If you enjoy my occasional posts on Bitcoin but want more blow-by-blow updates on Tethers, see @Bitfinexed
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Tethers are, briefly, a pegged-to-USD cryptocurrency on the Bitcoin blockchain which are the odds on favorite for next $X00 million loss.
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They're issued by an affiliate of a major Bitcoin exchange. They are also nearly structurally guaranteed to cause a bank run.
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Replying to @curi42 @Bitfinexed
They're fully backed by deposits in two bank accounts which have limited ability to actually transact with people holding tethers.
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So liquidity for people which hold tethers has to come from liquidity from secondary sources who can transact with the tether-backing banks.
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Regulatory action or an actor getting cold feet anywhere along this chain causes ~immediate crisis, in classic bank run style.
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e.g. "First $60 million redeemed at par next $400 million redeemed at, well, look at Mt. Gox"
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Replying to @patio11 @Bitfinexed
so the money is all there, but not accessible enough. makes sense.
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