Bitcoin: no angel investors, only Faustian bargains

The Something Awful Forums > Main > General Bullshit > Bitcoin: no angel investors, only Faustian bargains

Hobologist: May 4, 2007; We'll have one entire section labelled "for degenerates"

Grand Theft Autobot posted:

If Tether Co. printed $350m in Tether, they need an additional $350m in USD in their "account" to back up the Tether. Where did they get it?

In a sanely-ordered world they would back it up by being short Bitcoin futures. But in crypto world, who knows?

# ? Jan 17, 2018 22:01

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# ? May 29, 2024 13:23

Stealthgerbil: Dec 16, 2004

Boon posted:

Someone help me out here.

If Tether was true to their word, that would mean that some entity is currently holding $1+ billion. That kind of capital needs to legally reside somewhere and it would be noticable. Someone help me connect the non-existent dots.

Also, how does Tether buy back the coins issued? If it's acting as a central bank and increasing the money supply, without the ability to buy it back it'll only greatly accelerate the collapse once it loses its credibility lol

Lol the money doesn't exist. At one point they were going to do an audit which for that is as simple as going 'yep they have X dollars in a real bank account'. Guess what? It never happened.

# ? Jan 17, 2018 22:03

Alpha Mayo: Jan 15, 2007; hi how are you?
there was this racist piece of shit in your av so I fixed it
you're welcome
pay it forward~

You guys want to buy some ~~speakers~~USDT? Just as good as cash and I got $1.8 billion liquid capital backing it up.

# ? Jan 17, 2018 22:04

Drav: Jul 23, 2002; We've come a long way since that day, and we will never look back at the faded silhouette.

Communist Q posted:

Because it makes bitcoin go up up UP!

I can't wait to read the econ papers written on the cryptocurrency mania. It's truly idiotic.

Seriously. It's fascinating.

# ? Jan 17, 2018 22:05

let it mellow: Jun 1, 2000; Dinosaur Gum

EorayMel posted:

Clearly we need a 100 billion injection

we aren�t talking about your mom!!

# ? Jan 17, 2018 22:12

ghosTTy: Sep 22, 2008

# ? Jan 17, 2018 22:12

ghosTTy: Sep 22, 2008

# ? Jan 17, 2018 22:13

Rad Russian: Aug 15, 2007; Soviet Power Supreme!

The ingenious part of it is if someone just invented Tether no one would care and it would be useless. However the guy that did it also opened a popular crypto exchange that requires it, and so he can directly pump $100 mil of fake printed money into BTC on his exchange and other exchanges will follow as people trade between exchanges to match up the price (otherwise you'll have arbitrage). It's fully ingrained into the bitcoin economy now. So once tether goes, everything will crash.

It's similar to the housing crisis, even good honest insitutions that had nothing to do with issuing lovely subprime loans got screwed because they were all intertwined in this market with how everything was repackaged.

Tether is part of all the exchanges now whether they want it or not. However my assumption is it mostly affects BTC economy, as we've had no evidence that they pump any other alt coins with the tether printing.

# ? Jan 17, 2018 22:13

Sophy Wackles: Dec 17, 2000; > access main security grid
access: PERMISSION DENIED.

This thread title is going to be accurate again real soon lol

~~up uP UP!~~

DOWN DOwn down

# ? Jan 17, 2018 22:14

Communist Q: Jul 13, 2009

Rad Russian posted:

The ingenious part of it is if someone just invented Tether no one would care and it would be useless. However the guy that did it also opened a popular crypto exchange that requires it, and so he can directly pump $100 mil of fake printed money into BTC on his exchange and other exchanges will follow as people trade between exchanges to match up the price (otherwise you'll have arbitrage). It's fully ingrained into the bitcoin economy now. So once tether goes, everything will crash.

It's similar to the housing crisis, even good honest insitutions that had nothing to do with issuing lovely subprime loans got screwed because they were all intertwined in this market with how everything was repackaged.

Tether is part of all the exchanges now whether they want it or not. However my assumption is it mostly affects BTC economy, as we've had no evidence that they pump any other alt coins with the tether printing.

To help people visualize the tether pumps at the beginning. They've increased it threefold by now.

# ? Jan 17, 2018 22:16

Adar: Jul 27, 2001

chitoryu12 posted:

At Bitcoin's peak, they had over $1 billion worth. Which, of course, is utterly useless because they'd never be able to cash out even a million at a time and such a gigantic sell-off would cause the market to crash, devaluing their fake money before they were done selling.

They inflated their holdings to such a point that they're now stuck with useless assets. If they were selling their entire Bitcoin reserve for $20,000 profit that would be one thing, but they're now too big to use it.

They can cash out by selling directly to all of their friends and probably do quite a bit of that.

# ? Jan 17, 2018 22:19

Andy Dufresne: Aug 4, 2010; The only good race pace is suicide pace, and today looks like a good day to die

Communist Q posted:

To help people visualize the tether pumps at the beginning. They've increased it threefold by now.

I mean, it wouldn't be at all surprising if the bitcoin bubble retrospect puts the entire bubble firmly on tether.

# ? Jan 17, 2018 22:21

The Glumslinger: Sep 24, 2008; Coach Nagy, you want me to throw to WHAT side of the field?; Hair Elf

Boon posted:

Someone help me out here.

If Tether was true to their word, that would mean that some entity is currently holding $1+ billion. That kind of capital needs to legally reside somewhere and it would be noticable. Someone help me connect the non-existent dots.

Also, how does Tether buy back the coins issued? If it's acting as a central bank and increasing the money supply, without the ability to buy it back it'll only greatly accelerate the collapse once it loses its credibility lol

They're bank is a random rear end polish farming bank with less than 300 mil in total assets

Not Bitfinex or Tether, the entire bank has about that much in total assets

Also, didn't they only start issuing tether after they got hacked and they were basically IOUs?

# ? Jan 17, 2018 22:22

Nessus: Dec 22, 2003; After a Speaker vote, you may be entitled to a valuable coupon or voucher!

Yeah the Beet Farmers Credit Union of Central Poland are the only ones who would actually do bank things for them on account of all this cryptocurrency stuff being intertwined with crime and ruin.

# ? Jan 17, 2018 22:25

The Glumslinger: Sep 24, 2008; Coach Nagy, you want me to throw to WHAT side of the field?; Hair Elf

Fictional Reserve Banking

# ? Jan 17, 2018 22:27

Alpha Mayo: Jan 15, 2007; hi how are you?
there was this racist piece of shit in your av so I fixed it
you're welcome
pay it forward~

Tether isn't going to fail for a while. People don't even care that you can't actually exchange Tether for real cash.

But bitcoin is a zero sum game. And I think it is pretty likely that after Bitfinex prints tether to pump it in to raise BTC prices, they go to another exchange with their newly acquired BTC and sell it for real cash. That removes money from the system. I mean I know that's what I would do if I was the scammer running Bitfinex/Tether. Print 100M fake money, buy BTC, transfer BTC to another exchange, sell it for real money for an inflated price. Or hell, get lucky and when you pump the BTC, spark a rally and get even more suckers money.

Mining also removes money from the system. Unless new investors are coming in to replenish that outgoing cash flow, it will all continue to deflate.

In a regulated market, not only is there no such thing as fake money, but even using REAL MONEY to do what Bitfinex is doing is illegal.

# ? Jan 17, 2018 22:29

Goa Tse-tung: Feb 11, 2008; ;3; Yams Fan

The Glumslinger posted:

Fictional Reserve Banking

"That's what they'll call it!!!" - Chandler Bing

# ? Jan 17, 2018 22:31

Communist Q: Jul 13, 2009

Alpha Mayo posted:

Tether isn't going to fail for a while. People don't even care that you can't actually exchange Tether for real cash.

But bitcoin is a zero sum game. And I think it is pretty likely that after Bitfinex prints tether to pump it in to raise BTC prices, they go to another exchange with their newly acquired BTC and sell it for real cash. That removes money from the system. I mean I know that's what I would do if I was the scammer running Bitfinex/Tether. Print 100M fake money, buy BTC, transfer BTC to another exchange, sell it for real money for an inflated price. Or hell, get lucky and when you pump the BTC, spark a rally and get even more suckers money.

Mining also removes money from the system. Unless new investors are coming in to replenish that outgoing cash flow, it will all continue to deflate.

In a regulated market, not only is there no such thing as fake money, but even using REAL MONEY to do what Bitfinex is doing is illegal.

You figured out their business plan!

Communist Q fucked around with this message at 22:34 on Jan 17, 2018

# ? Jan 17, 2018 22:32

Ruggan: Feb 20, 2007; WHAT THAT SMELL LIKE?!

Tether could have maybe worked if Bitcoin prices truly increased forever. Bear with me here while I explain:

0. You're a penniless loser.
0a. You own $0.

1. Generate 100 funbux.
1a. You now own 100f.

2. Buy $100 worth of Butt (1b) using your 100f because "PEG ME"
2a. You now own 1b worth $100. 100f is out in the wild somewhere, getting pegged.

3. Value of 1b appreciates to $200.
3a. You now own 1b worth $200. 100f is out in the wild somewhere, pegging.

4. You redeem 1b for $200.
4b. You now own $200. 100f is still out in the wild, trying to fit in a square hole.

5. Someone approaches you to redeem 100f for $100. You do so.
5a. You now own $100 and 100f.

6. You destroy the 100f, taking it out of circulation.
6a. Congratulations! You made your own interest free loan and used it for leverage!

So basically it's interest free debt used for speculation using leverage. This is almost certainly what funded the claim that they owned a dollar for every tether in circulation.

However, my guess is that they got caught up in the mania. They probably overleveraged themselves, buying back into the market with their cash reserves near all-time highs. "Just imagine," they imagined, "if Bitcoin prices keep going up we can keep the earnings - then we'll really be rich!". Well the market crashed instead and now they're under on a margin long, but nobody can perform a margin call on them.

So now they're thinking they can print more fake money to pump the market, offload their assets at anything except a loss, and be "whole" again. They could redeem a fraction of their investors, but they'd need to liquidate coins at a loss to do so.

# ? Jan 17, 2018 22:32

Ruggan: Feb 20, 2007; WHAT THAT SMELL LIKE?!

Communist Q posted:

You figured out their business plan!

Yeah this.

An interest-free margin long, but nobody can perform a margin call.

# ? Jan 17, 2018 22:33

Rad Russian: Aug 15, 2007; Soviet Power Supreme!

Alpha Mayo posted:

Tether isn't going to fail for a while. People don't even care that you can't actually exchange Tether for real cash.

But bitcoin is a zero sum game. And I think it is pretty likely that after Bitfinex prints tether to pump it in to raise BTC prices, they go to another exchange with their newly acquired BTC and sell it for real cash. That removes money from the system. I mean I know that's what I would do if I was the scammer running Bitfinex/Tether. Print 100M fake money, buy BTC, transfer BTC to another exchange, sell it for real money for an inflated price. Or hell, get lucky and when you pump the BTC, spark a rally and get even more suckers money.

Agreed. I mean they mostly likely do it slowly because they want to keep BTC price high. Pump in $100 mil of fake money every two weeks to raise price of Bitcoin so there are media headlines of new highs and more suckers coming in, then slowly sell off $5 mil a day as the suckers are in to buy for actual fresh dollars. Literally cashing out $100 mil at once in Bitcoin will crash the price like crazy so their con is long term as you suggested, and the higher the price of BTC, the higher their income and the longer the scam can go on. This is what they were doing historically to get to $20K per BTC.

Right now they are emergency pumping money simply to maintain price above 10K so not sure what their sell off plans are, those are probably on pause for now until the market stabilizes and more fresh money starts coming in. They aren't really losing a lot by waiting to sell since all the money they used to buy BTC is fake anyway, however a price crashing too far will expose tether to a bank run which they don't want. Who knows exactly, the scams are pretty complex.

Rad Russian fucked around with this message at 22:42 on Jan 17, 2018

# ? Jan 17, 2018 22:35

ElGroucho: Nov 1, 2005; We already - What about sticking our middle fingers up... That was insane; Fun Shoe

So what I'm hearing is that now is the best time to take out a second mortgage and invest the money in PonziCoin

# ? Jan 17, 2018 22:36

Ruggan: Feb 20, 2007; WHAT THAT SMELL LIKE?!

Alpha Mayo posted:

Tether isn't going to fail for a while. People don't even care that you can't actually exchange Tether for real cash.

But bitcoin is a zero sum game. And I think it is pretty likely that after Bitfinex prints tether to pump it in to raise BTC prices, they go to another exchange with their newly acquired BTC and sell it for real cash. That removes money from the system. I mean I know that's what I would do if I was the scammer running Bitfinex/Tether. Print 100M fake money, buy BTC, transfer BTC to another exchange, sell it for real money for an inflated price. Or hell, get lucky and when you pump the BTC, spark a rally and get even more suckers money.

Mining also removes money from the system. Unless new investors are coming in to replenish that outgoing cash flow, it will all continue to deflate.

In a regulated market, not only is there no such thing as fake money, but even using REAL MONEY to do what Bitfinex is doing is illegal.

Yeah, exactly - if I were them I'd do exactly what you outlined with one extra step:

Print 100M fake money, buy BTC, transfer BTC to another exchange, sell it for real money for an inflated price, re-buy and destroy 100M fake money.

Then the only bagholders are people holding Bitcoin during the crash, not Tether. Since you've cashed out all your debtors, nobody holds you responsible.

# ? Jan 17, 2018 22:37

Sophy Wackles: Dec 17, 2000; > access main security grid
access: PERMISSION DENIED.

ElGroucho posted:

So what I'm hearing is that now is the best time to take out a second mortgage and invest the money in PonziCoin

yes. also take all you can from loan sharks and buy buy buy!!

# ? Jan 17, 2018 22:38

Lote: Aug 5, 2001; Place your bets

Alpha Mayo posted:

Tether isn't going to fail for a while. People don't even care that you can't actually exchange Tether for real cash.

But bitcoin is a zero sum game. And I think it is pretty likely that after Bitfinex prints tether to pump it in to raise BTC prices, they go to another exchange with their newly acquired BTC and sell it for real cash. That removes money from the system. I mean I know that's what I would do if I was the scammer running Bitfinex/Tether. Print 100M fake money, buy BTC, transfer BTC to another exchange, sell it for real money for an inflated price. Or hell, get lucky and when you pump the BTC, spark a rally and get even more suckers money.

Mining also removes money from the system. Unless new investors are coming in to replenish that outgoing cash flow, it will all continue to deflate.

In a regulated market, not only is there no such thing as fake money, but even using REAL MONEY to do what Bitfinex is doing is illegal.

Unless the Bitfinex people are true believers and using it to buy bitcoin and hold. Eventually there will come a point where there�s so much Tether that if people try to cash out there won�t be enough cash in a regular exchange who will then go to the Tether company and say we need you to back up that guarantee. Tether will respond by selling bitcoin and making the crash even more pronounced when people realize that Tether isn�t tied to real money.

The funny thing is that Tether could have made poo poo tons of money by requiring USD upfront and then buying US treasuries or foreign currency treasuries. $1 billion generates a ton of interest even at 1%.

# ? Jan 17, 2018 22:41

Uranium 235: Oct 12, 2004

i just watched people buy about $25 million of bitcoin at 11000

# ? Jan 17, 2018 22:42

Ruggan: Feb 20, 2007; WHAT THAT SMELL LIKE?!

Why does Tether advertise the printing of new supply?

# ? Jan 17, 2018 22:43

Uranium 235: Oct 12, 2004

Ruggan posted:

Why does Tether advertise the printing of new supply?

"transparency"

# ? Jan 17, 2018 22:44

a_gelatinous_cube: Feb 13, 2005

Any chance that the graphics card manufacturers are ramping up production to meet the bitcoin miner demand and there will be a glut of cheap GPUs when this all comes down?

# ? Jan 17, 2018 22:45

deadwing: Mar 5, 2007

Alpha Mayo posted:

Tether isn't going to fail for a while. People don't even care that you can't actually exchange Tether for real cash.

Tether will "fail" as soon as Bitfinex stops seeing gains from "printing" it. At which point, the obvious endgame is to go full Gox

# ? Jan 17, 2018 22:50

Mr Luxury Yacht: Apr 16, 2012

Zyklon B Zombie posted:

Any chance that the graphics card manufacturers are ramping up production to meet the bitcoin miner demand and there will be a glut of cheap GPUs when this all comes down?

There wasn't the last time this happened unless you want a GPU that's been run into the ground through a mining rig.

# ? Jan 17, 2018 22:53

Barudak: May 7, 2007

Ruggan posted:

Why does Tether advertise the printing of new supply?

Same reason other countries announce printing additional currency, to encourage inflation.

# ? Jan 17, 2018 22:54

Hobologist: May 4, 2007; We'll have one entire section labelled "for degenerates"

deadwing posted:

Tether will "fail" as soon as Bitfinex stops seeing gains from "printing" it. At which point, the obvious endgame is to go full Gox

Since you can't turn tether back into dollars, aren't they already full Gox?

# ? Jan 17, 2018 22:56

Delthalaz: Mar 5, 2003; Slippery Tilde

Ugh it looks like the quantitative easing worked, at least for now. Up up UP!

# ? Jan 17, 2018 22:58

Communist Q: Jul 13, 2009

Ruggan posted:

Yeah, exactly - if I were them I'd do exactly what you outlined with one extra step:

Print 100M fake money, buy BTC, transfer BTC to another exchange, sell it for real money for an inflated price, re-buy and destroy 100M fake money.

Then the only bagholders are people holding Bitcoin during the crash, not Tether. Since you've cashed out all your debtors, nobody holds you responsible.

What's better is they're likely using tethers to fund margin trading along with a lot of other shady tactics like trading spoofing and wash trading to raise the price. Bitfinexed is a great read on bitfinex and tethers.

# ? Jan 17, 2018 23:01

Rad Russian: Aug 15, 2007; Soviet Power Supreme!

Hobologist posted:

Since you can't turn tether back into dollars, aren't they already full Gox?

You can while there are enough people still pumping real money into this. People give exchanges real money and then sit on various coins or withdraw little actual USD. You can make real returns and ask for your money back while in any ponzi scheme. It's just everyone can't do that at once, and new suckers need to be signed up daily.

# ? Jan 17, 2018 23:02

Alpha Mayo: Jan 15, 2007; hi how are you?
there was this racist piece of shit in your av so I fixed it
you're welcome
pay it forward~

Lol it looks like it worked.

# ? Jan 17, 2018 23:06

Moxxis Endowment: Dec 11, 2017; by Nyc_Tattoo

Arglebargle III posted:

Hey guys.

# ? Jan 17, 2018 23:07

Alpha Mayo: Jan 15, 2007; hi how are you?
there was this racist piece of shit in your av so I fixed it
you're welcome
pay it forward~

A ponzi scheme where the perpetrators can pay people with Itchy and Scratchy money and people are cool with it.

# ? Jan 17, 2018 23:10

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# ? May 29, 2024 13:23

Ruggan: Feb 20, 2007; WHAT THAT SMELL LIKE?!

Moxxis Endowment posted:

so youre saying buy NOW?!

# ? Jan 17, 2018 23:11

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