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Tether: Unchained Credit on the Blockchain

2 pointsby monortover 4 years ago

1 comment

jqpabc123over 4 years ago
Bitcoin pump and dump.<p>1) Slowly accumulate bitcoin.<p>2) Mint stable coins and &quot;loan&quot; them to certain big customers (i.e. players in this scheme). Note that the only &quot;backing&quot; of these coins is just a promise --- not USD.<p>3) Big customers&#x2F;players use &quot;loaned&quot; stable coin to buy bitcoin --- thus inflating bitcoin price.<p>4) Small investors&#x2F;speculators see rising bitcoin and jump in to buy inflating price even more.<p>5) All together now --- sell bitcoin at inflated prices. Profit!<p>6) Stop minting and &quot;loaning&quot; stable coins. Bitcoin drops. Naive small investors get screwed.<p>7) Repeat at step 1.<p>What facilitates this scheme is people accept the fiction that the stable coin is 100% backed by USD.<p>Doing this in any &quot;regulated&quot; market would subject you to a huge fine, prison time or both.