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Have you ever bothered to research what type of USD currency is used by centralized exchanges like Bittrex and Binance? Well, I don’t think so.
These centralized exchanges use a modified version of the US dollar, known as USDT.
Why is this special USDT used? Let’s explore and find out in this detailed analysis of Tether (USDT).
We will address the following points in this article:
- What is a rope?
- How does the rope work?
- Why use a rope?
- Cord fees
- Tether market capitalization
- How to buy a rope?
- Controversy over the rope
- Future plans for the rope and conclusion
What is a rope?
Tether, or USDT, is the cryptocurrency version of the US dollar and this USDT is pegged to US dollar fiat currency reserves at a 1:1 ratio. Tether is also known as a Stable coin.
The main use case for Tether is to provide stability to the highly volatile cryptocurrency market and provide a stable use case for:
- Blockchain companies
- Exchanges
- Individuals and traders
Leveraging blockchain technology, Tether allows you to store, send and receive digital tokens linked to the dollar, euro and yen person-to-person, globally, instantly and securely for a fraction of the cost of any alternative.
How does Tether work?
All tethers are initially issued on the Bitcoin blockchain via the Omni Layer Protocol, which is why they exist as a cryptocurrency token.
Each unit of Tether issued for trading is backed by a one-to-one ratio (i.e. one Tether USDT is equal to one US dollar) of the corresponding unit of fiat currency deposited with Hong Kong-based Tether Limited. (The conversion rate is 1 USD₮ equals 1 USD.)
By having this individual support, the cryptocurrency market gets a stable cryptocurrency that they can rely on to hedge/short sell/buy while completing their trades.
Let’s say you know that the Bitcoin market is bearish. In this case, you can close your position by entering into USDT and buying BTC again when you think a probabilistic bottom has been reached via the same USDT.
Why use a rope?
In this modern and privileged world, it is important to have stable tokens like Tether for any individual or company due to the above mentioned features it provides.
Adding a stable cryptocurrency solution to your business through integration with Tether has its benefits:
- Easy step
- API integration
- Full infrastructure support
- Wallet provider
Cord fees
One of Tether’s USPs is very low to no transaction fees.
- The cost of sending USDT from one Tether wallet to another Tether wallet is zero
- The cost of sending USDT from one Tether wallet to another Tether-enabled wallet is zero.
- The cost of sending USDT from a Tether wallet to a bank account is 10 basis points
Or $20 (whichever is greater will be applied to all wallet deposits and withdrawals funded from your bank account)
Tether market capitalization
There is no upper limit for the supply of USDT tokens as the concept is to issue tokens pegged at a ratio of 1:1.
according to CoinMarketCapThe total circulating supply of USDT is USD 2,806,421,736 USDT and the current price per unit is $1. This estimates it at about $2.8 billion (At the time of writing this article).
How to buy a rope?
One can buy Tether (USDT) from many exchanges because these exchanges use USDT instead of USD to bypass banking regulations.
USDT is the main facilitator in this which is why some of the popular exchanges you can buy USDT from are:
- Q Queen
- Binance
- portal.io
- Beatrix
- Bitfinex
- A mythical sea monster
Controversy over the rope
When you have a strong use case like Tether, controversies are not surprising and it goes without saying that Tether has quite a few.
The first is the deep ties between Tether and Bitfinex, which is a huge red flag as the top management of Tether and Bitfinex share a lot of names.
Additionally, Tether has been accused of printing the USDT digital token that is used at Bitfinex to artificially pump and flood cryptocurrency markets.
Not only that, Tether claims to be a clean and transparent company that can be audited at any time, but so far all efforts to fairly review Tether have failed.
The latest is Friedman LLP, their auditor.
We confirm that the relationship with Friedman has been dissolved. Given the painfully detailed actions Friedman was taking regarding Tether’s relatively simple balance sheet, it became clear that the review would not be achievable in a reasonable time frame. Since Tether is the first company in the industry to undergo this process and pursue this level of transparency, there is no precedent to guide the process nor any standard to measure its success. (pregnancy)
This clearly shows that Tether does not have enough USD reserves to complete a fair audit.
Future plans for the rope and conclusion
Tether currently supports the US Dollar (USD) and Euro (EUR), and is expected to support the Japanese Yen (JPY) soon. Currently, the pegged currency is represented by ₮, so the peg platform’s fiat currencies are referred to as USD₮, EUR₮, and JPY₮.
In addition, they have plans to conduct regular fairness audits as well, but the details of that are still unknown.
In the end, I would just say that the future looks risky if regulators decide to crack down on Tether and Bitfinex, but that is not the case at the moment.
Also, if you own a large amount of USDT, you should reconsider, because if the USD crashes, you may also lose the value of your USDT by that percentage.
Finally, the massive supply of Tether shows that there is a huge demand for stablecoins. That’s why the cryptocurrency community is looking for innovative ways to create currencies that are fairer, more stable, and better than Tether.
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