Tether

Stablecoin backed by US dollar.

Where it came from

Tether or USDT (the symbol under which you can find it on exchanges) was developed an introduced to world in July 2014 by Brock Pierce, Craig Sellars and Reeve Collins. It was firstly called “Realcoin”, but was rebranded to Tether in November by Tether Ltd.(the company that takes care of keeping the reserve amounts of fiat). USDT was one of the first created and introduced stablecoins, built on Mastercoin (Omni). Mastercoin is a protocol layer for BTC which publicly introduced the concept of stablecoins to the world in 2012.

Figuring out Tether

Tether was developed and created as an attempt to deal with two problems, which are high volatility and convertibility between fiat currencies and cryptocurrencies. To solve these issues Tether created a cryptocurrency that is fully backed 1:1 by deposits of U.S. dollars, which are stored in the banks. It should represent something like a bridge between fiat currencies and cryptocurrencies which also offers stability, transparency, and minimal transaction charges to users.

Ranking

Tether is currently ranked at the 4th place if we are talking about market cap, which is $78,2 billion. The total supply of tokens is almost 78 billion and the whole supply is now in circulation. However because the Tether is run by a private company, the max supply is hypothetically unlimited, because the company can always issue more tokens and put them into circulation. Thanks to backing by US dollar its price is moving around $1 (e.g. $1,01).

Uses

The Tether is used among crypto investors to avoid the extreme volatility of other cryptocurrencies, which is more than common. In this case the extreme volatility is prevented by its backing by U.S. dollar. Also if you use USDT (compared to the U.S. dollar) the transaction costs and delays are removed.

Advantages

One of the biggest advantages that Tether has is stability and almost no Market Fear. Because Tether is backed by U.S. dollar, there is no chance it will make some sudden moves, so you can be calm. Next on is transparency. This has similar explanation as the point before. Thanks to its backing by U.S. dollar there is absolute transparency and buyer does not need to be worried. Also the company shares details about all coins in transactions publicly. Last point here is its reliability and security. Not only that Tether is running on blockchain, but company follows KYC and AML guidelines which makes its security stronger.

Disadvantages

No chance of mining. Because the Tether is bound to the value of U.S. dollar and mining it would go against the purpose of this cryptocurrency. Centralization. Some could say that due to the ownership of Tether Limited, the point of the crypto, which is to be decentralized, is lost. Accusations. In the past days many accusations about Tether were made. Most common were these. First one is that Tether has been used to launder money for criminal activities. Second is that Tether has been used to manipulate the price of Bitcoin. Now, I can’t tell you if these are true, but I can definitely encourage you to DYOR (Do Your Own Research) and after that you can decide if Tether is safe enough for you.

Feud/Dispute

During the existence of the USDT, there were three big controversies, that somehow tarnished its reputation.

2017

The first scandal came out in November 2017 and in this case it was a hack allegation. The tether was allegedly hacked and $31 million worth of Tether tokens was stolen. After this happens the hard fork (nodes of the newest version of a blockchain no longer accept the older version) was implemented and performed.

2018

Next strike came in 2018, in January. The problem was that the necessary audit, needed to ensure that real world reserve is backed, did not take a place. Instead of audit the company announced that they are parting ways with said audit company. After this scandal, a subpoena was issued by regulators.

2019

Last feud that happened was in April 2019. The company iFinex Inc., the parent company of Tether Ltd. and operator of cryptocurrency exchange Bitfinex, was accused by New York Attorney General Letitia James of hidding a loss of $850 million dollars. These funds were supposedly given to Panamanian entity called Crypto Capital Corp. and that happened without proper contract. Purportedly, Bifinex took $700 million to hide the gap after the money went missing. These money were supposed to be taken from Tether’s cash reserves.

Key Takeaways

• Tether tokens are traded under the USDT symbol.
• USDT is stablecoin backed by US dollar.
• Tether is used by crypto investors to avoid the extreme volatility of other cryptocurrencies while it keeps its value within the crypto market.
• In years 2017, 2018 and 2019 scandals that tarnished Tether’s reputation happened.

Thank you for reading.