alt Hacker NewsProbably not everyone knows, but USDT has a "black list", and admins can prevent any address holding USDT from spending. The black list is implemented in USDT contract.
So USDT is not truly decentralized and your money can be frozen for any reason or no reason at all.
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Turns out that there are quite good reasons to have a centralised currency after all. Who would’ve known.
Arguably any fiat-collateralised stablecoin is ipso facto centralised and trusted (someone needs to 1) issue the coins only against fiat collateral and then 2) hold onto that collateral reliably and 3) return it upon presentation of the coin), and at step 3 they can always say "no, we won't give it to you".
Decentralized is a great concept but it’s 99.9% rug pulls and you can’t get any safety unless you centralize. As an investor there is no way to protect yourself because the rug pulls are several orders of magnitude more sophisticated than most people’s understanding.
The U.S. government is the largest beneficiary of this service. More than $2.1 billion in USDT connected to or requested by U.S. authorities out of over $4.4 billion in total illicit USDT freezes globally.
If they baked in a function to freeze USDT, why not also add a function revert a transaction flagged as part of a hack?
Did they ever show proof that they actually hold $1 for every tether? This was big a few years ago but never heard anything about it since. (I could Google it but others here probably want to know)
I lost ~20,000 USDT by accident once and the CTO just sent me some freshly printed ones. That was many years ago though.
Anyone can refuse any bitcoin, too. But that's not implemented in the contract, just by how much real money people want to give you for bitcoin.
A shame that they can and do so here but happily facilitate transfers or scam victims, human trafficking and sexual abuse including of minors.
So when tether is blacklisted, is it reissued?
The financial system has evolved over 5000+ years and is like an endless series of Chesterton's Fences at this point. Here we find another: the ability for a regulator or a bank to freeze assets is once again proven to be a feature not a bug.
Managing a wallet where there is no recourse if your wallet is compromised is simply too difficult when even crypto exchanges get hacked and otherwise sophisticated people get compromised when taking cautious measures (eg [1]).
Crypto really is and always was a race to the rug pull.
[1]: https://www.straitstimes.com/singapore/about-3-5-million-los...
So USDT is a great amazing decentralized censorship-free drop in replacement to USD except:
- much more awkward to use
- more liable to hacks
- deposits are not insured
- fewer legal protections
- doesn’t pay interest (or not easily anyway)
- and as I find out, bannable by a central institution with lower legal oversight than the Fed
I’ll keep a mental note of this.