If its pegged to fiat then it kills the whole purpose.
Topic: Tether/USDT Security - page 2. (Read 3779 times)
No Security.
If its pegged to fiat then it kills the whole purpose.
If its pegged to fiat then it kills the whole purpose.
One point that is not clear is how Tether can be profitable with such low fees. We do not know the volume of transactions, but that could be significant, and it states on the FAQ page that they are in Beta and are planning to expand from USD to the euro and yen. So that should provide additional revenue.
They probably simply haven't caught up with demand yet. There has been a lot bigger demand for Tether since around January when the Bitcoin price spiked. That is the risk with a centralized coin like this though.
There is no sure way for them to "catch up with demand." They are supposed to have 1 USD in reserve for each 1 USDT. There is no place for this $11 million USD to come from. I wonder why the price still holds at 1 USD and does not collapse?
I believe that this is a result of the drop in the value of BTC last week. The only option for them seems to be to not issue anymore USDT until the price of BTC catches up (assuming it does so).
EDIT: After more research apparently (although it is not explicitly stated) they only issue USDT per USD they receive. And vice-versa. So they can exchange as much BTC for USDT as they want, and can take a gain or loss on it, but it should not affect the reserves, thus they should be able to maintain solvency. They are not/do not have a bank, but store the USD in external commercial banks, so the funds should be relatively well-protected. There is always the risk that the company absconds with the money. Tether is incorporated in the Virgin Islands. There is some concern that the founder, Brock Pierce, was involved in a child sexual abuse ring:
https://www.buzzfeed.com/hunterschwarz/mystery-man-at-center-of-alleged-hollywood-sex-ring-has-vani
Yes, it would be good to get some clarification from them on this, it now shows a deficit of more than $11 million dollars. Their claim of USDT being 100% backed by dollars in the bank doesn't seem legit.
According to the most recent update on the transparency page, section on USD:
Total Assets $29,790,829.57
Liabilities (Tether in Circulation)
Total Authorized $44,951,600.00
Authorized but not issued $6,722,965.09
Total Liabilities $38,228,634.91
Shareholder Equity -$8,437,805.34
So it seems that they have a deficit of $8 million USD. This doesn't give me confidence to use USDT. If everyone wanted to exchange their USDT for USD, the bank could not do it (if I am interpreting their numbers correctly). I am not sure why the value of USD is still equal to USDT.
Total Assets $29,790,829.57
Liabilities (Tether in Circulation)
Total Authorized $44,951,600.00
Authorized but not issued $6,722,965.09
Total Liabilities $38,228,634.91
Shareholder Equity -$8,437,805.34
So it seems that they have a deficit of $8 million USD. This doesn't give me confidence to use USDT. If everyone wanted to exchange their USDT for USD, the bank could not do it (if I am interpreting their numbers correctly). I am not sure why the value of USD is still equal to USDT.
50-cent TX fee ...
Yeah, that.
Nubits is like 0.01 cent.
We'll see.
Yeah, that.
Nubits is like 0.01 cent.
We'll see.
Common, you can't compare Nubits with Tether, the difference is there for all to see
Agree, Nubits seems to have significant problems. First, they cannot maintain the peg. Their solution to maintain it is to increase the circulation when the value rises, and the decrease the circulation when the value falls. But in order to decrease the circulation, they are going to temporarily take nubits off the market and pay the owners interest. Where are they going to get the money to pay the interest? If the value keeps falling they cannot maintain it.
Tether makes more sense, if they indeed hold 1 USD in reserves for each 1 USDT.
Looking historically at nubits, they could not maintain the peg from June-Sept 2016, not even close to 1 USD. The total market cap now is only $135,000. That's 0.38% of the market cap of tether.
50-cent TX fee ...
Yeah, that.
Nubits is like 0.01 cent.
We'll see.
Yeah, that.
Nubits is like 0.01 cent.
We'll see.
Common, you can't compare Nubits with Tether, the difference is there for all to see
tHAT SAID.
Who ever is the $-peg, and can offer decentralized trustee expansion.
WINS!
Very simple idea.
Agent X holds $50k dollars in Bank XYZ.
Agent Y holds $50k dollars in Bank ABC.
this scales.
the blocks of $-value per trustee are of mater of importance.
It will work. Question is who does it?
Who ever is the $-peg, and can offer decentralized trustee expansion.
WINS!
Very simple idea.
Agent X holds $50k dollars in Bank XYZ.
Agent Y holds $50k dollars in Bank ABC.
this scales.
the blocks of $-value per trustee are of mater of importance.
It will work. Question is who does it?
50-cent TX fee ...
Yeah, that.
Nubits is like 0.01 cent.
We'll see.
Yeah, that.
Nubits is like 0.01 cent.
We'll see.
Realized another problem with tether - I thought they only allowed conversion of USD and USDT (which would always insure they have adequate reserves). But according to their website they allow the exchange of BTC to tether. (https://tether.to/faqs/ - KYC process). So if BTC has a significant drop (like today), they may not have enough USD to maintain their 1:1 ratio of USDT to USD. According to this page https://wallet.tether.to/transparency, the deficit is just under $1 mil USD. I wonder how they are going to make that up?
The market cap of Tether is around an all-time high, ~ $35 million, #11 overall, and probably will keep increasing. I know there are issues in that it is backed by USD, so they have to maintain physical security, etc.
But what maintains the security of the USDT network, hacking attempts, and so forth? I do not think there is mining like bitcoin mining. Tether layers on top of the bitcoin network using the omni protocol, but does that mean the security can somehow be piggybacked on bitcoin security? Or does it have to do with the number of users on tether, as more ppl use it, the security increases?
But what maintains the security of the USDT network, hacking attempts, and so forth? I do not think there is mining like bitcoin mining. Tether layers on top of the bitcoin network using the omni protocol, but does that mean the security can somehow be piggybacked on bitcoin security? Or does it have to do with the number of users on tether, as more ppl use it, the security increases?
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