Review on Tether by Fabrizio Zampieri

Name: Tether
Item: Tether
Rating: 4

April 21, 2018

Tether is something of a hybrid. It’s a crypto-fiat “stablecoin.” Its value is…

Tether is something of a hybrid. It’s a crypto-fiat “stablecoin.” Its value is pegged or rather, tethered to the value of fiat currencies.
USD₮ is the currency that Tether most frequently uses. More specifically, 1 USD₮ is intended to remain exactly equal to $1, not a cent more or less. It’s basically a crypto dollar (at least in value).
Another currency that Tether uses is the Euro, in the form of EUR₮. And Tether will reportedly use the Japanese Yen soon, in the form of JPY₮.
Technically, Tether is based on the Omni Platform. This platform is used for various digital assets, which are anchored to the Bitcoin.
To sum up, the only reason why 1 USD₮ is actually worth $1 is that the exchanges keep a reserve of dollars to back every USD₮ in existence.
﻿

Pros

Tether is extremely useful to traders and investors as an alternative to fiat for manyl good reasons: - Tether transaction times are completed in minutes. This benefit is significant because cryptocurrency traders often need to rapidly shift funds, and take advantage ofarbitrage opportunities; - Tether charges zero transaction fees between Tether wallets: - USD is a relatively stable base currency. However, many altcoins are only available for trading on crypto-only exchanges; they accept Tether, but refuse any form of fiat; - Tether is useful for trading strategies: it makes sense for a trader to convert their position to USD₮, and withdraw it to their personal wallet for safekeeping. When the buying opportunity occurs, the trader can quickly transfer their USD₮ back to the exchange to take advantage of it, as opposed to waiting days for a bank wire to clear.

Cons

Tether is close to the fiat banking system. Tether is also centralized, permissioned, and trust-dependent. Such a system is antithetical to the principles of Bitcoin and other cryptocurrencies.. So, many crypto enthusiasts are naturally skeptical of Tether. In my opinion USD₮ should only be used for short-term trading and transfers, in fact Tether users are protected from the volatility of cryptocurrency, but they’re still exposed to fluctuations in the price of the pegged fiat currency (Usd or Eur). Tether will soon have strong competition from new stablecoin Basis (decentralized).