Crypto Academy Week 6 - Homework Post for Professor @yohan2on on Stable Coins Homework by @hadassah26

Homework by @hadassah26 on Stable Coins (USDT)

The crypto market has made a means of transaction around the world seamless, transparent and trusted.
But volatilities among crypto coins make the newbie investor skeptical of entry.
Volatilities though is not a new occurrence as it is also being experienced in the stock market.
It refers to price movement which can be healthy when movements are steady, or extreme and bad for speculation when price moves surprisingly steep. link
During the last 2 months, Bitcoin has seen about a 300% increase, breaking its previous highest highs and making investors skeptical of its next movement, Doge coin has also quadrupled, so also Binance and other coins. These movements make the new investor question?
“Hope these prices don’t go against me on my entry, and also how do I hedge my self from these price movements even though I want to be a part of the crypto world.”
First introduced on January 2012, the Mastercoin was a fiat pegged coin authored by Willet J.R.
The fiat pegged coin was a coin tied with a ration of 1:1 to a real currency with the idea of beating volatility and other insecurities faced by the bitcoin world.

USDT (UNITED STATES DOLLAR TETHER)

link

After the luanch of the Master coin others such as the ripple and Nxt were also launched.
Introduced October 6th 2014 after the Real coin, which was introduced on July same year, the United States Dollar Tether was birthed under Tether limited located in Hong Kong.

”Asset backed token issuers and other market participants can take advantage of blockchain technology, along
with embedded consensus systems, to transact in familiar, less volatile currencies and assets. In
order to maintain accountability and to ensure stability in exchange price, we propose a method to maintain a one to one reserve ratio between a cryptocurrency token, called tethers, and its
associated real world asset, fiat currency.”
-USDT Whitepaper. link

Uses of USDT

The USDT can be bought and used like every other currency as a means of exchange, this can be done through crypto exchanges like Binance or OKEx, which have the highest volume of USDT exchange,
One can also get USDT directly from Tether limited with their credit cards, this which is traded at a 1:1 ratio on Tether limited involves depositing the same amount of United States Dollars and issuing a compatible wallet for depositing of the USDT to you.

USDT can be used to buy other cryptos like BTC, BNB, Ethereum etc.

Disadvantages of USDT

• Centralization of USDT by Tether limited: while the main aim of cryptocurrency is decentralization, Tether limited have full control of issuing the USDT which beats the whole idea of crypto currency decentralization in the first place.
• Possibility of Bankruptcy of Tether Limited: it is possible Tether Limited can file for bankruptcy like every other company making the USDT have a major problem, that should be researched on on further classes.
• Unclear Audits by Tether Limited: it is said that Tether’s most recent audit was in September 2017, this which brings about skepticism among investors can be worrying.

Advantages of USDT:

• Tethers still a crypto currency can be used like its peers, transferable beyond borders, p2p traded, etc.
• Tether beats the scare of volatility suffered by other cyrptocurrencies making if like a safe heaven when other coins are going haywire.
• Tether can be transferred far and wide with little exchange fees

Conclusion:

From the above study we have seen that the Tether, is a fiat backed currency that merges the likeness of crypto boundless transfers, but the stability of currencies or commodities link.
Thanks I am @hadassah26, this is my Week 6 homework for professor @yohan2on.

CC:
@yohan2on
@steemcurator02
@steeemcurator01