Crypto Academy Week 6 STABLE COINS | Homework Post for @yohan2on - USDT(TETHER) Most Popular Stable Coin

WHAT ARE STABLE COINS?

Stablecoins are cryptocurrencies with a fixed price and a market value tied to another stable asset. Stablecoin, unlike other cryptocurrencies, can be pegged to assets like fiat currencies that can be traded on exchanges, such as the US dollar or the Euro. Other assets, such as precious metals like gold and even other cryptocurrencies, can be pegged to some stablecoins.

USDT (TETHER)

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One common cryptocurrency that traders have been using to leverage their trades without having to resort to fiat for years. Tether, known by its ticker symbol USDT, was the first popular stablecoin project. A stablecoin is linked to a fiat currency, so it is unaffected by the price of Bitcoin or the volatile crypto markets.


A tether is a line attached to an object that limits its range of motion. This connection is depicted digitally, so each Tether coin is practically equal to one US dollar or alternative reserve currency. It will be referred to as a "digital dollar." “Every tether is always 100 percent backed by our reserves, which include conventional currency and cash equivalents and, from time to time, may include other assets and receivables from loans provided by Tether to third parties, which may include associated entities,” Bitfinex, a Tether sister company, states.

How Does Tether works?

When a user deposits fiat currency into Tether Limited's reserve, the company produces and releases the corresponding sum of digital dollar tokens to the user, which can then be sent, stored, or traded by selling fiat to buy USDT. A consumer will receive 100 tether tokens for depositing $100 USD. When a consumer redeems Tether tokens for fiat currency, these coins are discarded and withdrawn from circulation.

ADVANTAGES OF USING USDT OR TETHER

• Tether is used by investors and traders because it offers liquidity, or the opportunity to join and leave cryptocurrency positions without experiencing severe price fluctuations.

• Tether registered a trading volume of billions of dollars in a single day, making it the most liquid cryptocurrency, far more liquid than Bitcoin. That is to say, it is much more widely available than bitcoin.

• It is not only the biggest stablecoin, but also one of the largest cryptocurrencies in terms of market capitalization. Making it literally like a stable company!

• Tether gained popularity over other stablecoins running on various blockchains due to Bitcoin's secure blockchain and network impact. It is the most reliable stable coin available by popularity.

USDT’s UNIQUENESS

First and foremost, Tether is a special cryptocurrency in that it "exists" on several blockchains, in addition to being a stablecoin. Tether tokens are currently available on the Omni Bitcoin website, Ethereum, EOS, and Tron. The distinction between the four coins is attributable to the properties of the blockchain that hosts Tether.

• Some investors may prefer the Bitcoin Omni version of Tether for full security and immutability.

• Other investors may prefer the ERC20 Tether token, which can be used to earn a passive income via DeFi.
  
  
  
  

CONTROVERSIES ABOUT TETHER

USDT has established itself as the most widely used stablecoin in the ecosystem, with a significant volume advantage over USDC. Tether has been the target of further controversy both within and outside the crypto room, ranging from market manipulation charges to liquidity and security concerns. Tether was also hacked in November 2017, resulting in the theft of $31 million USDT, following which a hard fork was introduced, rendering the stolen funds untraceable. Tether and its sister firm, Bitfinex, are defendants in two class-action lawsuits claiming that they used their USDT funds to manipulate the price of Bitcoin during the December 2017 bull run, according to the plaintiffs.

CONCLUSION

The fact that their reserves have never been officially audited only adds fuel to the fire, and in March 2019, the company changed their long-standing statement that all USDT are backed by the same amount of cash to say that all USDT are indeed 100% backed, but “by cash and cash equivalents,”

So, do you believe Tether is a good investment? This is a good question to ask, and the answer varies depending on your specific requirements. Tether isn't going to blow up and go out of business tomorrow, to be sure. It's been around for more than five years and is likely to continue for a long time. What are your thoughts on USDT and similar stablecoins?

Thanks to prof @yohan2on for lecturing us about stable coins and this helped us not only in knowledge but in resourcefulness as well.