Tether
Tether (USDT) is one of the first and most popular of the so-called stablecoins, cryptocurrencies that aim to peg their market value to a currency or other external reference point to reduce volatility. Because many digital currencies, even major ones like Bitcoin, have experienced dramatic volatility, Tether and other coins are trying to adjust prices to attract potentially wary users. The price of Tether is directly linked to the price of the US dollar. The system makes it easier for users to transfer from other cryptocurrencies to US dollars faster than converting to real money. Launched in 2014, Tether describes itself as a “blockchain platform that helps… to support the digital use of fiat money.”
In fact, this cryptocurrency allows individuals to use the blockchain network and related technologies to interact with traditional currencies while reducing the volatility and complexity associated with digital currencies. .
From September. 18, 2022, Tether is the third largest cryptocurrency by market capitalization, with a market capitalization of $67.9 billion and a single token value of $1.00.
Tether History
Tether was founded in 2014 by the trio of Reeve Collins, Craig Sellars and Brock Pierce – a former actor in a few Disney movies. The initial approval of their coin, called Realcoin, was negative [1]. However, in 2015 Tether was bought by the new owners of Hong Kong, who also owned the Bitfinex Central crypto exchange, and the subsequent participation in the Bitfinex ecosystem increased its popularity.
As Tether developed, the original Taiwanese bank partners became more and more concerned about the lack of KYC and other checks on the token once the stablecoin was released from the initial holding and distributed across multiple blockchains and eventually ended their relationship with the bank and Tether in 2017, which undermined Tether’s ability to move fiat currency into cryptocurrency and vice versa. However, they managed to find banking partners in Puerto Rico and the Bahamas, and during the next crypto bull run, Tether stablecoins became the most popular, with its flagship USD₮ in the middle high tokens. in terms of traded volume and market capitalization.
Tether was created to use the Bitcoin network, and is now spread across several leading blockchains. Tether is registered in the British Virgin Islands and lists JL van der Velde as its CEO. Both the company and Bitfinix are owned by iFinex.
Understanding the Pros and Cons of Tether (USDT)
Tether (USDT) is a cryptocurrency whose value is meant to reflect the value of the US dollar. The idea is to create a stable cryptocurrency that can be used as a digital dollar. Coins that represent the stable dollar are called “stable coins”. Tether is the most popular stablecoin and even acts as a substitute for the dollar in many popular exchanges!
According to their site, Tether converts money into digital currency, to peg or “peg” the coin’s value to the price of national currencies such as the US dollar, euro, and yen.
Like other cryptos, it uses blockchain. Unlike other cryptos, it is [according to the official Tether website] “100% backed by USD” (held by the US) [this has changed a bit, please see the update below].
That is, each Tether needs to be supported by dollars stored in a ratio of 1:1 (this is a big trading point and a potential problem in another place without a decentralized crypto storage). Ideally, this means that Tether trades at $1 on all exchanges and can be used instead of one dollar. However, in practice the price is a little less. The main use of Tether is that it provides some stability to other crypto opportunities that are volatile and provides money for exchanges that cannot be traded in dollars in banks (for example, sometimes there is a conflict between – leading Bitfinex exchange).
With USDT, you can, in theory, convert to a currency that has a stable value like USD…even when you’re in an exchange that doesn’t affect fiat! That’s a big deal in itself, but it’s better. Many exchanges also offer USDT as a trading method, allowing you to buy coins and coins denominated in USD. This is very useful (especially when the price of Bitcoin fluctuates). However, all good things about Tether aside, there are a few issues with Tether.
The truth is that there are good opinions and concerns about Tether that every user should at least be aware of. There are concerns that getting fiat for USDT may not work as expected at some point. There is a fear that the crypto-economy is now tied to a small dollar substitute. There is concern based on the fact that some Bitfinex runners also run Tether (Bitfinex is a leading exchange that allows trading of shares using USDT as a contract and puts a lot of effort into some in this sense). There are concerns that Tether may not always be backed by a 1:1 ratio as claimed (and instead there may be a small portion of security lending going on). etc.
In other words, there are some concerns about the centralized nature of Tether and some concerns that the public does not have enough ways to verify the system that Tether has tried to show through its documents, its public blockchain and public audits. . The words and values here are all based on the same concept. That is, put the crypto space to a surrogate for the dollar, which is controlled by a middleman, and set expectations based on that. This should be loud, because this problem of trust and coordination is a big problem that crypto is trying to avoid in the first place!
The underlying problem then is that the Tether company, although it uses blockchain technology, is not a distributed smart contract; it is a business in which humans can fall (those who ask us to trust them). The same goes for Bitfinex. Bitfinex is not a peer-to-peer exchange; they are business.
In fact, since we all use centralized exchanges and the need for those exchanges to have access to liquidity and work, we can make a strong case that USDT is exactly what the doctor ordered. for here in the history of cryptography. Finally, their average appearance does not make them bad. This puts them more in the same category as Ripple and XRP than Bitcoin (that is, they are companies that deal with crypto, not pure decentralized cryptos). Still, to put aside the concern and get to the point: Tether is very useful in practice due to its variable value, its ability to be used in transactions for many cryptos across the world’s major exchanges, and the ability to provide money for business.
As long as everyone believes that Tether is worth $1, and especially if this applies to all exchanges, including Bitfinex, it is more beneficial to Tether than possible problems. Concerns and thoughts are different, the truth is this: Tether has done well so far, earning it a place in the top 20 coins by market capitalization at the beginning of 2018.
Additional power of Tether
Liquidity and Market Dominance: USDT is one of the most stable coins with the highest liquidity on the exchange. Its network influence has given it a huge lead in the stablecoin market controlling almost 55% (although it is down to 2021). Price stability and track record: USDT has a long history of maintaining its dollar peg (almost) perfectly, earning the trust of many traders.
List of exchanges: Tether supports almost all exchanges, including many of the largest and most trusted ones.
