Current price Tether:
What’s Tether – basic information
Tether, abbreviation USDT, is a kind of a stable cryptocurrency, meaning - in principle - it’s exchange rate do not fluctuate or these fluctuations are very limited. Such cryptocurrency, in the industry, is professionally called a stablecoin.
Before we move on to the history and purpose of Tether creation, let’s focus on what differentiates this kind of cryptocurrency from the others, like Bitcoin for example. So, the issuer of the stablecoin (company or organization behind it) should ensure its coverage in fiat money (traditional one, like USD) or other asset with established value (for example a natural resource, like gold).
There are many stablecoins on the cryptocurrency market. Tether, however, is the top one, currently ranked fourth in the CoinMarketCup rating. But hold on, how come a virtual coin worth just one dollar is rated higher that the ones worth 100 or 200 USD? Well dear reader, the value of the cryptocurrency does only depend on its price. It all related to the market capitalization. How to calculate it? You just need to multiply the quantity of the coins in circulation and the current price.
Tether (USDT) vs. Bitcoin (BTC)
Bitcoina algorithm (SHA256)
Coins in circulation (as of 03.01.2020)
4 108 044 456 USDT
18 138 862 BTC
Total quantity of coins to be excavated
Limited by the quantity of funds deposited to the Tether Limited account
Rank in the CoinMarketCap rating
Current price (as of 03.01.2020, 4:50 PM)
NO: USDT coins cannot be mined/excavated. They’re issued by Tether Limited, after receiving fiat money on their bank account
Yes: Bitcoins can be mined/excavated, with the use of special equipment called cryptocurrency excavators. Bitcoin miners receive a 12,5 BTC prize, each time they excavate a block. Every 4 years, as a result of halving, the prize is cut in half.
NO PRIVACY: Because funds are transferred to the bank account of the Tether Limited company users do not remain anonymous. Moreover, they are required to go through the Know-Your-Customer process (abbr. KYC). User therefore must confirm their identity by using a private ID, provide their address and disclose the source of the funds they are about to transfer. That way, the company know everything about their customers. The company policy is supposed to prevent money laundering.
PSEUDO ANONYMITY: For transactions in the Bitcoin net the users are not required to disclose any personal information like name, surname or address. But it does not mean they remain anonymous. The public address of the cryptocurrency wallet used for transerring the BTC funds is saved on the blockchain. Each Bitcoin net user can check when and from which address the BTC were transferred.
What’s the Omni platform? How is it connected to Tether?
When describing the process of Tether creation, we need to mention the Omni project, initially named Mastercoin. Its ICO (Initial Coin Offering) was conducted in 2012. It was distinctive, that projects building their own tokens with the use of the Omni layer, were not charged with any transaction fees. Which is why, the Omni token died quickly, as no one really needed it for any transaction.
The Omni layer is based on one Bitcoin feature – the information in Omni blockchain can also be saved as Op-Return script.
You must wonder, what does it all have to do with Tether. Well, Omni is a layer, the USDT was placed on. Stablecoin does not have its own blockchain. And Omni is a protocol, allowing the Bitcoin blockchain assets to be tokenized.
At this point we must mention that Tether is a completely centralized project. It means, the power over it lays fully in the hands of its creators. The Omni layer allows the owners to freeze the value of a cryptocurrency wallet. For example, if somebody wants to transfer to a private wallet a given quantity of Tether using the Op_Return, but the company behind USDT thinks this person is a criminal, then they can block the funds. Situations like that has already happened in the past.
Tether history. Controversy
The first USDT was issued on 6th October 2014. What’s interesting – Tether was initially called Realcoin. It was not until later, when the name was changed by the project general director – Reeve Collins.
Company behind Tether confirmed, that it has 100% coverage in USD. So 1 USD should be equal to 1 USDT. However, in time, it turned out to be only partially true. But let’s tell the story in chronological order.
In January 2015 Tether was listed on a cryptocurrency stock exchange called Bitfinex. In 2017 some documents, referred to as Paradise Papers, leaked. They described how Appleby law firm helped the Bitfinex operators in creating Tether in British Virgin Islands, back in 2014. A spokesman for Tether and Bitfinex revealed, that both companies have the same director - Jan Ludovicus van der Velde. The information located on the Tether web side state, that Tether Limited with headquarters in Hong Kong is a subsidiary pf Tether Holdings Limited.
So, it turned out, that Tether and Bitfinex not only had the same CEO, also CFO, strategic director and legal counsel positions were occupied by the same people in both the companies. In December 2017 the US Securities Exchange Commission called on the companies to provide explanations in regards to their operations. However, details have not been exposed. Bitfinex and Tether claimed, this was all a routine control, though.
The biggest accusation made against Tether was it lacks transparency. Of course, the company behind claims, all USDT issued, have a full coverage in US Dollar, however, until now, they were not examined by any external auditors, that could confirm that. And that is causing a lot of controversy in the cryptocurrency community.
Moreover, mid-2018 economists of Texas University published a report, called: Is bitcoin really un-tethered. They suggested, that the massive increase in Bitcoin value that took place at the end of 2017, was caused by the huge quantity of Tether issued because of declining correction.
What are the advantages of Tether?
Tether is different from other cryptocurrencies; its value does not really change. So, a reason of its existence can be challenged, since the investors interest is mainly based on the currency exchange rate. Users will not buy it for profit, because the fluctuations in unit price are too low to make any money on it. And the Tether idea itself was that it’s values will be 1 USD. So, what are the benefits of Tether?
Well, it’s a very good alternative to a fiat money. First, the transactions take less time. As we are all aware, that payments in USD and currency exchange is time consuming. Those kinds of operations can take from 1 up to 4 working days. Moreover, banks do not work on weekends and public holidays. So the waiting time can even increase.
Transactions in Tether takes minutes. It’s crucial for cryptocurrency trading companies, especially when they need to quickly transfer their funds or to arbitrage.
Another advantage of Tether is that no transaction fees are charged, when funds are transferred from one wallet to another. SWIFT transfers, on the other hand, are really expensive. Besides that, if user is operating in a currency different than the one featured on the stock exchange, bank will charge additional fees related to currency exchange and interest on the transfer.
Price stability turns out to be another benefit of transactions in Tether. Trading instable currencies can expose the users to complications and additional risk. That’s why stablecoins are very appreciated in this manner.
For you to better understand it, here’s an example. Imagine, you are about to purchase ETH with BTC, Ethereum rises by 10%. Later, you want exchange Ether back to Bitcoin. However, while your transaction is being processed, the Bitcoin value decreases by 15%. So even though you were right about the direction the Ethereum will take, you still lost because of Bitcoin drop. If you’d use Tether, your only concern would be the ETH price.
Tether listings. Which stock exchange list Tether?
USDT can be purchased on many cryptocurrencies stock exchange. As the Tether value is directly linked to US Dollar, some platforms do not offer USD/USDT transactions. So, users can only exchange USDT for other cryptocurrencies, like Bitcoin.
Examples of crypto-crypto stock exchange listing Tether (USDT):
Examples of crypto-fiat stock exchange listing Tether (USDT):
USDT wallet. Which one to choose?
Tether (USDT) cryptocurrency wallets
Present in a physical form. Can look like a pen drive or a small remote controller. They store the private key in a way that allows it to remain safe, even after connecting the wallet to a virus infected computer. Operate in offline mode, hence considered to be the safest ones.
It’s simply the public and private keys printed on a piece of paper
You can download them to your computer. Work on operating systems like Windows or Linux. As they are constantly connected to the Internet, they are considered to be unsafe, your key can be hacked.
They are simply websites you log into and keep your assets at. However, users do not have their own private key, it’s under control of a third party.
These are mobile phones applications. Not a good solution when huge funds are to be stored.
By: Karolina Kropopek
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