period of time, not because they said "trust us" enough times.