In the digital world where people are chasing common views in varieties, obviously, Tether’s consensus are hard to reach on, controversial and compelling.
In the views of investors seeking stable coins, Tether is god, as a panacea to solve the unstable situation of digital currencies. However, some American supervision organizations and critics think Tether is a monster and try to sweep off it considering it’s possible a scam. Meanwhile, some researchers are trying to uncover the dark side of Tether, they suspect this token would manipulate the price and market cap of Bitcoin.
Tether, as a token(USDT) based on the price of dollar, have become a popular encrypted coin taking place of dollar. And now the current circulation worth $2.2 billion. The problem, however, is that while Tether says all the tokens are backed by corresponding dollar reserves at a 1:1 ratio, the company has yet to provide solid evidence or audit accounts. Commodity Futures Trading Commission(CFTC) issued subpoenas to Tether and related virtual currency trading platform Bitfinex on Dec 6th 2017, and on Jan 30th 2018, some reports claimed that the company was being investigated by American regulators, which made the market atmosphere more intense.
We hope we can clearly understand the possible side of Tether: the magic side and the dark side, through the eight following questions.
1. What is Tether?
Tether definition: Simply speaking, Tether is a special encrypted currency, it uses the Omni Layer protocol to launch tickers in blockchain. Unlike Bitcoin, which of the prices fluctuate wildly every day, Tether is designed for stability. The USDT or USDTether, is a dollar-linked ticker launched by Tether, which remain at the price of $1. In the same way, Tether also issues Euro-linked token called EURT or EURTether.
2. Why is Tether so popular?
Frankly speaking, the biggest advantage of Tether is that the prices would only change with dollar currency rate rather than fluctuating wildly like other virtual coins. So USDT is rock-solid in digital currency market, providing a haven shelter for investors especially when markets collapse.
Many traders see USDT as a substitute of dollar. Without transferring in bank’s system, USDT is more easier to transfer in encrypted currency exchanges and other online exchanges. The rock-solid price of USDT makes this coin become a convenient tool for investing in other encrypted currency.
3. Who controls Tether?
Tether’s official website revealed the information about teams on Dec 5th,2017, leaking the sign that Tether and Bitfinex have the same management teams. It is probably related to Tether’s receipt of a subpoena from Commodity Futures Trading Commission in term of time Dec 6th,2017.
Bitfinex is one of the most biggest encrypted currency exchanges. Some market researchers say that, trading USDT in Bitfinex can support Bitcoin’s prices.
4. Why is Tether so fiendish? What the critics doubt about?
As an encrypted currency that claims to be fully linked with dollar and other fiat currencies, and implement 1:1 currency exchange ratio supported by fiat currencies, Tether faces the biggest question is that if the USDT issued by the company have corresponding dollar deposit in the company account as the exchange reserve support.
The main website of Tether declares frankly:” we will release the data of reserve holdings every day and accept audit frequently ”. However Critics point out meanly that this is just a talk without doing.
To critics, the statement said that Tether lacked transparency, that the audit process appeared inadequate, or at least inconsistent with the commitments on Tether’s website, which causes the rumor from coin cycle was more fiendish towards to Tether, such as Tether is a Pyramid scheme.