Tether Review: Beginners guide
Tether (USDT): Stable cryptocurrency tied to USD
Industry type: FIAT to crypto solutions.
What is Tether?:
Tether is a blockchain based cryptocurrency that is pegged to the US dollar. The Tether foundation claims to have 1 US dollar held in its reserve account for every Tether in circulation. One Tether is equal to 1 USD regardless of whether the crypto market goes up or down and because of this Tether is also regarded as a ‘stablecoin’.
What gives it value?:
- It is a stable coin in a volatile market.
- It is useful to use when purchasing other cryptocurrencies in exchanges that don’t accept FIAT but do accept Tether.
- It is often used by crypto investors and businesses to convert and safely store their crypto holdings.
- Tether-to-Tether transactions incur no transaction fees.
- It is one of the most liquid cryptocurrencies on the market.
- It is an ERC20 token that is based on the Ethereum network.
- Reeve Collins is an American tech entrepreneur and the co-founder and CEO of Tether. Collins is also the CEO of interactive smart objects company BLOCKv, and he is also known previously for successful online and gambling businesses.
- Phil Potter who was chief strategy officer of Bitfinex was also revealed to be a director of Tether. Potter stepped down from his role at Bitfinex in June 2018.
- Giancarlo Devasini is the chief financial officer of Bitfinex who revealed as a shareholder in Tether due to the release of the Paradise Papers in 2017.
- Tether Limited is a money services business based in the British Virgin Islands and incorporated in Hong Kong.
- Tether hired Friedman LLP accounting and advisory services to oversee its bank account audits to prove the legitimacy of its banking reserves, but the partnership dissolved in early 2018.
- Leading crypto exchange Bitfinex has an undisclosed and controversial partnership with Tether and both companies share some key employees.
Review: The Good.
- It allows for traders and businesses who want to buy, sell, and trade cryptocurrencies to stabilise their assets.
- It is a useful tool to use to retain crypto assets whilst avoiding taxable events.
- It allows for the purchase of cryptocurrency on exchanges that don’t accept FIAT currency.
- It is a pivotal source of liquidity in the cryptocurrency market.
Review: The Not So Good.
- It is one of the most controversial cryptocurrencies.
- There is a lot of doubt surrounding the legitimacy of its auditing system and the FIAT money that it claims to hold in reserve.
- There are popular claims that Tether and Bitfinex worked together to prop up and manipulate the Bitcoin bubble of late 2017. When the price of Bitcoin began to fall in early 2018, 850 million new Tethers were printed and the price of Bitcoin stabilised and rose simultaneously.
- As there is a suspected correlation between the Bitcoin price and Tether, some warn that the price of Bitcoin would plummet if Tether crashes.
- The Tether Reddit forum is a ghost-town, with rare comments claiming that the administrator deletes any commentary that does not speak positively of Tether.
- In June 2018, Tether released a fake audit with reasons that ‘the cryptocurrency market is too immature for big accounting firms to touch’. There was an uproar from the community in response and suspensions over Tethers legitimacy were deepened.
- Tether plans to issue a British Pound (GBPT) and Japanese Yen (JPYT) equivalent to their USD (USDT) trading pair.
In my opinion, and this is not trading advice, Tether is not a cryptocurrency to invest in, rather it is a utility for trading and storing crypto assets in a stable port whilst avoiding taxable events. The claims of Tether’s uncomfortably close relationship with Bitfinex, the legitimacy of its FIAT reserves, and the role it has played in inflating the Bitcoin price is unsettling. Regardless, Tether is a pivotal source of liquidity in the cryptocurrency market and is a handy tool for traders and businesses for stabilising purposes. As of now, there are alternative stable coins entering the market, some of whom can hopefully offer the same utilities as Tether, but with more transparent FIAT reserves, partnerships, and manipulation-free operations.
The current Tether price, market cap and charts.
Where to store this crypto:
Hardware wallet: www.bitgear.com.au
Desktop wallet: www.exodus.io
TrueUSD (TUSD) – A newer alternative stable coin.
Dai (DAI) – Another alternative stable coin.
Bitcny (BITCNY) – A stable coin tied to the Chinese Yuan.
Tether whitepaper: https://tether.to/wp-content/uploads/2016/06/TetherWhitePaper.pdf