Some of you know that I've been vocal about crypto currencies and their power to shift the economic balance. I still believe that but I'm taking a break from crypto and I think folks who care about their savings should too. Here's why:
Some time ago some smart but rather self-serving folk created a new crypto currency called USDT. The T stands for Tether. They needed it in order to make transfering fiat around the world simpler. It's easy to move bitcoin, ethereum and friends from one wallet to another. It can be done cheaply and in moments but anytime you want to move fiat, you have to go back to the traditional mechanisms like banking and transfer services that are slow and expensive. If you're trying to make money off of arbitrage trading, you need to move your fiat faster than that. USDT solved that problem on the premise that for every tether dollar printed, a company also called Tether, would put a real US dollar into a bank account for safekeeping. They promised that if you needed to change a USDT for a real US dollar, they'd go and get you one from their safe bank account.
Tether also made it easy to run a crypto currency exchange without having a bank account. Or even without having a registered tax paying company or legal entity behind it. Yes, really. Some exchanges are profitting to the tune of many millions of dollars and are run entirely anonymously. That's fine until the revenue wants a cut or until there's some problem that means the traders want their money back. That's what's happening now. Both of those things actually.
The problem is that those self-serving wankers who created tether realised that nobody really cares enough to check wether they were actually putting a real dollar in the bank whenever they printed a funny one. If nobody's checking, why not dispense with the pulava of sticking to their word? It's really hard to leave all that cash sitting in a bank account when you could be buying Lamborghinis. Also, while we're not sticking it in the safe bank account, what's to stop us printing a little extra funny money? Everyone likes the funny money anyway and they give us real bitcoins for it. We can use the real bitcoins to buy real money on honest exchanges like Coinbase and Bitstamp. Then we can put the real money back into safekeeping - or maybe just buy more Lambos.
It get's better. Since there's now a machine that prints funny money that nobody cares to look into and since the funny money can be used to buy real bitcoin, lets use funny money to prop up the price of bitcoin. Yes, that's right. The price of bitcoin and ethereum and all the other cryptos crashed a long time ago. It's only the constant printing of USDT and the pumping of that USDT into the crypto markets that's keeping the price of bitcoin from crashing all the way back down to something realistic.
Well, there you go. That's why I'm taking a break. There's a real crash coming that's going to make all the previous ones look like a bit of fun. I'm not even going to bother citing references for everything I've said above. It's all easily available information so if you don't believe me, do yourself a favour and Google it. The research will put you in good stead for what's coming. And yes, when the tether scam blows, I'll go back to believing in the tech that makes crypto great and I'll probably go back to trading and hodling and buying whatever's left standing after the fallout.