Hi Steemians, first of all i wanna say that I’m just an engineer who did some research and is interested on this topic. I’m not an expert or an journalist. I just want to share some facts and my opinion with you.
I would like to briefly show you what risks the cryptocurrency market currently brings and how you can adjust to it. First and foremost, you should be aware of what is happening on the market right now, before you lose everything with “panic sells”. That's why I want to show you all the individual factors that might cause panic on many investors in the next few weeks. I come straight to our biggest problem, Tether, and the related exchange Bitfinex.
What is Tether?
The copy of a fiat currency.
Today, the digital currency Tether (USDT) is on 15th place on CoinMarketCap and counts more than 2.2 billion tokens - which means 2.2 billion US dollars for most users, because Tether couples the price of a USDT to the US dollar.
The question that many people are currently asking is: Does this coupling turn USDT into real dollars?
At least the company behind Tether says that it has dollar deposits for each tether, so you might assume that anybody could trade tethers for real dollars.
On their website was the following pointed out but was removed for any reasons or at least I can’t find it anymore.
"Once you have tethers, you can trade them, keep them, or use them to pay people who accept tethers. But tethers are not money. Also, it is not a saved value or currency. There is no contract or any other right nor any legal right to disbursement or exchange of your tether for money. We also do not guarantee the right to withdraw or exchange a tether on our site for money. There is no guarantee against loss when you buy, trade or sell tethers. "
The company does not call its cryptocurrency as money. There is also no right to disbursement. If you consider the daily amount of exchanges between money and "non-money", then you understand the currently panic on the markets.
After some rumors of broken links with banks, the community called for audits to confirm the US dollar reserve. These were perceived and sometimes even published. The last audit was apparently conducted on March 2017.
Some voices were loud that Tether could theoretically harm cryptocurrencies with his policy. After that, Tether corrected his point of view over his own terms of service. A payout is still possible but limited:
"We have a duty to ensure that our service is not used by any persons who come from sanctioned countries, who are subject to sanctions, or who can’t provide background evidence. In short, disbursements are not denied without reason, but we have the right to decide on a case-by-case basis. "
For crypto enthusiasts, this was a knockout criterion. Security is lacking, a temporary exchange in USDT carries a great deal of risk, because the terms of service preserve the rights of the tether company, but do not give the hodler of a USDT token any rights.
Let's come to a statement that we all already heard often enough.
"The loss of $ 2 billion that reflects the value of tether will not affect the market."
Let me show you how the money really is made up.
How is the M.Cap actually calculated?
The M. Cap reflects approximately the 50x of what actually of our fiat money is in the market. So 500 billion M.Cap reported on CMC equals 10 billion real fiat money. The remaining billions are extrapolated. Tether, on the other hand, is a cryptocurrency that is supposed to mirror the dollar 1:1 in order to fill the gap between the real world and the virtual world and make life of exchanges easier. Each tether that is released must have been deposited with a real USD. In turn, this means that tether is not extrapolated with the factor 1:50, but is 1:1 available on the market. If you assume the 1:50 ratio, this would mean that at 500 billion M.cap, 20% of the Fiat money on this market is generated by tether. You can imagine for yourself what this would really mean for the market if Tether is a real scam. Hopefully Tether should have deposited 2.2 billion anywhere on any bank.
Another problem I want to point out is that many exchanges have already integrated the pairings BTC / USDT or ETH / USDT, although there is no exact coverage of the tether by the exchanges. Therefore, I advise everyone not to keep their money in tethers and to exchange them for good coins as soon as possible. Nonetheless, we have to ask ourselves if Tether can really bring down Bitcoin. In the long run, I do not think so. The market we are in is filled with emotions and reacts very irrationally. But the technology or ideology, that Bitcoin or rather Blockchain should improve or even replace the current financial system, is what we have to keep in mind.
The most recent announcement is their statement on the current situation:
“As our customers and others in the blockchain space may have recently experienced, Tether is currently expecting continued delays in processing international wires to and from tether.to users. Blockchain-based withdrawals and deposits are in no way affected. The Tether Reserve remains in surplus of the 1:1 backing of USDT and has more than the necessary currency on deposit to redeem all existing tethers. Since April 18, 2017, all incoming international wires to Tether have been blocked and refused by our Taiwanese banks. As such, we do not expect the supply of tethers to increase substantially until these constraints have been lifted.
For customers with bank accounts in Taiwan, we are currently experiencing no difficulties or delays in funds transfers in USD, with deposits and withdrawals functioning as expected. For customers with bank accounts outside of Taiwan, we are diligently pursuing alternate funding channels. New banking corridors are in the process of being established, and we are speaking with integrators of USDT about the possibility of intermediate customer redemption processes. Until then, we are asking our customers not to send any additional incoming wires until we can provide a reliable method of receiving funds. Any incoming wires will be returned to their original sending account, which may result in fees levied by your bank. As additional progress is made, we will keep our customers and the community up to date with developments.
We are immensely grateful to the community for standing with us against unreasonable attempts to disrupt and discredit the legal and responsible business of reputable, innovative companies like us and other exchanges in the blockchain space.
First they ignore you, then they laugh at you, then they fight you.”
Attempt to whitewash their own reputation?
Recently, i encountered the “transparency update” on their website. But the documents are from September 15th and prove the 1:1 deposit of USD to USDT at this time. By now the amount of tokens has risen to 2.2 billion! Very Important: The documents are from September 15th 2017 !!!
Still, we do not know much about the Lord behind Bitfinex and Tether. I mean did anybody see this guy in real life? In my opinion Tether tries not enough to quieten the rumors and has to do a quick update on their “transparency update”. If you wanna read the whole document follow this link:
https://tether.to/wp-content/uploads/2017/09/Final-Tether-Consulting-Report-9-15-17_Redacted.pdf
Most importantly, I'm not claiming that Tether is Scam, but I'd like to express my skepticism about this cryptocurrency. Tether did not yet speak concretely about the current situation and tries in my view to disguise everything.
Financial crisis 2018?
The classic stock markets such as NASDAQ, S&P500, Dow Jones and the DAX are on the decline, some of them up to 5%, which already equals on a market crash. Some insiders even speak of a renewed depression in the markets and predict a financial crisis this year. Also, the new US tax policy is not doing well for the USD and big stock companies.
However, it is interesting to see that the crypto market has always behaved anticyclical to the normal stock markets so far, but not this time. Is it an indicator of a bubble? Will the downtrend of Bitcoin continue despite the small crash on the normal exchanges or do we see a turnaround? That will be the question that many will face in the next few days.
Bitcoin was created in 2008 due to the financial crisis. It should stop the rich bankers to make more profit with our money. It should express that we turn our backs on the banks and say that these idiots should not decide on our money. But now we are just confirming that we have invested in this market to gain our own share/interests. Should we not invest in Bitcoin and Co. right now? Should we really let the banks and governments win?
What has happened in the last few days !!
The India FUD, like most FUDs, was simply misunderstood by many of us. In recent years, there have been repeated threats from governments where any minister in China, South Korea, the US or India said anything rash and crashed curse. Probably the media misinterpreted Inda’s finance minister to generate more readership and attention. The finance minister has claimed that he wants to fight the crime in the crypto sector, which in my opinion is to be judged positively.
Media and institutes turn and use statements in their favor and usually do not think about the effects that these might have on some existences.
Facbook ban
Facebook tries to protect innocent Facebook users from scam ICOs. Why not?! It's the market where scam like Bitconnect was invented. However, this headline was presented in such a way, that Facebook or rather Mark Zuckerburg bans the crypto advertising, to gain his own advantage. What the hell?! As if Mark Zuckerburg needs to endanger the capital of otherss or to create advantages for himself. The man has as much money as Bitocoins Mcap.
I’m just writing this to give you my opinion about the whole situation and summarize the current aspect affecting the market. So, build up your own opinion and invest in coin in which you believe in.
The important thing right now is to keep a cool head. The value of Bitcoin has not changed over the days. There were no regulations, no prohibition or anything like that. You should be aware of this.
Greetings from Germany
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