Tether is the biggest one when it comes to stablecoins. It issues stable coins in multiple blockchains such as Bitcoin (Omni and Liquid Protocol), Ethereum, EOS, Tron, Algorand, SLP and OMG.
Tether stable coins are supported by US Dollar, Euro and Chinese Yuan. If you are a crypto trader or investor, you must have used USDT, which is Tether’s stable coin backed by the US dollar. USDT has a daily trading volume of $73 billion, which is more than the total volume of Bitcoin and Ether.
Then there’s Tether Gold – whose 1 XAUt token represents one troy ounce of gold on the London Good Delivery bar. (troy ounce- This is a weighing system of precious metals and gems in which one troy ounce is equal to 31.1034768 grams.)
1. What I love about Tether
USDT is a very useful risk management tool for crypto traders. If you feel that the market is too volatile for your liking, you can easily convert your crypto to USDT. There are many other stable coins as well, but by far USDT is the largest and has the most trading pairs.
The other thing I like about USDT is that it is very easy and cheap to send and receive money around the world.
The third thing I like about it are the interest rates! Earlier this year, you could earn more than 14 percent per year on your USDT deposits. Even at the current rate of 10.5 per cent, this bank gives more returns than fixed deposits but of course there are many risks involved.
Fourth, since Tether stable coins are centralized, they have some security features that are not common in the cryptocurrency ecosystem. This can also trigger a “5-day hold” if your account has been compromised and a hacker is trying to steal your funds.
2. What I hate about Tether
According to its website, Tether’s platform is designed to be “completely transparent at all times”. But in reality it is not so. First of all it includes many legal entities. According to Tether’s White Paper, Tether Limited is a Hong Kong company that is fully controlled by the British Virgin Islands company Tether Holdings Limited.
Then there is Tether Operations Limited which holds the copyright on Tether’s website. and TG Commodities Limited which operates Tether Gold. The 2017 Paradise Papers leak reveals that the Bitfinex crypto exchange and Tether are operated by the same people – iFinex Inc.
I haven’t been able to thoroughly research these companies.
There are reports that only 2.9 percent of Tether was backed by cash and more than 65 percent is backed by commercial paper. The conclusion of things so far is that Tether may well be a huge scam waiting to be uncovered.
3. What I fear about Tether
My first fear is that Bitfinex will be busted. And it’s probably worth it too. It was first hacked in May 2015 and caused a loss of 1,500 bitcoins.
Then it was hacked in August 2016 and it lost 119,756 bitcoins. In the event of not being able to bear this loss, it gave returns to its customers with a deduction of 36 percent. It even took money from customers who had not even invested in bitcoin at the time of the hacking.
Many people think that Tether is actually used to keep the price of bitcoin high. The media loves Tether bashing and it creates a lot of FUD- Fear, Uncertainity, Doubt. What if this FUD turns out to be true and Tether gets busted? This is my second fear.
I think this will have a huge negative impact on the entire crypto sector and hundreds of billions of dollars in loss in crypto market cap.
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