Can someone ELI5 tether to me?

you don't understand market cap. if btc's market cap goes up by a billion dollars it DOES NOT MEAN a billion dollars just went into bitcoin. This isn't even crypto this is just you not understanding the most basic market principles.

not sure if trolling or if you're actually that stupid

This was my post from last week.

"Jesus the economic illiteracy of Americans explains to me how our bullshit system never has been fixed, we deserve the mess we have.

The value of bitcoin as a speculative asset is different from it's perceived value as a system of barter. Forget market cap, it's meaningless. Tether creates liquidity and therefore a higher perceived value by closely pairing it's liquidity risk to the dollar. It's undoubtedly not a perfect 1:1, but the reduction in beta by creating ease of liquidation allows BTC to function almost as a treasury bond in theory, where its systemic risk is perceived to be vastly reduced due to tether simply existing.

Additionally, once you realize that by having a liquid, securitized currency floating along the dollar; combined with the fact people are ignorant to how this system operates on the network level; and the connection is not made between crypto as a derivative assets with USD acting as the underlying; I hope some of you can see what will happen if there is a way to counterfeit the USD using a method similar to how the Fed printed money in QE without flooding the circulating supply by raising market values through purchases; thus increasing the equity of the asset owner and countering insolvency by the conversion of liquid wealth to illiquid wealth.

I hope you all can understand what this means and why those that do are taking mortgages out to buy BTC.

>meme comics
>eli5
Reddit: the thread.

Market cap should only be used to measure crypto against other crypto. The total dollar mkt cap as a whole is meaningless.

are you retarded?

its a big nothing burger that the resident autists use to sink their claws into. They print 1 tether for every US dollar that enters the crypto market. Currently there is only 1.6 billion tether, compared to ~$560 billion dollars in the crypto market. They won't start removing tether until the two sides are equal.

How does Bitfinex know how many dollars have entered crypto genius?

Stop showing off your ignorance.

there's a difference between market cap and 1.8B of tether buys. that many buys can increase the market cap by massive multiples, not just 1.6B

it's like what the federal reserve does to prop up asset prices. they buy up assets with money they conjure out of thin air. right now, tether acts like the central bank of crypto.

bitfinex prints 100m tethers which they give to themselves (actually the total is 300m over the past few days, 1.8B total now). then, they buy up actual cryptos with tether since people believe its 1:1 usd. those 300m worth of buys drive up prices and those prices leak out to other exchanges (markets are pretty efficient due to arb).

tether says they back each one they issue with real usd on a 1:1 basis, but there's no way they really do. at first they may have, but they have simply printed too much at this point.

anyway people, right now, tether makes investor confidence higher. it soothes crashes and makes pumps go higher, so don't bite the hand that feeds. it's good for anyone that owns a lot of crypto. it's worse for people who don't own a lot.

also FYI. your own central banks do exactly this shit to you, which makes everyone late to the game poor, and wealthy asset owners rich.

with tether acting like the central bank of crypto, it is actually helping fight central banks with their own weapons. it's pretty fucking amazing. it makes it that much harder to fight crypto since we now use their own tactics against them. they can't fight it.

they print more tether cause they need to counter a swing increasing its market value.
Only thing I dont get is the 1for1 USd backing bullshit. Why not just run fractional reserve and be honest about it? I get most crypto investors are fucking stupid and scared of basic banking systems. But most sane people would see it as a good thing.

Someone with actual brains holy shit

mostly accurate. But its not true central banks just print more money for open market operations. They operate as a bank for banks and have capital to play with. They also make profits to fart around with before they have to give it to the government. Printing money is a fairly controlled and scaledback operation compared to what most people here seem to believe.

youtu.be/d3mfkD6Ky5o

Ok I still have a couple of probably stupid questions:

1. What cryptos can be converted to tether? Just BTC or ETH too? Etc.
2. Why would someone want to tether as opposed to getting back into fiat? Easier to get back into the market?
3. Why does the price sometimes jump past $1 to like $1.03?
4. Each tether is "backed" by 1 physical U.S. dollar, right? But what does that even give you? It's not like you're going to cash out 100,000 tether for a duffel bag full of money.

Seems there's something fundamental about this that I'm not understanding.

> 1. What cryptos can be converted to tether? Just BTC or ETH too? Etc.
Any of them. Look at the USDT pairs on polo, or the pairs on Bitfinex. Bitfinex has a bunch of USD pairs, but those are really USDT pairs

> 2. Why would someone want to tether as opposed to getting back into fiat? Easier to get back into the market?

Since its another crypto its a lot easier for other exchanges to implement, and its inherently uncontrollable (it runs on the bitcoin blockchain actually). In order to trade to actual USD you need to have authorization to do so, with tether you don't.

> 3. Why does the price sometimes jump past $1 to like $1.03?

If the demand for it is higher than the amount they have issued, its price may go up. There is a finite amount at a given time, but the controllers are able to create more at will, which can then be distributed to exchanges, but in the meantime the price may not be 1:1 usd.

> 4. Each tether is "backed" by 1 physical U.S. dollar, right? But what does that even give you? It's not like you're going to cash out 100,000 tether for a duffel bag full of money.

They say its backed, but they have issued almost 1.9B, so it's unlikely (almost impossible) that they actually have that much in reserves.

>ELI5
GB2R

>1. What cryptos can be converted to tether? Just BTC or ETH too?
Depends on the exchange anything can have a pairing. Pic related is binance.
>2. Why would someone want to tether as opposed to getting back into fiat? Easier to get back into the market?
Yes that exactly.
>3. Why does the price sometimes jump past $1 to like $1.03?
Demand grows faster than supply. Market crashes everyone panics and wants to tether up start putting buy orders over $1, to get out faster not enough tether for sale as hodlers dont wamt to go into crypto atm. Then they print more selling at $1 to bring the price back down.
>4. Each tether is "backed" by 1 physical U.S. dollar, right? But what does that even give you? It's not like you're going to cash out 100,000 tether for a duffel bag full of money.
This makes no sense to me whatsoever. Like I said if they were fractional reserve it would make sense, they make money invest money for profit etc, amd still have liquidity for a run. But 1for1 is bullshit because that's $2billion with no profits lmao. But its necessary incase one day price drops to say $0.95 cents and they need to stsrt buying back to drive price up.

oops forgot pic

Marketcap is the biggest meme in crypto

wtf I love tether now

Not when they are panic buying toxic assets just so the entity with shit books has enough equity to cover liabilities and restructure

>let's just turn crypto into fiat, we'll have or own central bank and manipulate our own system
Just go buy fiat and hold it in a chequing account you fucking traitors

Yoousa house nigger

Massa feeds yous well from da tables scraps huh house nigga

Enjoy your """"crypto"""" when tether's QE's 4 gorillian USDT out of their ass to prop up BCC because it's too big to fail

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