What is Tether (USDT)?
This article provides an explanation of Tether (USDT), which is a type of stable cryptocurrency linked to the value of a specific currency. The value of the initial Tether currency should always equal one unit of the fiat currency. This article will focus on the US Dollar version of Tether (USDT), although there are other versions for other currencies including the Euro and even Gold. In this article, you will learn important details about the Tether cryptocurrency and its potential usefulness in your cryptocurrency strategy, as well as why it faces controversy.
Features of the US Dollar Version of Tether
The main advantage of USDT is the introduction of fiat currency stability to blockchain technology. This makes it useful for storing or transferring value, as its value is always pegged to the same price, and its owner does not have to worry about losing purchasing power. The value of Bitcoin, Ethereum, and other popular cryptocurrencies fluctuates based on market supply and demand. The price of USDT is always designed to be one dollar.
How to Buy Tether
Tether operates on various blockchains. This includes the Bitcoin network (via Omni), Ethereum, Tron, EOS, Liquid, Gorilla, SLP, and Solana. The easiest way to obtain Tether is through an exchange that supports USDT. You can find Tether in most major cryptocurrency exchanges. Just ensure you do not pay more than one dollar for each coin, in addition to network and exchange fees, otherwise, you are likely to experience a bad deal.
Interesting Controversies
While many cryptocurrencies have not sparked much controversy, Tether has a more complicated history. Tether is closely linked to the cryptocurrency exchange platform Bitfinex, where both share the executive JL van der Velde and other executives. It is this close relationship that led researchers to question potential price manipulation in Bitcoin using Tether and Bitfinex. The Attorney General of New York investigated Tether and Bitfinex, alleging that despite its claims, Tether was not fully backed by US dollars. The two companies were also accused of covering up the value of $850 million in missing funds and deceiving investors about their currency backing. In February 2021, Bitfinex and Tether agreed to pay $18.5 million to New York State and to meet new transparent reporting requirements to settle the matter without admitting or denying the allegations. In October 2021, the Commodity Futures Trading Commission (CFTC) imposed a $41 million fine on Tether due to misleading claims regarding US dollar reserves, and also fined Bitfinex $1.5 million. Although these new regulations are meant to protect investors, it is wise to exercise caution when holding assets or working with a company previously involved in fraud. On May 12, 2022, Tether USDT lost its peg to the US dollar, with the cryptocurrency’s value temporarily dropping to a low of 95 cents. This collapse came days after another popular cryptocurrency, TerraUSD, dropped to a low of 30 cents. Although Tether’s value recovered to 99 cents, this drop shook the confidence of many cryptocurrency traders.
Sources
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Source: https://www.thebalancemoney.com/tether-usdt-explained-5193888
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