Why You Should Be Worried About Tether

If you have been following cryptocurrencys lately you probably have heard of something called Tether which has been causing a lot of FUD in the crypto community and for a good reason. First off lets talk about what Tether actually is and the incentive to use USDT. USDT is designed to be linked with the USD dollar and is mostly used and valued in crypto only exchanges such as Binance where in order to lock in gains you would normally have to send the crypto to another exchange that deals with your fiat currency. Tether makes this process a lot easier as Tether is a cryptocurrency and can operate in an exchange such as Binance where you can just trade your crypto for USDT which is supposed to hover around the worth of one USD dollar and you are able to keep your USDT in a crypto only exchange ready to invest with limited volatile risk. This all sounds great and something like USDT will probably be necessary in the future of crypto as banks get more involved with fiat exchanges but the problem with Tether is it is centralized and promises that it backs every USDT with one USD dollar. Tether has yet to been professionally audited to actually see if they provide a 1:1 ratio in terms of USDT to the USD dollar which is a big red flag as the only thing guaranteeing this swap is the users trust in Tether who claims they have about 2,250,000,000 USD dollars of assets as of February 3, 2017. Tethers legal status states, "Tether is not a legal tender currency or a financial instrument.[29] The ownership of Tether has no contractual rights, other legal claims, or guarantees against losses." It also states, "Tether Limited is not a bank and is not required to, and does not hold its reserves at the Federal Reserve, Tether tokens are not legal tender or currency and are not covered by deposit insurance." Tether Limited runs Tether and it is speculated that Bitfinex and Tether limited are run together based on leaked Paradise Papers in 2014. Tether also has the right to not redeem your tokens if you violate any terms of service and really has the ability to make up any reason to not redeem your tokens. So, why should you even care if you dont even use USDT? USDT is used to "cash out" of speculative cryptocurrencys but is also used to buy cryptocurrencys and if USDT is not backed 1:1 to the USD dollar as promised it could currently be worthless value inflating the price of cryptocurrencys such as Bitcoin leading to an imaginary increase of value of sorts. Tether as of now only has a fraction of Bitcoins market cap at 2.2 billion compared to Bitcoins 154.6 Billion USD dollars but as Tether grows so does the risk to all cryptocurrencys.