Your daily reminder that you can short Tether if you want. All these people writing these articles, and the freely moving market price hovers right around 1:1. Funny how when people are asked to bet, despite the fact that there's almost no risk of loss for shorting it, their convictions disappear.
As explained in the post, you have to bite off very high levels of counterparty risk to short. Cryptocurrency exchanges die in something like 20% of exchange-years, and your estimate of an exchange dying _contingent on me being right_ should be biased towards the high side if they are exposed to the risks of using tether.
This is a subplot of the Big Short, and cost several groups of the protagonists a lot of money: they were so right about their prediction regarding the housing market that e.g. the banks who had brokered their swaps might have gone under, which would have impeded their ability to get paid. (There are several variants of the same thing discussed; the book is marginally clearer than the movie about them.)
The big short is a very different situation from crypto exchanges. Banks are highly levered and exposed directly to the assets they are trading. Crypto exchanges do not have this same problem. Secondly, you can use leverage to make these trades, and you can make them on many different exchanges, diversifying your risk considerably. The counterparty risk argument does not imply that the current price should be 1:1 under the assumption that insolvency is obvious.
(Outside of the USA) On Poloniex you can short USDT vs. USDC (USDC is the non-sketchy version of Tether) and make your riches. If you put your money where your mouth is! https://poloniex.com/marginTrading#usdc_usdt
"Markets can remain irrational longer than you can remain solvent."
Also if Tether implodes the exchanges you're using to short are also likely to implode or exit-scam (since they'll know the gig is up), and there is no recourse.
> "Markets can remain irrational longer than you can remain solvent."
That is absolutely correct. However, an equally correct statement is: Whenever you think the market is being irrational, you just don't understand the situation well enough.
So, if you think you can read some blog posts and determine that a freely trading financial market is being irrational...well, it's not the market that is irrational.
People love to say this but it’s simply wrong. You can believe something is actually worth anything but not believe the market will realize this over a given time period.
E.g. a time traveler might see tether go to $0 in the year 2025. But if he is stuck in the year 2019... shorting it in the short term is clearly a dumb idea. Betting that you can have a chair when the music stops is similarly dumb to to betting you can guess when the music stops altogether. Both fools know the music will stop eventually. Both will likely lose.
the other posts about the ownership issues aside a good amount of people will find it ethically reprehensible to make money off a scam like this and to participate or be involved with it at all so I've always considered these "why don't you bet on it?" arguments to be in borderline bad faith.
If you told me that I could make a ton of money by betting on the blood diamond market I wouldn't do it even if I knew 100% that I'd make money. It says very little about one's confidence in predictions. I don't want to spend five minutes of my life being financially involved in the crypto circus.
> the other posts about the ownership issues aside a good amount of people will find it ethically reprehensible to make money off a scam like this and to participate or be involved with it at all so I've always considered these "why don't you bet on it?" arguments to be in borderline bad faith.
How, exactly, is it unethical to make money off of something like that? Your bet would be providing information to the rest of the market. You would be helping other people to be informed about the situation.
