Cryptocurrency Under Spotlight: Why is Tether a Safe Investment?

Tether is one of the most adopted cryptocurrencies in the digital currency sphere

Cryptocurrency

Cryptocurrency

In the digital world, blockchain technology has made a remarkable stance in the past few years. Owing to the increasing importance of bitcoin, many investors are jumping into the cryptocurrency sphere. However, all is not good. The Cryptocurrency market is remarkably volatile and doesn’t suit investors who want to keep their investments stable. When things were going out of hand due to extreme oscillation in cryptocurrency pricing, crypto investors moved to a safe source of investment called stablecoins. Tether is one of the famous stablecoins that is seeing drastic growth in the past months.

Today, there are more than 10,000 cryptocurrencies in the market. However, only a handful of them see a  frequent growth in the price and market capitalization. Especially, after experiencing a major setback in bitcoin investment due to its sudden fall, crypto investors are looking for a secure place to invest. Tether, also known as USDT, emerged as the most traded stablecoin towards the end of 2020. Tether is a blockchain-based cryptocurrency that is pegged to the US dollar. It follows a 1:1 relationship with USD, making it a source of collateral. Stablecoins are designed to avoid drastic volatility and allow cryptocurrency to be a source of trading rather than a risky investment. The most well-known stablecoin is Tether, a cryptocurrency that is familiar for having gotten past its problems mostly unscathed. Despite the increasing number of cryptocurrencies entering the stablecoin market, Tether still remains a major source for trading, loans, and earning interest. Tether has a market capitalization of US$60 billion. Recently, US$33 million Tether was frozen due to the KuCoin hack and this action even intensified people’s belief in the stablecoin.

 

Origin of Tether

Tether is one of the most adopted cryptocurrencies in the digital currency sphere. Despite its high investment rate, the cryptocurrency constantly ran into trouble in the past. However, to everybody’s surprise, it came out of the issues without big damage to the price and market cap. In order to learn more about Tether, let’s jump into its origin.

The idea of introducing a stablecoin that is tied with a fiat currency was introduced in 2012. Originally called as the ‘RealCoin,’ Tether emerged as a solution to combat the volatility of the cryptocurrency market. The digital currency was tied to the US dollar, making it more attractive and adoptive. However, the first token of Tether was only issued in 2014 by co-founders Brock Pierce, Reeve Collins, and Craig Sellers. Later, it was taken up by Bitfinex, Binance, WazirX, Huobi, and many other famous cryptocurrency exchanges. Although its stable pricing has made a remarkable stance in the digital currency sphere, Tether ran into trouble due to the less transparency it provides.

In 2017, it was brought to light that Tether and Bitfinex, the first crypto trading platform to float the cryptocurrency had the same management and corporate team. The crypto trader was blamed for publicizing the stablecoin over its own profitability. Critics have also pointed out that the Tether has no real collateral to back it. Even though the stablecoin providers came out with loan plans to patch the remarks, the transparency and audits were constantly under scrutiny. Besides, in 2019, Tether’s parent company faced heavy backlash for spending US$700 million to pay its US$850 million loss.

 

Recent developments in Tether

Tether has recently surpassed the US$60 billion mark in market capitalization, as crypto investors flooded to the stablecoin following the fall of bitcoin prices. Tether team has said that the coin has performed well while other the cryptocurrencies, faced extreme volatility.

Owing to the trust it has secured in the crypto investors heart, Tether announced that it has become one of the world’s largest investors in the US commercial paper market, rubbing shoulders with the likes of fund managers like Vanguard and BlackRock.