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Is Tether (USDT) really backed by US Dollars? What’s the proof?

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Tether or USDT is one of the most popular cryptocurrencies developed in order to provide stability within the cryptocurrency market.

Trying to decode the reliability of Tether.

Introduction

Gaining stability in the cryptocurrency market was very crucial, as volatility has always been haunting the cryptocurrencies space. All the investors as well as daily traders make use of the volatility, in order to make profits out of it, at certain point of times it is very crucial to have stability within the cryptocurrency market, for many cryptocurrencies have been developed in order to mitigate the stability but most have been most of them have been prone to the volatility attacks of the uncertainties due to cryptocurrencies in the market. The original vision of Satoshi Nakamoto, of developing and commercializing a decentralized financial economy has become or is in the process of becoming a reality, but one thing is for sure that even he wouldn’t have imagined the scale and pace at which the cryptocurrencies has been expanding within the past decade. Let’s read about the first stable coin in the cryptocurrency world: Tether and see if it is really reliable?

 

Tether

Tether or USDT is one of the most popular cryptocurrencies developed in order to provide stability within the cryptocurrency market it is its working functionality is such that the value of 1 USDT is always maintained somehow with that of 1 US dollar. The need for the stable coin in the cryptocurrency market is very much, as an immense amount of losses used to happen before the invention of Tether, due to a slight amount of price slippage issues. Tether has been the most popular stable coin, apart from many of its counterparts in the cryptocurrency market.

 

Why was Tether required?

It was said that it was it is not safe enough to keep your cryptocurrency friends on the exchange itself in the form of an online wallet but preferred that they transfer the amount to their personal hardware wallets.  But, as the network gets busy the transaction takes longer time and hence due to price slippages, the investors had to face a huge amount of losses but this is where the stable coins like tether come into the picture. The users can easily convert their volatile cryptocurrencies into a nonvolatile Tether cryptocurrency and can effectively avail the profits without any slippage losses.

 

Claims by Tether officials

According to the professionals, all amount of Tether is backed by the same amount of US dollars in the bank or indirectly we can say that this particular cryptocurrency entails the features of a fiat currency but along with the powers of Blockchain technology. The Tether Blockchain platform was actually initiated by the same person who is the man behind the cryptocurrency exchange, Bitfinex. However, high amounts of speculations as well as accusations hover around Tether, as it is speculated to be a scam. To be very specific, not a single authority has confirmed that the cryptocurrency blockchain platform is really backed by an equivalent amount of Fiat currency is deposited in the Bank. On the contrary, it is just their cryptocurrency website that claims to be highly reliable and trustworthy.  

 

Is Tether reliable?

According to them, the reserves are audited on a consistent basis by professional auditing experts. Friedman LLP happened to be their first auditors,. The Tether blockchain platforms seem to have a relationship with some of the major banks across the world like Puerto Rico and ING. The huge amount of bank deposits within a duration of one year that Puerto Rico experienced, is roughly equivalent to the total amount of data distributed within the cryptocurrency space, this can be considered as a legitimate but ambiguous explanation of the reliability of Tether tokens.

 

Conclusion

Nothing can be predicted with respect to the trustworthiness of the Tether blockchain project. It is very common in the cryptocurrency space to consider any fraudulent company to be innocent until and unless it reveals its true colors before everyone. The situation seems to be very ambiguous and unclear when it comes to the legitimacy of the coin. Any government or any professional auditing organization must raid into the offices and force the people to open their ledger and reveal the proofs of their reliability. Or we just might not be aware, at any point of time that the project might actually be a scam.

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4 Comments

4 Comments

  1. Pingback: Is Tether (USDT) really backed by US Dollars? What’s the proof? - Satoshiuncle

  2. Pingback: Is Tether (USDT) really backed by US Dollars? What’s the proof? – The Coinage Times

  3. Ashwani nagrani

    September 11, 2018 at 5:35 am

    this is bullshit meantime tether allow buy in bearish market any coin which you want to manipulate later. or simple words btc eth big head are playing with small altcoins to d-evaluate.
    uphold is there we can swap through uphold why only shit tether. bullshit stable coin

  4. ChrisEvan

    September 11, 2018 at 10:59 am

    Tether is backed by its usage. The rules of accounting allow for this. If you don’t like it, make your own!

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#Blockonix

Blockonix announces its decision to list Multiversum, LAToken & APIS Token

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Blockonix.com (formally Bitindia) published a tweet minutes ago announcing its decision to list Multiversum Token, LAToken & APIS Token

Decentralized cryptocurrency exchange Blockonix.com (formally Bitindia) published a tweet minutes ago announcing its decision to list Multiversum Token (eMTV), LAToken & APIS Token.

 

The decision was made after a community vote that was help on Blockonix’s Telegram group.

The move will now have 6 additional trading pairs on Blockonix: eMTV/ETH, eMTV/USDT, LA/ETH, LA/USDT, APIS/ETH and APIS/USDT.

The 3 ERC20 tokens are scheduled to be listed on the exchange tomorrow, i.e. 26 August.

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#Exchange

What is Tether? Is USDT good for investment?

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Tether is usually denoted by USDT on many of the cryptocurrency exchange trading pairs and is confused with the US dollars.

Understanding the qualities of Tether.

Introduction

Among the suite of cryptocurrencies, Tether is one of the most prominent ones. Therefore let’s understand some of its characteristic attributes which makes it so. It is usually denoted by USDT on many of the cryptocurrency exchange trading pairs and is confused with the US dollars. Even if you assumed so, then you can be considered as partially right, as the USDT is the cryptocurrency version of the US dollar. Its value is precisely fixed to the value of US Dollars, hence it is said to be tethered to the US dollars.  Its value is so staunchly attributed to the to US dollars that it is estimated to be not more not 1 cent more or 1 cent less the actual value of the USD. As we all are very familiar with the fact that, the theory is far away from practicality. Hence the value of Tether is not exactly the same as the value of USD.

 

Similar to the US dollars even Fiat currencies of some of the most prominent countries of the world are looking forward to developing their respective Tether coin. for an instance, the European dollar is denoted by EURT, and Japanese Yen to be represented as JPYT.

Why do they exist?

In order to jump onto the cryptocurrency trading bandwagon, one must have cryptocurrencies handy, as many exchanges do not support the Fiat currencies. Hence it plays an important role, as it is supported by most of the cryptocurrency exchanges. One can get the US dollars converted to Tether on Kraken easily.

It is worth mentioning, that Tether is a completely Centralised form of cryptocurrency and at any point of time, the price of cryptocurrency might completely vanish off.

Although the cryptocurrency is more or less exactly similar to the US dollars itself then one might be wondering, why the cryptocurrency form of the Fiat currency is useful? There are there are a number of characteristic attributes which makes Tether highly useful in cryptocurrency domain. They are.

Reduced Transaction time

Imagine if some user wants to convert his cryptocurrency into the US dollars and needs to withdraw it. It is no wonder that it would take a longer time for the transaction to get executed. If the banks are closed due to public holidays and other events, the transaction type might increase up to days together, on the other hand, the transactions in case of Tether coin is settled within a couple of minutes as the whole system is online.

No transaction fees

The traditional US dollar transfers which take place throughout the world is undertaken with the SWIFT (Society for Worldwide Interbank Financial Telecommunication) protocol. The protocol levies a percentage of the transaction, fee starting from $20 and adding on to that, a number of other fees such as Forex exchange fees are added which makes the transfer highly unaffordable. On the contrary, the transfer of USDT between the cryptocurrency wallets throughout the world is almost free of cost.

Stable currency

If a daily trader, uses some other cryptocurrency apart from USDT, in order to halt their trading, then due to the high volatility of the Altcoins, price slippage may occur, and unnecessary complications for the trader is increased. As the coin is already stable it is one of the most preferred one by the traders.

Faster access

It has been well understood from the cryptocurrency exchange hacks that have occurred in the past few years that a user must safeguard his funds by storing them on his personal wallet and not leaving them on the cryptocurrency exchange, so as to avoid vulnerability. Also, imagine is Tether wouldn’t have existed. Then the users would have needed to convert the Crypto into the US dollars to keep away from the exchange. Again, if the user needs to resume trading, then transferring the Fiat currency through wire transfer would take days together, which can instantly happen in case of USDT.

Is Tether good for investment?

If long-term profits are expected by the investors out of Tether, then he is in a wrong notion. As it was earlier explained, that the value of USDT is pegged on to the US Dollars, it is obvious that the value wouldn’t be gaining or losing value. However due to its Centralized nature, to an extent, a downfall might be expected. In a nutshell, it is not a good investment for profits.

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