Tether is a cryptocurrency that claims to be backed by one US dollar for each of its token issued. Its creators aim to create a cryptocurrency that is more stable compared to most of the digital coins on the market which undergo huge price swings every now and then. The user will pay $1 for one tether coin that he acquires. There are currently 2.2 billion tethers circulating on the market, as reported by coinmarketcap.com.
It is created by the co
mpany Tether Limited, which is incorporated in Hong Kong and governed by the rules and laws of the British Virgin Islands. The CEO of Bitfinex, Jan Ludovicus van der Velde, is also the CEO of Tether Limited. Tetzzher was launched on the Bitcoin blockchain through the Omni Layer Protocol. This protocol is a platform that allows anyone to create, trade, and transfer digital currencies. The embedded commands in the Bitcoin blockchain are interpreted by Omni Aware Software.
Since is is backed by an actual fiat currency, it allows the users to move their preferred fiat money in and out of a certain exchange efficiently and in a cheaper transaction rate. It also builds stronger and more stable relationship with banks, which is one of the problems that most cryptocurrencies have. The world of business and finance is still skeptical about the potential and security of cryptocurrencies, which is why most banks close customer accounts with relations to Bitcoin and other digital currencies. These problems are what Tether is trying to resolve.
However, the US Commodity Futures Trading Commission sent subpoenas to Tether on December 2017 because Tether Limited has failed to issue a complete audit of their total currency reserves. Moreover, since Bitfinex and Tether has the same CEO, Bitfinex announced that they will use this crypto as their official medium for users to buy other cryptocurrencies. Cryptocurrency enthusiasts and critics strongly believe that an exchange and a cryptocurrency should not be closely related. There would be conflict of interest.
Speaking of the CEO, Jan Ludovicus van der Velder is also known for his involvement in the price manipulation of Bitcoin and Tether. His image is heavily tainted by these events, adding up to the skepticism surrounding the said crypto. Due to this, critics and experts are skeptical about the safety, stability and security of this currency. Moreover, their official site is vague and contradicting. They promise that Tether is 100% backed, but their Terms of Service states that there is no guarantee against losses. They also guarantee that Tether is transparent and secure, yet audits and transactions are not yet released.
Despite of the controversies surrounding it, its capitalization is exponentially growing. In January 2018, Tether has released 850 million coins on the market. It is aggressive in its endeavor, and the prices skyrocket over the past few months. Unfortunately, many critics see these efforts as their initial moves to manipulate prices. Like other digital currencies, Tether is not prone to inflation. It is one of its benefits compared to fiat currency. US dollars experience inflation quite commonly.
Due to its close relationship with the US Dollar, one of the most valuable currencies in the world, many experts believe that the mentioned crypto can be the next US Dollar, as they predicted with Bitcoin before. However, it needs to work on its security and stability before reaching to that extent. It needs to gradually work on gaining the trust of the public including banks and financial firms.
