Tether Limited is the issuer of cryptocurrency stablecoin Tether, ticker symbol, USDT. Tether is a creation of necessity. A stable coin which would in normal situation act as a conduit through which traders would shield themselves from everyday’s volatility common of cryptocurrencies was needed and Tether Limited issued this fiat backed stable coin pegged to the USD filling that gap.
What Exactly Is Tether?
Tether is a blockchain-based cryptocurrency that serves as a stablecoin. According to the issuer, the Tether Limited, every USDT in circulation is backed by an equivalent amount of fiat currencies such as the US Dollar, the Euro, and the Japanese Yen.
Tether, which was previously named RealCoin, was created in 2014. It was changed to Tether by the parent company Tether Ltd and officially started trading in February 2015. It is currently the most popular stablecoin in the crypto space, with a market cap of over $2.5 billion. Its popularity has seen it been adopted by several cryptocurrency exchanges to serve as the dollar replacement.
In a report by The Wall Street Journal, roughly 80 percent of all Bitcoin (BTC) trading is carried out in Tether, and it is an excellent source of liquidity for the crypto market.
How Does Tether Work?
Tether was developed on a blockchain via the Omni Protocol, which is an open-source software that interacts with blockchain networks to enable both the issuance and redemption of digital currencies.
According to their official website, Tether converts cash into digital currencies. Since the stablecoin is pegged 1:1 to the US Dollar, it should be trading at $1 per coin on every cryptocurrency exchange. However, the price tends to fluctuate a little. Thus, it trades slightly above or below the $1 mark on certain occasions.
Tether claims that they are fully reserved when the sum of all USDT tokens in circulation is higher than or equal to the amount in fiat currency they hold. They also have a Transparency Page where anyone can view both the number of coins in circulation and the amount in reserve.
As a stable-coin, Tether offers numerous advantages to cryptocurrency traders, investors, and exchanges. Here are a few benefits:
USDT is a stable currency more like ordinary fiat
It is 100 percent backed by fiat currency
The platform is built on blockchain technology
It has achieved widespread adoption
Tether is secure
Allows exchanges to accept USDT as an alternative to traditional currency deposit and withdrawal methods
Fiat balances can be settled between exchanges easier with Tether
Purchasing Tether (USDT) is one of the easiest things to do. Since it is available on several cryptocurrency exchanges, traders and investors can have easy access to the stablecoin. Once you visit cryptocurrency exchanges, you can easily use Tether to purchase cryptocurrencies.
Alternatively, you can purchase, send and receive the USDT tokens on Tether’s official website. You will be required to register on the platform, complete all the necessary verification and security measures put in place and you will be able to send, receive, and purchase the cryptocurrency afterward.
While Tether is the largest stablecoin at the moment, it continues to immerse itself in one dispute after the other. The parent company, alongside crypto exchange, BitFinex are under one management via iFinex but continue to come under fire for several cases of fraud and misleading their customers.
The company claims that its stable coins are backed 1:1 to the US Dollars. However, there are doubts regarding that. Recently, the New York State Attorney General’s office revealed that it would be suing Tether and BitFinex for fraud.
According to the details provided by the New York State Attorney General’s office, BitFinex lost $851 million via its payment processor, Crypto Capital. Tether on its part used some of its reserves to cover up BitFinex’s loss.
This implies that after giving BitFinex some of its funds, its USDT stable coins are no longer 100 percent backed by the US Dollar. Tether hasn’t been transparent in its dealings with the crypto community. Up until the revelation by the New York AG, Tether didn’t mention that it was giving out some of its funds to BitFinex and it also didn’t reflect in their market cap.
In November 2017, Tether was alleged hacked, and coins worth $31 million were stolen from the platform. The company has also been accused of manipulating the cryptocurrency market in 2017. Leading to the Bull Run that saw BTC price reach $20,000. The fact that Tether hasn’t been audited by an external body also makes its claim of being 100 percent backed doubtable.
Tether is the largest stablecoin in the cryptocurrency market, and it offers several benefits to exchanges, traders, and investors. However. It has been involved in various controversies over the years, creating doubts over its transparency.