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What Is Tether (USDT) ?

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As cryptocurrencies go, Tether has the least of the things that make them interesting and perhaps the most of the things that make them attractive to traditional finance. Tether’s primary aim is simple: provide a way to move dollars on the blockchain by maintaining fiat accounts with units in a 1:1 ratio.

So if there are a million dollars in fiat deposits backing USDT, the US Dollar-Tether pairing cryptocurrency, then there should only be about a million USDT circulating. Tethers are managed by a company called Tether Limited, which is composed of employees of one of the world’s largest cryptocurrency-fiat exchanges, Bitfinex.

Tether is a token on both the Bitcoin blockchain and the Ethereum network. Tokens are issued by Tether Limited for either chain, but it is not possible to simply spend a USDT from the Bitcoin blockchain on the Ethereum network. While USDT is the only major Tether token currently circulating, the Euro version and a version for the Japanese Yen are both planned.

What Is Tether Needed For?

The reader may develop the obvious question: why shouldn’t someone just store their funds in a regular fiat account as opposed to keeping dollars in Tethers. The answer is that for the most part, someone should just do that. But if they want to have easy access to cryptocurrency markets with some predictability as to future value of the asset in question, then the USDT is a valuable tool.

Accepted across exchanges and every bit as fast as Bitcoin, USDT eliminates traditional boundaries to fiat banking. The trader can buy X USDT, the tokens are generated and issued by Tether Limited, and then at some later point he can trade back into USDT and exit into fiat.

The idea is that his starting capital, at least, is free of market volatility as compared to keeping the funds in Bitcoin, for instance. That can go very right plenty of the time, but of course it can also go wrong. For the times that bitcoins might lose significant buying power just over the duration of a transaction, Tether serves the purposes of traders and modern bankers looking to maintain certain levels of liquidity and consistency.

Perhaps most importantly, USDT offers exchanges a way to have fiat-crypto pairs without actually necessarily having to expose themselves to fiat laws and regulations. The primary exchanger of USDT to US Dollars is Bitfinex. On the same note, it would be incorrect to not mention the recent beginnings of investigation by the US Government.

Bitfinex Creates the Crypto Dollar

The Blockchain represents a global shift in the way people think about money, its issuance, and also about security and integrity. Bitfinex, one of the largest fiat and cryptocurrency exchanges in the world, identified a real need, watching trade patterns on its own platform, and thus sought to create Tether. USDT doesn’t have to be the only crypto token paired with fiat currencies, and certainly the frequent question of Tether Limited’s solvency creates a market for competitors.

As far as financial instruments go, cryptocurrencies are still very much in their infancy. Big money hasn’t even arguably begun to flow into the marketplace. For reference, the current size of the total cryptocurrency market is around $280 billion, while the size of the global stock market is pushing $100 trillion.

The Fundamental Drawback(s)

People don’t start using cryptocurrency because they want a managed account. There are many reasons to get into cryptos, but if you want an account that is attended to by financial professionals, sticking with a bank is the obvious best route. No, people get into cryptos because they want freedom. In Tether, you get quite the opposite. Your Tethers are always worth dollars, sure, but you are also constantly relying on Tether.

An incomplete mixing of banking and cryptocurrencies is bound to deliver substandard results. Essentially, the biggest drawback in Tether is that every USDT can be worth $0 actual money at any time at the behest of regulators. Aside from the benefits gained by their trading clients at Bitfinex, it’s not evident how Tether Limited actually makes significant money.

This underscores the problem with having to trust them: without a constantly auditable device like we have in traditional blockchains, there are constant opportunities for malfeasance.

Likely the biggest drawback for most is the lack of speculation. When Bitcoin and others are slipping against fiat currencies, it makes sense to have a safe haven or havens to park funds in, but ultimately the size of the Tether market could be meaningless.

While it gives any exchange the ability to pretty much instantly (by supporting Bitcoin or Ethereum) add fiat trading, its actual importance relies on exchanges continuing to have severe banking problems. The expectation is clearly the opposite — eventually banks and cryptocurrency exchanges will find workable relationships, and cohesion between the two will be sufficient as to make coins like Tether unnecessary.

While investors have the most need of Tether, it is also from their perspective that the token is least attractive. There’s no speculating on the price movements of Tether — they’re always going to be exactly as expected. So while Tether is a useful offering for those who need it, it will never play the role of expanding the overall network effect of cryptocurrency, and certainly over time its necessity could dissipate as banks join the 21st century.

A Summary Of Tether

  • The purpose of Tether is to directly pair with fiat currencies. USDT is the largest offering, pairing Tether and the US Dollar at a 1:1 ratio, but others exist as well, including EURT.
  • Tether issues tokens attached to both the Ethereum and Bitcoin blockchains. USDT issued on the Ethereum network do not replace USDT issued on the Bitcoin network.
  • It makes it easier for traders to more quickly enter and exit crypto markets.
  • It has had some community criticism regarding its transparency and has more recently had regulatory inquiries.

Bitcoin

Bitcoin’s Mining Costs Will See It Bottom out at $6,000, Traders Argue

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Two well-known traders, Brian Stutland and Jim Iuorio, have recently revealed they believe bitcoin has a major support at the $6,000 thanks to its mining costs, which means it may be the bottom of the cryptocurrency’s downtrend.

Speaking to CNBC, the traders noted that while it may be too expensive for the “average person” to start mining the flagship cryptocurrency, some of the miners will find it difficult to mine profitably if the cryptocurrency falls below the $6,000 mark.

Their comments came shortly after bitcoin lost over $1,000 in a 24-hour period, after reports suggested Goldman Sachs had dropped its plans to open a bitcoin trading desk in the near future and a whale moved over $100 million to cryptocurrency exchanges.

Brian Stutland stated:

It’s going to be difficult [to profit] once we get down to this $6,000 level I think that’ll act as some support there. But look, do we really need Goldman Sachs? The point of cryptocurrency was to get people out of the banking system, and bank and transactions offline from that.

Goldman Sachs’ chief financial officer (CFO), as CryptoGlobe covered, later on revealed the reports were false as the company is still working on “setting up a trading desk to make markets in digital currencies such as bitcoin.” It’s moving into the crypto space in “response to client interest in digital currencies.”

Per Stutland’s words, while the drop created “some selloff” the bottom will be reached a $6,000. Jim Iuorio then noted bitcoin price charts point to a potential bounce if the cryptocurrency manages to go through $6,480.

If bitcoin goes through that level, Iuorio said, the cryptocurrency will “come out of that little consolidation it’s been on” and go up to $6,800. If it fails to do so and trades under $6,300, he added, it’ll fall back to $6,000.

At press time, BTC is trading at $6,470 after rising 1.38% in the last 24-hour period, according to CryptoCompare data. The cryptocurrency seemingly started recovering after reports suggested crypto exchange Coinbase was tapping the expertise of $6 trillion asset manager BlackRock to launch a crypto ETF.

As CryptoGlobe covered adoption has been growing, as billionaire Tilman Fertitta, owner of the NBA basketball team Houston Rockets, recently started accepting bitcoin and bitcoin cash in hos Post Oaks Motor Cars dealership.

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What are Forks and Airdrop in Cryptocurrency?

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The cryptocurrency industry boasts of many technical terms of which most of them need no tedious search to understand them as they are self-explanatory. One of the frequently used terms in the industry is airdrop.

The word combination alone provides a gist of what it really means, however, it may not have a literal meaning as it may be assumed to be. This post identifies and explains two important most-used terms in the industry.

Airdrop

Airdrop does not literally means “drops” fall from the air or the air really drops. It signifies a free distribution of tokens or cryptocurrencies for a specific purpose. In most occasions, cryptocurrency companies decide to reward their early adopters by distributing a proportion of free tokens to them.

In addition, some companies ask interested parties to perform minor tasks, including liking their telegram page, following them on twitter and few other instructions to stand a chance of getting a portion of the distribution.

As this may be a marketing strategy to get more people on board to build a community, this may also be a strategy to evenly distribute tokens in order to avoid market manipulation by large token holders.

Airdrop is very common among the newly introduced coins that need a kind of popularity to rise to the moon.

Forks

Fork in cryptocurrency has a general meaning of dividing or introducing an updated version of an existing cryptocurrency. When inventors realize that an existing cryptocurrency falls short of a particular function, a similar but upgraded version is introduced.

A good example is Bitcoin and Bitcoin cash. Bitcoin gave birth to Bitcoin cash in 2017 after inventors announced on a fork that was intended to make the digital world even better.

Forks are categorized into two; Hard folk and Soft Folk. Hard fork has been explained to be a permanent diversion from an existing Blockchain with the nodes of the new Blockchain not interacting with the transactions of the old one.

Soft Node is quite different. Transactions of the non upgraded nodes are recognized by the new upgraded ones; however, when the non upgraded node mines blocks continuously, the new nodes will reject them.

In this case, enough hash power is needed to make it succeed. It is believed that the existence of a fork makes the future of cryptocurrency very bright. Possibility of a fork can address so many problems in the cryptocurrency industry.

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What Next For Ethereum (ETH)?

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Ethereum (ETH) has had a rough week in the crypto markets. On the 5th of September, right before the whole market lost close to $40 Billion in a day, ETH was valued at $280 and seemed to have considerable support at that level. Then the news hit that Goldman Sachs have decided not to proceed with plans for a Bitcoin (BTC) and Crypto trading desk. The entire market tanked. ETH fell in the markets to current levels of $219 as the news about Goldman Sachs have since been declared as fake news.

Fears of Further Decline and ICO’s Dumping ETH in the Markets

The Ethereum HODLers in the crypto community are concerned that ETH will continue falling to levels well below $200.The last time ETH went below this levels was back in mid September when it was valued briefly at $195.

With the constant rumors that ICOs are selling the ETH they raised last year and early this year to avoid further losses, the concern still lingers of the possibility of the digital asset continuing to depreciate in value. Although this claims have not been confirmed, the theory is plausible given the tonnes of crypto that was poured into ICOs from late last year to date.

Will it Go To Zero?

The extreme side of events is that ETH will plummet to zero as everyone ditches the digital asset for more stabler coins such as Stellar (XLM). There is also the theory that ETH can be replaced as the preferred ‘gas’ payment on the Ethereum network thus making the digital asset obsolete. However, the Ethereum community would not agree to such a radical overhaul of the network’s operations.

A Call for a New Ethereum Network

This then leads to a new discussion that the Ethereum network needs to evolve with the times or risk being obsolete as more efficient networks are created. These include the likes of Tron (TRX), Zilliqa (ZIL) and Neo (NEO). Of particular concern are the security vulnerabilities in Ethereum smart contracts as well as the network having congestion issues that need to be solved by increasing its throughput.

Waiting It Out

The good thing is that ETH still has fans and HODLers who are willing to wait out the current storm in the form of a bear market. There are also high hopes that the scalability issues on the network will be solved very soon further injecting the much needed life into the digital asset.

In conclusion, the digital asset of ETH is facing some trying times in the crypto markets as it has dropped 85% since its peak value of $1,400. With the bear market still in full force at the moment of writing this, there is some fear that its value could drop further. However, the long term future of ETH is still bright if its network can evolve with the times.

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