Tether (USDT)

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Tether aims to combine the benefits of blockchain technology with traditional currency. This is achieved by anchoring, pegging, or tethering, digital tokens to the US Dollars, Euros, and soon the Japanese Yen.

Our Joke Name

Tether = One 2 One

Basic Intro

Link to the main website

Link to price/market cap

Exchange Ticker (USDT)

Coin or Token

Circulating Supply (varies)

Block time (2.5 min)

Market Cap Ranking

Review

Tether aims to combine the benefits of blockchain technology with traditional currency. This is achieved by anchoring, pegging, or tethering, digital tokens to the US Dollars, Euros, and soon the Japanese Yen. Tether is committed to operating within government compliance and regulations.

Key Features

  • Avoids volatility
  • 100% backed
  • Proof of reserves

Features

Avoids volatility

Tether holds its value at 1:1 of the underlying asset, therefore 1 US Dollar is equivalent to 1 Tether. This is designed to provide a digital currency that will avoid much of the volatility seen within the free-wheeling crypto market. In theory, as long as the underlying asset holds stable then so will Tether.

100% Backed

Tether is backed 100%. According to the frequently asked questions page on the Tether website –

“Platform currencies are 100% backed by actual fiat currency assets in our reserve account. Tethers are redeemable and exchangeable pursuant to Tether Limited’s terms of service.”

For example, each time Tether limited, the Hong Kong based company that controls the issuing and redemption of Tether tokens, issues a Tether token, the equivalent 1:1 fiat currency is stored in a bank. Correspondingly, each time a Tether token is cashed in it is destroyed.

Proof of reserves

Tether publishes real-time records of what goes in and out of their reserve account. Access to this information provides transparency as to what funds are held in reserves, and is referred to as proof of reserves. The idea behind proof of reserves is that through transparency ultimately you achieve security.

Reserves are held in Cathay United Bank and Hwatai Bank in Taiwan, and balances are published. Professional audits are also carried out on a scheduled basis, which adds to the trust level of the company.

Although Tether Limited has made every attempt to be as open and transparent as possible they have identified some potential risks to users. For example, they could go bankrupt, the bank they use could go insolvent, funds could be confiscated from the bank, and they could abscond with the money.

Tether Limited has attempted to mitigate these identified risks as far as possible. For example, the banks they use are very proactive within the crypto community and were chosen because of this relationship. In other words their bank is on the ball in terms of regulations and what could be expected in the future. Further information on mitigation of other risks can be found in the appendix of their white paper.

https://tether.to/wp-content/uploads/2016/06/TetherWhitePaper.pdf

Summary

Tether can provide a home base for cryptocurrency traders, a place where they can move to if volatility erupts in other parts of the market. However, Tether is also reliant on the stability of the underlying asset, which means an incident in the fiat world could plunge the value, unlike storage in hard assets like gold or silver. Other risks have been identified by Tether Limited, e.g. confiscation of reserve funds in the future. However, these have been mitigated to a great extent by their relationships with banking partners whom are aware and confident that Tether’s business model is acceptable, and also by adherence to US and Hong Kong laws and regulation

Pros

  • Transparent
  • Loss Prevention
  • Backed

Cons

  • Long term investments lead to losses
  • Reliant on fiat remaining stable