and the distribution of digital products.
Tether vs. the US Military. Who Will Win?
With JP Morgan’s latest criticism of Tether’s inability to comply with Congress’s stablecoin bills, you may wonder what the fuss is about.
\ Tether’s stablecoin, USDT, almost single-handedly holds the crypto market together. At $140 billion, with tentacles in all crypto apps and exchanges, it’s a big fuss. Anything that tanks Tether will tank the entire crypto market.
\ Critics call it the biggest crime scene in financial history, a Ponzi scheme of unfathomable proportions, and the last bastion of terrorists, drug syndicates, and money launderers.
\ Sounds pretty shady.
\ Is it, though?
\ USDT is a mirror image of the US dollar. A copycat. An imitation.
\ It exists because most of the world can’t get “real” dollars, but they can get a digital representation of the same.
A rose by any other nameThe experts say that’s nonsense. The US dollar is worth something because the US government says so.
\ That government has a military to enforce its laws and treaties. Aircraft carriers, for example.
\
Experts say these things back the US dollar.
\ Does that military make the US dollar better than USDT?
\ You’d have to hope so, because US taxpayers spend almost $1 trillion on that military. They spend another $36 trillion on the “full faith and credit” that backs every dollar.
\ Is that better than whatever Tether offers?
\ Let’s examine.
Fun comparisonsChoose whether the statement applies to Tether, the US military, or both.
\ Will collapse if the US dollar fails.
\ US military.
\ Tether loses a profit center but has non-USD stablecoins to fall back on and can create more products if necessary. While its reserves will collapse, so will the need for reserves (because the US dollar will be worthless, therefore redeemable for nothing).
\ Has never passed an audit.
\ Both.
\ Tether has never even had an audit.
\ The US military has failed all its audits. In fact, for its most recent audit, the US military passed only 7 of 29 categories and couldn’t account for 61% of its spending.
\ The world order would fall apart if it disappeared.
\ US military.
\ If Tether disappeared, people would use a different USD stablecoin.
\ Responsible for the deaths of millions.
\ US military.
\ We don’t know how many people Tether has killed. I’m guessing it’s a lot less than millions. Probably 0.
\ Props up dictators and autocrats?
\ Probably both.
\ The US military, for sure. We know this because it’s public information and part of US foreign policy.
\ Tether? We don’t know, but you’d have to assume so. North Korea used USDT as part of its FDI-as-theft fundraising policy. Does that count? If not, we have to assume other despots used USDT for something or other.
\ Responsible for the overthrow of sovereign governments?
\ US military.
\ Tether doesn’t mess with that.
\
That may sound absurd. Shall we look at some ways they’re alike?
\
- US military: run by one guy who is unaccountable to the public and does whatever his boss (the President) tells him to do.
- Tether: run by three guys who are unaccountable to the public and do whatever their customers tell them to do.
- US military: vital for the security of Western governments and their friendliest partners.
- Tether: vital for the liquidity of global financial networks and the people who use them.
- US military: a secretive, opaque entity that does terrible things with US dollars in pursuit of US policy outcomes.
- Tether: a secretive, opaque entity that does terrible things with US dollars in pursuit of profits.
\ Tether and the US military dominate their respective fields, get a lot of support and praise, and face withering, sometimes-valid criticism. They both expand the power, usage, and demand for US dollars.
One final pointThere is, however, a big difference that I didn’t cover above.
\ Tether has enough money to back its token.
\ The US military has no money. It gets funding from the US government, which hasn’t had enough money to back its dollars since the 20th century. Despite having the largest economy in the history of mankind, it falls $1 trillion short of its budget obligations each year. It depends on speculators, taxpayers, and central bank interventions for its solvency.
\ Which one should you worry about more?
Mark Helfman publishes the Crypto is Easy newsletter. He is also the author of three books and a top Bitcoin writer on Medium and Hacker Noon. Learn more about him in his bio and connect with him on Tealfeed.