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Comment by brokensegue | Hacker News Reader

they can't withdraw any such promise because it never existed, right?

Yeah. Their TOS says that they're under no obligation of giving you dollars in exchange for tethers. In fact, no one has ever redeemed a single tether and there is no process in place to actually do it. Why people believe that 1 USDT = 1 USD is beyond me.

> Why people believe that 1 USDT = 1 USD is beyond me.

I imagine it's because Tether has an effective PR team.

My understanding is that tether exists so you can sell your alt-coin position to something resembling USD in volatility, vs selling them for btc.

You can use USDT to buy ETH or BTC, and thats enables liquidity to USD fairly easily.

I'm not defending Tether, I'm just pointing this out because your comment makes it sound to me like a trap that nobody has gotten any value out of.

lots of people get value out of ponzi schemes too (until they don't)

Not the point. Why not just play straight with the facts?

Nobody ever has to be able to redeem for dollars as long as exchanges keep making markets with usdt.

I have no position in tether, haven’t used it, just interested in cutting thru misinformation.

the exchanges aren't the ones tasked with defending the peg though.

>In fact, no one has ever redeemed a single tether and there is no process in place to actually do it.

It's called withdrawing at any of the exchanges that support tether.

Can you actually "withdraw" Tether as dollars at these exchanges? Or can you just pass the buck by trading Tether for other cryptocurrencies?

You cannot withdraw Tether. You can only trade it for something else on an exchange. Tether does not actually let you convert USDT -> USD. I wonder why.

Presumably you can. I personally do not have accounts at any USDT exchanges, so I can't personally verify that fact. Even if all of the USDT exchange don't accept USD withdraws (which itself is unlikely because nobody would provide sell volume to them), at the very least you can trade them for "real" USD on kraken (at a few percent discount).

> at the very least you can trade them for "real" USD on kraken (at a few percent discount)

For now. If faith in Tether collapses, no one will trade USD for that "few percent" discount anymore.

You say "presumably you can", but according to David Gerard, there is no evidence that anyone has redeemed Tether. Only people presuming that they could if they wanted to, or people who heard of someone who heard of someone who did it.

The surprising fact is that people do buy and sell on exchanges that have no access to real money.

Trading Tether for USD on Kraken is different, and is the topic of this thread. Given that Tether cannot be redeemed, its price is free to fall as soon as traders on Kraken lose faith -- which, given that Tether has essentially failed an audit, may be happening.

I'm not saying it's impossible. I'm saying I know of 0 reports of this happening - and if it had, I'd have heard, and I mean there's not even bitcoin advocates saying they've done it - and one well-documented one of failing to do so: https://davidgerard.co.uk/blockchain/2017/12/05/bitfinex-rat...

But it can mean they abandoned whatever pretense they were maintinaing that USDTs could trade at par, even in a wink-wink nudge-nudge sense. That’s what “Tether breaking” implies. (As opposed to “Tether losing value.”)

It’s the difference between a money market mutual fund officially “breaking the buck” vs shareholders marking them as being worth less than a dollar.

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