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Comment by askmike | Hacker News Reader

Come on man..

> The post I was responding to claimed Tether was specifically created to address Bitfinex's wire issues. That is false.

It does not claim that it was "specifically created for that", it claims that "Their solution" to the wire problems was "Tether". It does not state anything about why Tether was created in the first place.

> Secondly, there is plenty of reason to create something like Tether independently of any wire issues (specifically: to normalize prices between exchanges).

People will arb the effiencies away anyway, regardless of what tools the exchanges provide them. Besides tether a lot of people in Taiwan are arbing through the traditional banking system [0].

But you are right, it IS important that there are ways to flow money in and out. Which is exactly what Tether is for according to OP's argument.

[0] https://steemit.com/bitcoin/@kingscrown/living-in-thaiwan-yo...

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> It does not claim that it was "specifically created for that", it claims that "Their solution" to the wire problems was "Tether". It does not state anything about why Tether was created in the first place.

Read the post, man, very first paragraph:

> Bitfinex was cut off from the US financial system, which makes it impossible for them to clear USD-denominated wires...Their solution: issue a cryptocurrency which is claimed to be 100% backed by USD and say that it is redeemable 1-to-1 for dollars... we just can't actually physically give you the dollars.

> People will arb the effiencies away anyway, regardless of what tools the exchanges provide them. Besides tether a lot of people in Taiwan are arbing through the traditional banking system [0].

That's true, except you probably have never tried to actually execute that kind of arbitrage before. I have, so let me tell you the problem tether solves: speed. If you do arbitrage through the banking system, you have to wait for wire transfers to clear. That can take days to weeks. That means you have to wait for the spreads to be large enough and stable enough to compensate you for the enormous risk of being exposed to the vicissitudes of the crypto markets during that time. And that's assuming you already have the accounts setup in the right countries. Tether makes all that instantaneous. That is an enormous benefit to arbitrageurs equalizing prices, and inter-exchange liquidity.

> Read the post, man, very first paragraph:

I've read it a few times now, still can't find where they say they specifically created tether (the system) for this exact purpose. Keep in mind that the issuance of tether is not the creation of the complete tether blockchain/system (they are issuing new tether around the clock).

> That's true, except you probably have never tried to actually execute that kind of arbitrage before. I have, so let me tell you the problem tether solves: speed.

You are right, I have never tried arbing through the banking system. I am doing small/mid scale arbing in cryptomarkets, however I stay away from anything that touches any bank / FIAT.

Though my point is that: yes arbing through banks is slow, inefficient and very dangerous. People will do it nonetheless because of the margins you can make. The exchange does not care how hard it is or how people do it, just that there is some guy somewhere (potentially flying around with suitcases of cash) who is doing it.

So yes I 100% agree with:

> That is an enormous benefit to arbitrageurs equalizing prices, and inter-exchange liquidity.

But bfx only cares about the latter, not really about the people doing it.

> I've read it a few times now, still can't find where they say they specifically created tether (the system) for this exact purpose. Keep in mind that the issuance of tether is not the creation of the complete tether blockchain/system (they are issuing new tether around the clock).

Right there. patios11 claims that Bitfinex's "solution" to their wire problems was issuing Tether. That is demonstrably false, because Tether predates Bitfinex's wire issues by more than a year.

If it is raining outside and I take an umbrella with me, I can say it's a solution to the rain. That doesn't say anything about whether I bought the umbrella specifically for today and if I had it longer than today I am lying...

"Their solution: issue a cryptocurrency" implies they issued Tether to solve their wire issues. This is false. They issued it long before.

Lots of people use git as a solution to their source control problem who only started writing code after it was invented.

Do you think that bitfinex didn't know they'd potentially have wire problems before being officially cut off?

I don't think they knew 1.5 years before.

I have no idea really but from the discussion I get the impression that one side assumes some amount of Tether could be issued at will, more or less, whereas the other seems to think to issue means to invent the ... whatever that even is.

I read the patio11 post as implying very strongly that Bitfinex was responsible in some way for Tether, when in fact that couldn’t be further from the truth.

http://article78againstnydfs.com/docs/317-cv-01882-BitfinexC...

> I, J.L. van der Velde, hereby declare as follows:

> 1. I am the Chief Executive Officer for iFinex Inc. (“iFinex”), BFXNA Inc. (“BFXNA”), BFXWW Inc. (“BFXWW”), and Tether Limited (“Tether”). I have personal knowledge of the facts set forth below, and if called and sworn as a witness, I could and would testify competently thereto.

> 2. iFinex, through its subsidiaries BFXNA and BFXWW, owns and operates a leading global Virtual Currency platform called Bitfinex.

Bitfinex is responsible for Tether.

https://twitter.com/Bitfinexed/status/932139909237833728

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