Tether
Crypto currencies have been declining in dollar price lately. Some “coins,” such as Terra and Luna have completely imploded, wiping out the savings of those speculators. Terra (aka UST) was supposedly backed 1:1 with dollars. It was used to back Luna. Terra was not really backed 1:1 and defaulted when more people wanted dollars than Terra had backing it. Tether is a crypto that is supposedly backed 1:1 with dollars. It is used to back several, many, or all cryptos- including Bitcoin. If Tether implodes, the crypto market may implode.[1]
Tether, on May 11, started being traded with a discount. On May 12, it was trading at 95 cents on the dollar- possibly foreshadowing a run on Tether as people seek to cash out their Tether for dollars before a defaults like Terra. Tether has since risen up to .997 dollars per Tether.[2]
One of the biggest attractions for cryptos is that they can be exchanged for dollars. If Tether falls in dollar price again, it could result in owners of other cryptos seeking to cash out their cryptos for dollars, as they fear being paid in Tether instead and receive fewer dollars. That would result in a fall in dollar price for those cryptos.
Of course, the entire point of using another currency instead of the dollar is to not use the dollar. If cryptos have their value derived from dollars, then cryptos won’t survive the end of the dollar as the world’s reserve currency (current events for those unaware).
Maybe people will trade receipts for images of gold coins when the dollar is no longer the world’s reserve currency. Maybe they will prefer receipts that can also be redeemed for gold, silver, or any other commodity. What is the difference between a defunct receipt for gold and a receipt for imaginary gold? Historically, gold and silver are money by debt default.
Cryptos are tulips. Physical bitcoin is money when the dollar aint worth a continental.[3][4]
Crypto currencies have been declining in dollar price lately. Some “coins,” such as Terra and Luna have completely imploded, wiping out the savings of those speculators. Terra (aka UST) was supposedly backed 1:1 with dollars. It was used to back Luna. Terra was not really backed 1:1 and defaulted when more people wanted dollars than Terra had backing it. Tether is a crypto that is supposedly backed 1:1 with dollars. It is used to back several, many, or all cryptos- including Bitcoin. If Tether implodes, the crypto market may implode.
We’re not living through the end of the world. It is just the end of the dollar as the world’s reserve currency.