If you’re investing in Cryptocurrencies you would’ve been familiar with Tether. If you want to know about This Cryptocurrency, this article will tell you everything about Tether you need to know.
What is Tether?
Tether or USDT is a stable coin hosted on the Ethereum Blockchain. A stable coin is a coin that is designed to be $1. USDT is the biggest Stablecoin according to its market cap at the moment. With a market cap of $73.58 Billion, it is also the 4th most popular Cryptocurrency at the moment right now.
Stablecoin is pegged to The United States Dollar by reserves which help it maintain $1 in value.
History of Tether
Tether initially started as Realcoin, however, after a while, it changed its name to the present name. The Cryptocurrency’s tokens are provided by its parent organization called Tether Ltd. The first tokens were made available on the Omni layer at the Bitcoin Blockchain in 2015.
The creators of Tether created three types of Tether, each pegged to 1 unit of a fiat currency. These are the USTether, pegged to The United States Dollar; EuroTether, pegged to Euro and YenTether, pegged to the Japanese Yen.
USDT has been in the public eye for quite a while. A critic by the name of “Bitfine’xd” has accused Bitfinex, Tether’s parent organization of creating Tethers without actually backing them with USD. After this controversy, Bitfinex issued a memorandum implying that Tethers are entirely backed with the help of The United States Dollars.
Tether’s parent organization Bitfinex was also accused of concealing $850 million dollars in losses. After a long lawsuit, Bitfinex and Tether arranged a negotiation and paid a mere $18.5 million, 2.17% of the value of the loss.
Tether was asked to pay a fine of $41 million by CFTC for deceptive assertions that Tether is entirely backed with the help of The United States Dollars. Shortly after this event a financial research firm promised a $1 million prize for information about its backing and is pegged to the United States Dollar. The award remains unclaimed as of now.
Pros and Cons of Tether
Pros of Tether
The Crypto market has shown itself to be volatile. In times of volatility, Stablecoins like USDT come to the rescue.
Furthermore, USDT offers attractive interest rates of more than 10%. Which is far greater than fixed deposits rates by banks.
USDT also has unique security features in which your account gets locked for 5 days if it gets compromised or a hacker tries to steal data from it.
Cons of Tether
USDT claims to be “entirely” backed with United States Dollars, however, according to reports just 2.9% of USDT was backed by cash and over 65% is backed by commercial paper.
USDT has been involved in multiple lawsuits and has been asked to pay fines many times. What makes this even more ugly is the tendency of Bitfinex to try and hide these issues.
It has been hacked a couple of times. Despite obvious measures to avoid it from happening, these events are enough to tarnish its name forever.
In this article, we talked about the most popular Stablecoin presently on the market, Tether. We discussed its history and its pros and cons. Hopefully, you found this article to be informative and interesting. If you liked this article, do read similar articles that are on our website.