The Dark Side of Bitcoin
A huge milestone for Bitcoin has just been reached, as we begin to see the starting entry of mainstream adoption in the form of hedge funds and serious institutional investors alike flocking towards owning the precious digital currency. Price has been questionably growing since the start of 2017 where 1 BTC could be grabbed for under $1,000 around early January, by the now-lucky individuals who took action. At the present day and time of writing, Bitcoin has exploded to a psychology barrier of an incredible $10,000 per BTC which the technical’s have been pointing towards for several weeks’ now, the long-awaited break of $9,400 resistance was the final hurdle to achieving this record.
But milestones and monetary gains aside, what a majority of Bitcoin investors are failing to realise is their investments are at more risk than they truly believe as this miraculous growth didn’t come from mainstream adoption, banks or the large-scale institutions. In fact, since the $7,000 region was breached, all growth came predominantly from ANOTHER cryptocurrency that has been the dark horse of the cryptocurrency world, where its public use-case is a means of trade-ability between cryptocurrencies for redeeming profits, but it’s darker, sinister use is acting as an artificial asset to pump Bitcoins valuation sky-high beneath the general public eyes. During all of this celebration and excitement, it’s important to remain a tight grasp of clarity and see the market from both sides of the field, not just through the lens of large percentage gains and profits.
So what is this underlying danger?
US Dollar Tether (USDT)
USDT is a blockchain based digital currency designed with the sole purpose of acting as the actual USD itself. Many places that allow you to transfer between crypto and fiat currencies also offer USDT as an option.
There's only one problem.... The USDT is backed by absolutely nothing, besides claims that for every 1 USDT the company 'Tether Limited' holds 1 paper-value USD in reserves to back up this crypto/currency alternative. This can be magically generated into existed just how the Federal Reserve can do so through quantitative easing etc. Except, unlike the FED, USDT has out of nowhere began being generated almost EVERYDAY in the millions!
This week alone, more specifically yesterday during Bitcoins final push from the mid $9000’s to the celebratory $10,000 mark, another $30 Million of USDT was just printed and as a result has launched the circulation of USDT to $720 Million. This is following on from the $20 Million the day before yesterday and $50 Million total in the past week.
USDT is quickly becoming the go-to crypto of choice when selling your crypto for profits to 'sustain' wealth during market corrections due to its stability. It's also the method of choice when buying cryptos, in particular... Bitcoin.
The supply of USDT has increased by 43% in November alone, with the total market cap surging from $15 Million in January 2017 to $720 Million at the time of this writing.
Tether has NEVER released an audit proving they even hold these reserves they claim they do and it's no coincidence that just like clockwork after the multi-millions of Tether have been printed, Bitcoins price begins surging ridiculously. The company is essentially diluting the market with tethers for the sole purpose of pumping Bitcoin even higher with artificial money.
It should also be stated in their official terms & conditions the following disclaimer is put forward to protect themselves from claims towards a monetary equivalent should Tether collapse:
"Purchase and Redemption of Tethers: The Site is an environment for the purchase and redemption of Tethers. Once you have Tethers, you can trade them, keep them, or use them to pay persons that will accept your Tethers. However, Tethers are not money and are not monetary instruments. They are also not stored value or currency."
"There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money. There is no guarantee against losses when you buy, trade, sell, or redeem Tethers."
The ‘Transparency Page’ mysteriously vanishes and goes down during the fabrication of further USDT. You can easily track the ever-growing supply here - https://wallet.tether.to/transparency
This is a genuine fear in the market right now and it’s becoming more evident than ever within the cryptocurrency communities that this is a genuine threat to the ecosystem and will damage a lot of credibility for Bitcoin and the market as a whole. Should this cause a collapse, it’s looking more likely than ever that capital will be flooded to Altcoins during the Bitcoin sell-off.
Anybody who was around during the MtGox collapse should remember this type of turnout very clearly. $450 Million worth of investors money vanished into thin air. It’s a frightening resemblance to that same scenario.
For me, Bitcoin is not something as appetising as it once was for an investor as it's just becoming a haven for manipulation and ever-increasing risks of collapse. What goes up must come down and it’s important to consider this factor whenever we witness over lasting bullish trends.
Yes, the price will always eventually go higher. But when you combine this everlasting bull run with artificial pumps, hard forks, Bitcoin spinoffs etc. The risk of a huge MtGox style crash is possible more than ever before.
To summarise, be very cautious... Altcoins could see the surge of a lifetime if this really plays out and I'm in no way saying Bitcoin will die, far from. It could simply be one of the largest corrections we've seen before taking years to recover again. Something to think about and research, especially if you’ve invested yourself.