Is Bitcoin Controlled By Tether?

Bitcoin University

Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.

Is Bitcoin Controlled by Tether 

Someone sent me a paragraph of questions about Tether’s “Ponzi-scheme-like” control over Bitcoin. Let’s go over each in detail.

Question #1: “Bitcoin is a speculative asset that, with limited supply, will never become a transactional currency.” 

Answer: Sorry to say this, but Bitcoin has already become a transactional currency. People in every country on Earth already use it daily to pay for goods and services. 

We previously discussed Pedro at Lake Bitcoin in Guatemala yesterday, where he accepted Bitcoin for his businesses.

Here’s Francis in Bitcoin Jungle making fun of people who say you cannot buy food with Bitcoin, showing all the stuff that he bought with Bitcoin. 

The BTCmap.org is a great tool for easily finding places to spend Bitcoin online and worldwide.

Even on my website, you can pay using Bitcoin for my paid material. So, Bitcoin is already being used globally as a transactional currency. It’s not being used everywhere, obviously. We’re still very early, but it works very well as money.

Question #2: “The abundance of sats only means that each sat has a value proportional to a Bitcoin, the same way a penny is always 1/100th of a dollar.” 

Answer: There’s no such thing as a whole Bitcoin. The Bitcoin software refers only to sats.

100 million sats in = 1 BTC

This also isn’t an argument against Bitcoin. 

Still, at least he didn’t say that dividing a pizza into a million pieces enables you to feed the whole planet with one pizza, which people often say when they claim that Bitcoin’s not scarce because it can be subdivided — a very silly statement.

Now, we come to the main critique of this comment:

• “The problem for Bitcoin is that its limited supply created its sole use as a speculative asset. Stablecoins evolved to back its speculative use, and Tether became the dominant stablecoin. Tether is an unaudited Ponzi scheme that will eventually collapse, as all Ponzi’s do. Because of the Tether Ponzi, which became the underlying foundation for the entire crypto space, there’s no true market value for Bitcoin. Its price is completely manipulated by creating unbacked Tethers and controlling Bitcoin’s limited supply.”

So, is Tether a scam?

This is something we’ve talked about a few times before…

Tether is probably one of the world’s best businesses today. The way it works: 

1. Investors have given Tether about $112 billion. 

2. Tether buys U.S. Treasuries with that money and gives the people USDT tokens.

3. Then Tether gets to sit on those Treasuries and collect its interest income.

Currently earning 4 to 5% a year. This is really like shooting fish in a barrel. In the first quarter of 2024, they reported a $4.5 billion profit. If you do the math

• 4%: $4.48B

• 5%: $5.6B

There is talk that they’re not fully backed. This is unlikely. They’re fully backed. They have such a good business—there is no reason why they wouldn’t be fully backed. Their problem is that the big four auditing firms have avoided auditing Tether.

However, Tether has onboarded the U.S. FBI and the Secret Service and is just rolling in cash. They’ve been investing billions of dollars in startups and buying huge amounts of Bitcoin using their cash.

But for the sake of argument, let’s assume that all this is smoke and mirrors, that Tether has only been pretending to invest billions of dollars into Bitcoin and startups. This would be very difficult to fake, especially when they refer to a company that they’ve invested in, and everyone knows what company this is, and they can audit it, etc. 

It’s hard to pretend to invest billions of dollars in Bitcoin and startups. But let’s pretend it’s all smoke and mirrors.

Does it really matter?

If Tether were to blow up, would it matter, given Tether’s tiny size relative to the real money printers?

People often forget about this.

Tether has a tiny money printer, if it’s a money printer at all. It’s not the same kind of money printer the Fed and central banks have. Like the Fed, the real money printer that pumps Bitcoin is the fiat money printer. 

As we said, Tether has a market cap of about $112 billion. 

By contrast, the Fed’s balance sheet is approximately $7.2 trillion, and the U.S. money supply is about $21 trillion. 

$112 billion pales in comparison to these much larger numbers, and this is where the real money printers are.

These so-called Tether truthers on Twitter have been around for years.

They refuse to accept reality. They’re like that person you see jogging outside, entirely alone in 2024, and wearing a blue surgical mask for some strange reason. 

Entirely out of touch with reality.

Final critique: 

• “Bitcoin has use and value as a means to transfer and hold wealth.” This was strange because, at the beginning of his paragraph, he already said that it can never be used for transactions, so he contradicted himself.

Bitcoin has been used and valued to transfer and hold wealth, but there needs to be a true market to determine that value. This is some of the biggest nonsense I’ve ever heard. 

• Bitcoin is the most accessible market in the world. 

• It’s global. Unlike any other market.

• It trades 24/7, 365 days of the year. 

• It’s highly, highly liquid.

Bitcoin has a market cap of over a trillion dollars and trades on centralized and decentralized exchanges worldwide. So, when someone says, “There’s no true market to determine its value.”

I suggest that they check the price of Bitcoin on one of these exchanges.

There are dozens of exchanges, decentralized exchanges worldwide, and peer-to-peer exchanges that trade Bitcoin. So, it’s pretty silly to say that there’s no true market to determine the value of Bitcoin. This is one of the most ridiculous things I’ve ever heard.

I get it. 

Some people really, really don’t want to have to deal with the cognitive dissonance that comes with finally facing how fraudulent the current fiat financial system is and how dumb they’ve personally been to have avoided buying Bitcoin for so many years. 

The people who supposedly study Bitcoin and then spend a lot of time online being bearish about it or emailing their friends like this person did are obsessed with Bitcoin, but they’re obsessed in a terrible way.

They don’t understand it deeply and are more obsessed with it because they feel like they’ve missed out—and in many ways, they have. These people prefer to devise a million poor excuses for never buying Bitcoin. 

So, what do they end up doing? 
What do they end up using instead of Bitcoin?

This is the problem.
They usually just end up using fiat money instead, just U.S. dollars.

So it sounds like this: 

“I hate Bitcoin, so I use the U.S. dollar network instead, with its single node controlled by ex-lawyers and investment bankers. I don’t believe in using money with a fixed maximum supply because I prefer currencies that bankers can print for free in unlimited quantities. In contrast, I have to go to work and earn those dollars, thus constantly eroding the purchasing power of my hard-earned savings.”

The person should focus on the real Ponzi, the U.S. dollar, which they’re probably HODLing and using daily.

Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news. 

Learn more at: https://www.bitcoinuniversity.com/  
Follow him on Twitter: @mattkratter
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