top | item 27214501

(no title)

o_p | 4 years ago

Pro tip: the deposits in your bank account are not backed by actual money 1-to-1

discuss

Yeah, but in the US the FDIC insures my bank account up to $250,000 (per account!). Tether has no such guarantee, which makes Tether's financials a lot more important.

tonfa|4 years ago

Which is why banks are highly regulated, have reserve and capital requirements and central banks acting as lender of last resorts.

whimsicalism|4 years ago

They are, however, backed by the FDIC.

sschueller|4 years ago

Only up to 250k. Any more and you need your own insurance.

anm89|4 years ago

The FDIC could not make the system solvent in the event everyone tried to redeem their funds. It can only keep up confidence to try to prevent people from all trying to redeem their funds.

taneq|4 years ago

Pro tip: Modern finance is also a Ponzi scheme.

ttul|4 years ago

No, it's not a Ponzi scheme. A Ponzi scheme, "is a fraudulent investing scam promising high rates of return with little risk to investors. A Ponzi scheme is a fraudulent investing scam which generates returns for earlier investors with money taken from later investors. This is similar to a pyramid scheme in that both are based on using new investors' funds to pay the earlier backers." (https://www.investopedia.com/terms/p/ponzischeme.asp)

Modern finance is regulated. Schemes that aim to generate a return have to file a prospectus and must be audited and exposed to legal liability should they fail to follow the rules.