Ever wondered about a hybrid currency? What if you could create something that has both crypto and fiat link? Well, worry no more. Tether, commonly known as a stable coin is a crypto-fiat which means it is pegged to a fiat currency. In this case, the crypto-fiat is linked to US dollars. Generally, 1 tether is equivalent to $1 to the very last digit. Meaning, not a cent less or more. All in all, a lot of controversies regarding this currency have been raised regarding this dollar-pegged cryptocurrency.
The main aim of this article will be to discuss in detail the History and development of Tether, its founders, how it works as well as the advantages tether has over other cryptocurrencies. I hope by the end of this article you have a better understanding of this currency. Sit back and let me take you through the birth of a new age in the cryptocurrency world.
History of Tether USDT
Tether was launched in the year 2015 and since then its value has stagnated at one USD. Most people thought of this as disadvantage but then this means that Tether is way promising than most digital currencies. The reason is that its price is more stable when compared to other currencies which experience huge price variations over time.
Tether was created by a company known as Tether Limited which was incorporated in Hong Kong. This company designed the Tether coin which is governed according to the British laws of Virgin Islands. It is as well closely related to the Bitfinex Company and was issued on the Bitcoin blockchain using the layer Omni protocol.
Understanding Tether USDT
Tether also referred to as USDT is a token that is asset backed. The main reason why it was introduced in the first place was to create a link between cryptocurrencies and fiat. The fact that Tether is ultimately attached to the US Dollars means that no matter what the value of one Tether is, it will always be similar to that of one US dollar.
Through Tether Limited which is a company registered by the Government, users can buy or redeem. In that case, each Tether that has been issued is in turn equaled as a liability to the company. Tether is basically the link between cryptocurrencies and fiat. This means that users can simply buy one Tether with their hard cash which in turn they can use to purchase any other crypto they desire.
Unlike other currencies, Tether is so much easier for newbies to transact too. At times actually, it can be frustrating when one is sending the fiat they want to use to make purchases. This especially happens if one is using a less popular coin. In such cases, when one wants to but an altcoin, you are expected first to buy a more popular currency like Ethereum, Litecoin or Bitcoin. After that, you can now send your ETH, LTC or BTC to that other exchange where now you can purchase the altcoin of your choice.
All in all, this becomes much easier with Tether. This is because the whole process is made easier as you can purchase the altcoin directly without having to go through that long procedure. That depends with the pair used in trade however.
As much as Tether seems like it has a whole lot of advantages, there are still one or two things about it that should be worked on. The main one being the transparency issue.
Tether and Transparency
Tether might have declared itself as the link between fiat and crypto coin. The main challenge with this is that it has to prove that each and every Tether issued in the marker has an asset which backs it up. In effort to fulfill the demands of the public and its users, it uses the POF (Proof of Reserves).
The contradicting information given from different websites about this issue has made the users as well as the supporting community to doubt its 1:1 ratio on the fiat reserves. This is because, this far Tether has come there is no audit or even a third party guarantee on this issue of concern. Actually most people believe that the $31 million which was hacked from Tether might have been a cunning way of covering up for bad bookkeeping strategies.
The other major concern is that the grants on Tether are possibility being used behind the curtains to raise the prices of Bitcoin on the platform known as Bitfinex. The reason is there has been a rather odd timing between the Tether grants and the sudden increase in the prices of the Bitcoin. The timing has been a questionable issue and the market expects individual explanations from both.
Last but not least is the general concern about Tethering. Ideally, cryptocurrencies stand for a decentralized version of control. However, with tethering, the crypto economy with a more centralized one, the dollar is a potential threat to the crypto world. The main reason is that the Tether could be imprinted on the same leading to a centrally controlled system that is different from the decentralized one used in all cryptocurrency.
With that kind of instability and controversies concerning Tether, its future is untold. No one is capable of predicting how events will unfold one or two years to come. However, cryptocurrency enthusiasts are still waiting to hear from Tether officially concerning the transparency issues that have been raised. This might actually increase the confidence of investors and save the situation of this cryptocurrency market. But who knows anyway?
In conclusion, as long as the Tether is super useful at the moment, we better enjoy the fruits of a stable coin. Only the people who have lost hope and faith on the crypto and are running around in panic can take it down. Even if this take down happens, it can only be temporary since you cannot take down a whole giant with crude weapons like only one failed token.