What is Tether?
What is Tether?
Tether is a digital currency backed by fiat, in this case the United States dollar. By implication, it means that every Tether has a dollar reserve kept by the issuing company, Tether Limited. One Tether is meant to be equivalent to one USD. The Tether website describes the coin as global, fast and secure digital money for the digital age. One of its peculiarities is that it is one of the so-called stable cryptocurrencies and is not subject to the volatility of most cryptocurrencies such as Bitcoin and ether. It’s stability confers on it application in exchanges where traders use it to purchase coins like Bitcoin.
Tether is known to be one of the most widely integrated cryptocurrencies with fiat and users can easily purchase it through some exchanges. Although it boasts world-class security, Tether platform was hacked on November 19, 2017. The hacker was reportedly said to have made away with $30 million worth of Tether tokens.
Aside the USD, there is Tether backed by euro and recently, effort is underway to have Tether backed by Japanese yen. The essence of the coin is to save digital currency traders the inconvenience of using regular national currencies such as dollar or pound to purchase coins in exchanges. This is because banks are not inclined to serving the digital currency market. To do this effectively, Tether has to have similar traits with fiat, one of which is stability and still possess the attributes of a blockchain-based cryptocurrency such as ease of transfer and digital storage.
Tether was invented in 2015 and has since then played an active role in cryptocurrency exchanges such as Bitfinex. Tether Limited argues that using Tether to buy cryptocurrencies is a quick way of using fiat and yet avoid the involvement banks since Tether is theoretically tied to fiat. However, there recently have been issues regarding claims that every Tether is backed by fiat. A controversy which the company tried to dispel through a transparency update using proof of funds posted on their website. They also claim that they publish daily reserve of fiat backing up all circulating Tether.
With 2 billion coins in circulation, the Tether controversy arose due to an exponential increase in the coin supply, pointing to doubt that every tether is dollar backed. Tether has been in the eye of the storm after it was rumored to have links with Bitfinex and that the exchange has been using it to manipulate the Bitcoin market. The allegation says that Tether minting coincides with the times of Bitcoin dip and market watchers are speculating that the company is buying up cheap bitcoins thereby propping up the market.
How it is different from Bitcoin
Tether is distinct from Bitcoin in that it is backed by fiat. The objective of the founders is to create a stable coin that would circumvent the use of banks in cryptocurrency trading. Integration of fiat currencies with blockchain underlies its invention. Bitcoin was invented as an alternative to fiat. It is a peer-to-peer digital currency meant to be used without banking restrictions across international boundaries. Bitcoin was meant to operate independent of fiat and is not backed by any currency. The main use of Tether is as an alternative to fiat in cryptocurrency exchanges. It can be bought at major exchanges such as Bitfinex and Kraken.
Where to store the coin
The official Tether wallet is at tether.io. There are a few other alternatives where you can store your Tether such as Omniwallet. Tether was built on omni layer, so any wallet based on omni will serve well to store It.
You may also like
You need to login to create comments.