[oneoff786]

It’s not that hard. When Bitcoin goes down, people like tether because it’s “safe” at $1. So bitfinex makes more tethers and trades them for bitcoins. When Bitcoin goes up, bitfinex sells the Bitcoin and gets dollars.

It’s fractional reserve banking swapped around, with no reserve requirements. The market is the bank.

And because bitfinex is not obligated to redeems tokens for $1 they have no risk. It’s in their interest to keep the market price at $1 because the longer it runs the more money they make but if there’s a run on the currency they can just shrug and go home with their bag of dollars.

[ricardobeat]

This is like giving central-bank levels of power to private entities. Which obviously follow from de-centralization. It’s insane.

The only way this could be a reliable replacement for our existing financial systems, would be with strong oversight from.. some kind of central entity that acts on behalf of society’s collective best interests.. staffed by people chosen through popular voting..

[landemva]

I stay away from USDT. The sooner it disappears, the better.

We no longer need central authorities to create good trusted products. Centralized can suck (communism, Federal Reserve bailouts of banks they regulate). DAI decisions are decentralized and done by the DAI holders. You may want to check it out.

[oneoff786]

The potential for good actors isn’t really as noteworthy as a system that enables bad ones.

[RF_Savage]

Wouldn't USDT crashing wipe out most large cryptos as well? 70% of BTC liquidity seems to be in USDT.