Tether. Review

in #money6 years ago (edited)

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You can find our previous reviews here:

Dash. Review - August 2018.
Binance Coin. Review
IOTA. Review. August - 2018
Ethereum Classic.Review
TRON overview.
Cardano - review. Future plans.
Ripple - review. Further Perspectives
Litecoin. June'18 overview
The Dow Jones index. From where did it come to us?
Bitcoin Cash. June 2018 overview
Are cryptocurrency indices a new crypto market trend?
EOS. End of May'18 overview
Ethereum. May 2018 overview

Here on our Cryptoindex blog, we will be posting 100 articles about each of the top performing coins selected by our powerful AI algorithm#CIX100coinreview.

Today’s review: Tether

USDT is a cryptocurrency asset issued on the basis of a bitcoin blockchain through the Omni Layer protocol. Each USDT unit is backed by the US dollar, which lays in the reserve of Tether Limited and can be obtained through the Tether platform. Tether is a crypto-phatic hybrid, the value of which is tied to the value of one of the currencies. Most often, Tether uses the USDT currency tied to the dollar, so 1 USDT is always equal to 1 US dollar.

The Omni Layer protocol is an open source software that interacts with the blockchain, ensuring the release and repayment of cryptocurrency tokens based on bitcoin. Tether currencies are 100% supported by the actual currency assets on the Tether backup account. Cryptocurrency can be bought or exchanged for a currency in accordance with the terms of service of Tether Limited.

An interesting aspect of Tether is its way to achieve consensus (network compatibility) through Proof-of-Reserves. It means that the amount of real money (dollars, euros, yen) held by Tether Limited must match the number of Tethers in circulation.

In theory, Tether should equal 1 dollar. But in reality, the USDT / USD rate is not a constant and can be traded near this mark. The maximum value of the Tether cryptocurrency to the dollar is 1.06; the minimum is 0.91. The average volatility is 1-2%.

The level of confidentiality of Tether cryptocurrency is low. By depositing money into Tether Limited's bank account, the user must undergo a long process of KYC, in which he certifies his identity, residence, and source of funds. Thanks to this, Tether Limited knows almost everything about its users. The transaction confirmation time is relatively long and sometimes lasts several hours. Currently, due to the increase in the number of transactions per second, not all transfers go directly to the block. Tether works on the BTC blockchain, and transactions take little time.

Tether (USDT) can be stored and sent using any wallet that supports Omni Layer technology, such as Holy Transaction, Omni Wallet, etc. Users also have an official Tether Wallet - software that was developed for storing USDT on Android and iOS.

The main useful quality of this cryptocurrency is that there is no need to calculate the price in other units. Familiar and most popular fiat currency becomes a benchmark. In addition, the classical advantages of cryptocurrency include:

  • cryptographic security;
  • transparency and openness for everyone;
  • availability for individuals and legal entities on the same terms.

In theory, USDT can at any time be exchanged for dollars within the Tether platform. However, it is stated in the rules of the platform that Tether is not a monetary instrument, and Tether Limited is not obliged to exchange its tokens for fiat currencies, nor does it guarantee such exchange and protection against losses when buying, selling or redeeming Tethers.

Some experts believe that in this way the company is insured against possible regulatory restrictions in different jurisdictions. However, in the same way, this cryptocurrency can actually lose real security, because it will not be possible to realize the right to exchange it.

For the majority of ideological fans of Bitcoin, Tether is unpleasantly similar to the fiat currency. And not because of the pegging to the dollar. Tether is also centralized, requires permission to use and depends on the users' trust in an organization, which is the opposite of the principles on which bitcoin is based.
So, if you want to use Tether, do it with caution. Conduct only short transactions and transfers with USDT. If you need to convert a large amount, divide it into several parts in order to reduce the risks.

You can always check the current CIX100 composition on our MVP platform: http://cryptoindex.ai/

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