Things to know before investing in Tether
Tether converts cash into digital currency, to anchor or tether the value to the price of national currencies like the US dollar, the Euro, and the offshore Chinese yuan. Every Tether token is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every Tether token is also 1-to-1 pegged to the dollar, so 1 USD₮ Token is always valued by Tether at 1 USD.
The Tether platform is built on top of open blockchain technologies, leveraging the security and transparency that they provide. The value of our reserves is published daily. The value of our reserves matches or exceeds the value of all tethers in circulation.
Tether’s blockchain-enabled technology delivers world-class security while meeting international compliance standards and regulations. Tether is the most widely integrated digital-to-fiat currency today. Buy, sell, and use Tether tokens at Bitfinex and other major exchanges and service providers.
How does Tether work?
Tether tokens exist as digital tokens built on bitcoin (Omni and Liquid Protocol), Ethereum, EOS, Tron, Algorand, SLP, and OMG blockchains. These transport protocols consist of open source software that interfaces with blockchains to allow for the issuance and redemption of cryptocurrency tokens, in our case, “Tether tokens.” Tether Platform currencies are 100% backed by Tether’s reserves. Tether tokens are redeemable and exchangeable according to Tether Limited’s terms of service. The conversion rate is 1 Tether USD token (USD) equals 1 USD.
The Tether Platform is fully reserved when the sum of all Tether tokens in circulation is less than or equal to the value of our reserves. Through our Transparency page, anyone can view both of these numbers daily.
Tether was created to use the Bitcoin network as its transport protocol specifically, the Omni Layer to allow transactions of tokenized traditional currency. Since this original version of Tether uses the Bitcoin blockchain it inherits the inherent stability and security of the longest established blockchain network.
Tether on the Ethereum blockchain, as an ERC20 token, is a newer transport layer, which now makes tether available in Ethereum smart contracts or decentralized applications on Ethereum. As a standard ERC20 token it can also be sent to any Ethereum address.
Since Tether tokens are currently available using different transport protocols, when users send Tether tokens to other addresses, they need to carefully check the destination address to confirm they are selecting the correct transport protocol.
Brief History of the coin and its holding:
A whitepaper published online in January 2012, J.R. Willett. In January 2015, the cryptocurrency exchange Bitfinex enabled the trading of Tether on their platform. While representatives from Tether and Bitfinex say that the two are separate, the Paradise Papers leaks in November 2017 named Bitfinex officials Philip Potter and Giancarlo Devasini as responsible for setting up Tether Holdings Limited in the British Virgin Islands in 2014. According to Tether’s website, the Hong Kong-based Tether Limited is a fully owned subsidiary of Tether Holdings Limited. Bitfinex is one of the largest Bitcoin exchanges by volume in the world.
From January 2017 to September 2018, the number of tethers outstanding grew from about $10 million to about $2.8 billion. In early 2018 Tether accounted for about 10% of the trading volume of bitcoin, but during the summer of 2018, it accounted for up to 80% of bitcoin volume.
The price of the tether will always be around $1, but the circulation of coins will increase causing the increase in value of the Tether overall. Investors having tether can use it to buy another cryptocurrency. Tether is used as a currency of all other cryptos. Tether protects you from volatility in cryptocurrency. If you want to have some reserves in your exchange wallet, it is better to hold the value in Tether since the value will not change from $1.
From a returns perspective, you cannot get more returns similar to other cryptocurrencies as the value will always remain at $1.
Market cap and ranking of the coin:
The current market cap of Tether is 60 Billion and it is the third-ranked cryptocurrency. It reached the peak market cap of 70 Billion in April 2021. Tether is traded in almost all crypto exchanges. People invest in Tether even to buy another cryptocurrency.
Tether as a currency will increase in value but the investor will not be able to get returns. Tether is similar to the dollar, with inflation value of the dollar will decrease. Supply will be increased causing the reduction of value. It is a cryptocurrency method of holding a dollar in your locker.
Even though you cannot see an increase in value, it is safe and quick to buy and sell cryptocurrency using Tether comparing top dollar cash. So volume traded in tether will generally be high as it is used as a currency to buy the rest of the currency.
How to Buy/invest:
The tether can be bought in any of the top crypto exchanges like Bitfinex, Coinbase, Binance, wazirx. Ethereum will be bought using any other cryptocurrency or any fiat currency based on the currency day’s price. Transaction fees will be marginally around 0.1-0.5% of the total value bought.
How to number of Tether increase over time:
Tether mentioned that the circulation of tether increase as they increase reserves in Dollars, Euro, Yen, and Chinese currency. Even though there is no real proof that they are accumulating. It is provided on their website about reservers.
A lot of doubts are available for investors about the reserves and whether we can get a dollar for Tether in exchanges in case of the collapse of this cryptocurrency. Many of the questions related to reserves were not answered 100% surely. Concerns related to reserves are also raised by the TechLead youTube video. Check the link
Alleged price manipulation
Reporters from Bloomberg, checking out accusations that tether pricing was manipulated on the Kraken exchange, found evidence that these prices were also manipulated. Red flags included small orders moving the price as much as larger orders, and “oddly specific order sizes with some repeating frequently.” These oddly sized orders might have been used to signal wash trades in automated trading programs, according to New York University Professor Rosa Abrantes-Metz and former Federal Reserve bank examiner Mark Williams.
IRS is not backing the comments or reserves held by Tether. But the idea of safe currency in cryptocurrency is famous among traders and investors is holding the price at $1. Since cryptocurrency is new to everyone. Many laws about cryptocurrency are yet to be streamlined.
How secure and Liquid is Tether?
Tether claims to have a reserve of USD based on the demand of customer withdrawal. There is evidence provided by Tether via external audit to confirm the same.
Valuation of Dollar and Tether:
Tether claims to have a percentage of dollar reserve that holds the price at $1. It was also speculated at it might have only 15-20% as a dollar reserver.
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