<\/p>\n\n\n\n
Who asked me to write this piece – strictly free of charge – knows that I am not used to agreeing with content and respecting editorial lines, so even though the topic is cryptocurrencies and even though I have taught international finance in several important universities (which remained such despite me teaching there…), it can happen that some financial topics are catapulted into contexts and situations that seem unrelated to them.<\/p>\n\n\n\n
Let’s start by saying that cryptocurrencies – all of them, not just the best-known and most widespread ones – are often associated with something shady, obscure, preferably and tendentially criminal.<\/p>\n\n\n\n
As often happens, this “association” is made by those who know little or nothing about it, and even more often have only heard about it. And this, in the matter, is a key point: those who (s)talk often about Bitcoin and altcoin (the alternative cryptocurrencies) are people ignorant of finance, who know what they have heard and, more often, have not understood what they were told.<\/p>\n\n\n\n
So when the word spread (however, to be fair, not without foundation…) that Bitcoin – a term I will often use to refer to the entire cryptocurrency sector – was the new Eldorado of money launderers, illegal currency exporters, and criminals of all kinds, suddenly those who cross the border between Mexico and the United States to export currency disappeared from the minds of these improvised “experts,” the mythical “shoulder bags” who, operating on the border between Italy and Switzerland (but also Austria, Slovenia, etc.), flood or dry up liquidity in our country depending on the case; and I could go on…<\/p>\n\n\n\n
All replaced by the indiscriminate and increasingly widespread use of cryptocurrencies: but just wait a few hours near the Chiasso customs or use a drone to see the movements at the border between Mexico and the United States to realize that none of this has happened, but that these “professional” figures are still living their moment of glory.<\/p>\n\n\n\n
From Doubts to Regulation.<\/p>\n\n\n\n
Does this mean that Bitcoin has failed in its goal to promote illicit trade or cover\/generate wealth of dubious origin?<\/p>\n\n\n\n
Absolutely not. But that’s not the point…<\/p>\n\n\n\n
The fact that the founder of Bitcoin himself is a mysterious figure suggests that the whole subject is surrounded by an aura of “darkness”.<\/p>\n\n\n\n
Starting with his name: Satoshi Nakamoto, a name from an operetta, which is actually a pseudonym. For years, legends about him have abounded: everyone wondering what he looked like, how old he was, who he was, and so on.<\/p>\n\n\n\n
And even today, the questions and doubts about the character outweigh the certainties…<\/p>\n\n\n\n
But at least in this field, there have been giant steps towards transparency, thanks in part to the information that regulatory authorities have demanded from issuers and that those same authorities have committed to providing.<\/p>\n\n\n\n
Today we know who issues, governs, and manages the main cryptocurrencies, even almost with an excess of information, as if they wanted to make up for lost time or there was something to be forgiven.<\/p>\n\n\n\n
Even with some totally unexpected “gems,” as in the case of Tether, a cryptocurrency born in 2014 and known only among those who collect figurines and can’t wait to fill their personal album.<\/p>\n\n\n\n
<\/p>\n\n\n\n
And yet, news that is even more unknown than an already particularly unknown topic, this cryptocurrency born from the intuition of the very Italian Giancarlo Devasini (Italian by birth, but also because the first thing he did was to build a corporate structure that has its center of gravity and headquarters in the Virgin Islands and other tax havens and that also owns Bitfinex, of which Giancarlo Devasini is the CFO, which is considered the largest cryptocurrency trading platform in existence) has become the most widely used digital payment system in the world: this is certified by a report from the company Coinmetrics, according to which on August 20, 2020, the 7-day weighted average of trades on Tether would have reached $3.55 billion, about 20% more than Bitcoin, which stopped below $3 billion.<\/p>\n\n\n\n
But how is it possible that a platform that allows payments of over three and a half billion dollars in a week is practically unknown, and only a few have really heard of it?<\/p>\n\n\n\n
In addition to those related to Bitcoin, Tether has in fact surpassed transaction volumes even of PayPal, yet both Bitcoin and PayPal are on everyone’s lips, while knowledge of Tether is the prerogative only of industry insiders.<\/p>\n\n\n\n
How is it possible that a cryptocurrency born “only” six years ago has grown so powerfully and exponentially?<\/p>\n\n\n\n
To fully answer this question, I may have to bore someone with some technical data, for which I apologize in advance.<\/p>\n\n\n\n
<\/p>\n\n\n\n
Let’s start by saying that Tether is a stablecoin, a cryptocurrency whose value is anchored to the dollar, and this is, in my personal opinion, the reason for its explosive success, for reasons I will come back to later.<\/p>\n\n\n\n
Bitcoin is subject to market fluctuations, while Tether instead maintains its value unchanged. In times of crisis, where stability and security outweigh returns, this characteristic is particularly appreciated and causes Tether to be widely used in cryptocurrency markets, especially in Asia, where investors and traders, instead of changing their assets into currency to be deposited later in the bank, transform them into Tether, which they can keep in their virtual wallets, and then change them back into cryptocurrencies as needed.<\/p>\n\n\n\n
In times of high volatility, Tether therefore becomes a sort of long but stable anchor that prevents dangerous fluctuations and protects against seasickness.<\/p>\n\n\n\n
But to the more astute readers, it will not have gone unnoticed that such a system has its – numerous – dark sides.<\/p>\n\n\n\n
Starting with the fact that Tether (guess what?) would make it easier to transfer capital abroad, not necessarily of illicit origin; but the numbers speak for themselves, if it is true that Tether worth over $18 billion has been transferred from East Asia to other regions in a year.<\/p>\n\n\n\n
To refute this thesis, recourse has been made to the most fanciful hypotheses, including the decidedly suggestive one that the “digital miners” who work in China proceed to convert newly extracted coins into Tether before they reach larger markets and masses.<\/p>\n\n\n\n
But to avoid this, it would be enough to do as in Sicily, where the workforce that collects the precious Bronte pistachios is periodically checked right down to their pockets to prevent them from hoarding pistachios that are then sold on the “black” market.<\/p>\n\n\n\n
Of course, also to rule out the hypothesis that I am one of the shareholders of the company or at least own Tether in industrial quantities, it must be said that there are several things that also do not work in Tether: beyond the lack of transparency of the corporate structure and the unscrupulous use of offshore entities, there are strong doubts about compliance with the legal reserves covering the exact amount of the offer: normally, legal reserves must cover 100% of the offer, but often this measure is not reached and this represents an undoubted risk for the market, made up of traders and investors.<\/p>\n\n\n\n
Stablecoins like Tether, to be reliable and guarantee investors, must in fact possess reserves of the same value as their fiat currency capitalization, and when this does not happen, the risk of market manipulation is really high, especially when it is used to manipulate the price of other cryptocurrencies, with the consequence of significantly increasing volatility.<\/p>\n\n\n\n
Tether development: from Covid-19, capitalization increase, anchoring to the U.S. dollar<\/p>\n\n\n\n
The Covid-19 pandemic has also contributed, perhaps unintentionally, to the affirmation of Tether, which in the hidden dreams of its shareholders and founders could become the digital currency of the world, asserting itself as a digital payment method even in hitherto unexplored sectors and strengthening its use in those countries, which are increasingly numerous, whose economy is particularly fragile: above all Venezuela, a historical leader in these situations, but also Turkey, where President Erdogan is studying several solutions to acquire “stabilizing” cryptocurrencies.<\/p>\n\n\n\n
The Bloomberg agency (which seems to have emerged unscathed from the presidential illusions of its owner, former New York City Mayor Michael Bloomberg, who literally threw hundreds of millions of dollars in advertising spots down the drain without being able to turn them into votes), tracing the value of cryptocurrencies from the beginning of the pandemic until today, has certified that while Bitcoin’s market capitalization has decreased by 37% since mid-February, Tether has increased by 38%: a transfer of value equivalent to several billion dollars.<\/p>\n\n\n\n
And speaking of dollars, the anchoring to the American currency has represented the most appealing element of Tether, precisely at a time when the value of most other digital currencies has collapsed.<\/p>\n\n\n\n
I wrote earlier that the anchoring to the dollar represents the most successful factor of Tether and stablecoins in general.<\/p>\n\n\n\n
The main problem with Bitcoin and similar currencies and at the same time a factor of distrust towards the entire sector has in fact been excessive volatility.<\/p>\n\n\n\n
A phenomenon that has caused Bitcoin to multiply its value by ten in a few months and then halve it in even less time.<\/p>\n\n\n\n
Some mischievous analysts have recalled the value\/disvalue creation system of so-called network marketing, in which the first ten people in the network (founder, brother and\/or cousin of the founder, girlfriends of the brother and cousin of the founder – not necessarily two different people…) make real money and the thousands of subsequent insertions divide the crumbs.<\/p>\n\n\n\n
Even with Bitcoin, the few “pioneers” made money, while many registered a bloodbath of their finances simply for having missed the time window of their investment.<\/p>\n\n\n\n
<\/p>\n\n\n\n
Let’s be clear: the financial bubble is not a novelty introduced by cryptocurrencies. Those who are no longer young will remember that in the 1980s, 3 square meters (three!!!) in the center of Tokyo cost one billion old lire (when one billion lire was not common to many people) and a few years later, after one of the most dangerous real estate bubbles of all time had burst, those skyscrapers were being sold at shameful prices.<\/p>\n\n\n\n
And who could forget when in the late 1990s, a few months before the tech bubble burst in the spring of 2000, Tiscali was making 100% gains every day on the stock market (without there being a single reason to justify such performance), reaching a market capitalization of over 30 trillion lire, more than Fiat? Today, Tiscali is worth less than a cent compared to back then and its founder, Renato Soru, has lost the aura of guru that accompanied him in the golden years.<\/p>\n\n\n\n
Those who invested in Tiscali (like many other similar stocks) at the beginning of its irresistible ride became rich, while everyone else is licking their wounds.<\/p>\n\n\n\n
You don’t need to be international finance professors to realize that nothing has changed…<\/p>\n","protected":false},"excerpt":{"rendered":"
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