So a single point of failure, then. Weren't cryptocurrencies supposed to eliminate single points of failure?
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I agree, Tether is a single point of failure and so is Binance to some extent. If either of them go down, there would be severe issues
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Larry, if you are right about exchanges all banking with Deltec, then the single point of failure is Deltec.
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It doesn’t mean it’s their primary bank if they have a bank account there.
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Nonetheless if the exchanges are using it to pool liquidity, as Larry implies, it is a single point of failure.
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I don’t know what’s going on but I don’t think they are using it to “pool liquidity”, but just for convenience when creating/redeeming tethers. It is a single point of failure for tether as that seems to be their exclusive bank.
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no.... from what Stuart Hoegner and Paolo Ardoino said this week, the exchanges use Deltec as something akin to a central bank
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Tether is effectively a liquidity pool....if exchanges and Tether all have Deltec accounts, the USD legs of exchange purchases from the Tether pool settle instantly across Deltec's books so there is no risk to Tether from timing mismatches.
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Tether issues more tokens now and then to top up the pool.
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So:
1) most exchanges don't themselves use Deltec
2) that being said, many _indirectly_ do because they use USDT
yup, USDT is a central focal point in crypto. If it goes down, it would be bloody.
It's worth noting some history though.
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The reason we got into this situation was because only Tether/Bitfinex were willing to *try* to get fiat, and so only they did, and everyone else mooched off of them