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Comment by woeirua | Hacker News Reader

Tick, tick, tick. The doomsday clock for Tether just moved closer to midnight. When Tether finally depegs, all the exchanges will go under (except maybe Coinbase and a few others that are tightly regulated). Coinbase will probably still go bankrupt because the crypto trading market is going to evaporate. The value of most coins will go to zero. There will be a liquidity crisis the likes of which we haven't seen since the 19th century.

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People need to actually redeem the tethers for actual US dollars in order to collapse the tether scam. I think all the crypto exchange collapses and bankruptcy declarations will actually help tether. All the money will be locked up for years as the lawyers and accountants go through everything.

The Mt Gox "hack" was in 2014 and people have still not gotten money back yet. That is 8 years and counting.

Why do you think that bankruptcy courts wouldn't order the Tether to be sold long before they figure out how to reimburse the creditors?

What makes you think they would do so quickly?

Also, selling to quickly would at least temporarily depeg Tether and cost the creditors money.

Presumably they'd try to sell it at some rate wouldn't depeg Tether, and the reason to do so is to preserve cash for the creditors in case Tether depegs for some other reason.

The redemption of tether (and other) can happen a long time before any payments to creditors happen.

But the only thing that matters so far is Tether's market cap... which has barely moved through the latest shitshow.

Whoever buys tether (and who is it? really? I don't think it's retail investors...) doesn't seem to be in a hurry to convert it to cash. I'm assuming it's mostly or all related to criminal activity, so they can't actually cash out?

"if people all try to retrieve their savings from banks, they will see the banks for the scam they are, as they will collapse".

Your argument does not make tether a scam.

Thankfully we'll always have USDTea. https://usdtea.io

I think we all need a bit of stabilitea in the modern world. Good thing it's iced tea though; as we all know, proper tea is theft.

Wasn't sure about the peg to a soft drink but the whitepaper sold me.

Who knew if you made an unregulated market full of sharks that you would get this outcome? /s [0]

0 : https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

> The value of most coins will go to zero.

By absolute number, sure, but if you count "most" by weighting them with trading volume, then no. Bitcoin and Ether will not go to zero.

> By absolute number, sure, but if you count "most" by weighting them with trading volume, then no.

That's crypto-speak for how to deny reality.

If the value of a USD dollar plummeted to $0.01, you don't pull out your wallet and say, "I have 100 of them, so no the value hasn't gone to almost nothing."

To use your analogy: Parent's point is that even if all the quetzals and colones and cordobas and lempiras go to zero, the USD will still have value.

The dollar holds value in tough economic times because it's the exit-channel for a lot of sketchier assets. You sell your quetzales and lempiras (or iffy stocks and bonds) when the market starts to tremble to get back to relatively reliable dollars.

When crypto implodes, what are people going to drop their shitcoins for? I could see a few possible answers:

* They'll accept BTC or Ether because it's what they can easily get to in a pure-crypto market. If there's enough turmoil, major fiat offramps may be overburdened.

* They'll pile onto stablecoins (likely because exchanges present it a default way out, and sure, they'll exchange for dollars some day) running the risk of triggering further contagion to stablecoins themselves.

* They'll take fiat at increasingly terrible exchange rates just to get out of the dumpster fire.

Exactly!

That's not what I mean at all, but I can see how you might arrive at that misunderstanding.

No, what I mean is that anyone can make new coins in 5 minutes to commemorate their favorite meme. There's a very large number of these coins and almost all of them are already valued at zero. So now you can go around saying "most tokens value will drop to zero", which is factually true because they already are at zero, and never were worth much of anything, and nobody traded them. So what?

If you take a typical crypto hodler, most of the value in their portfolio is in tokens like Bitcoin or Ether, and very little value is in meowcatcoin or shibadibacoin. Bitcoin and Ether will not go to zero.

I don't think they will go to zero either...necessarily...but much much lower...I think you underestimate the amount that ponzi liquidity inflated everything...

I never claimed that they couldn't go much lower. I was arguing against this statement:

> The value of most coins will go to zero.

There is definitely an energy, art, nutritional, collectable value to a steaming pile of shit.

I think the obvious issue is no one is going trade their actual-money for it.

Thanks so much for the explanation!

Your comment reminded me of this joke:

https://www.reddit.com/r/explainlikeimfive/comments/3hqxgs/e...

I wonder: what will be the last straw that breaks confidence in Tether?

Tether will keep pretending to be fine until every last real dollar behind it has been drained. This is what is happening right now, with Binance (and previously FTX) propping up the crypto market with their purported bailouts and pretending nothing is out of place. Then one morning, all of a sudden, it will all come down with some really spectacular fireworks to watch.

> Tether will keep pretending to be fine until every last real dollar behind it has been drained.

That's how stablecoins work. There are two stable points: 1 and 0. When they break, they go all the way. As soon as the price breaks, there's a rush to exit. We've seen this happen a few times now.

Watch the Tether market cap decline here.[1] A billion here, a billion there, and sooner or later you're talking about real money.

[1] https://coinmarketcap.com/currencies/tether/

Something is happening in stablecoins.[1] Binance and OKX exchanges "temporarily suspended" support for USDC and USDT on the Solana blockchain. Unclear why.

[1] https://www.coindesk.com/markets/2022/11/17/crypto-exchanges...

But that's in the wrong direction? They're suspending deposits, not withdraws.

Maybe they don't want to be holding those "stablecoins". If you withdraw USDT or USDC, it's off their books and they have no further risk. If you deposit it, and it's credited as US dollars...

Solana ecosystem is largely supported by Alameda which we all know went bankrupt. And furthermore Solana network is not quite stable, its validators are costly to operate and it has been down many times so maybe exchanges are losing confidence in the network's reliability.

> When Tether finally depegs, all the exchanges will go under

Why? Exchanges have existed before stablecoins, and you can still trade BTC et al without ever touching a stablecoin.

You have my hopes up. Let's hope your prediction is the lower bound.

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