In the recent past, a lot of controversies has surrounded the dollar-pegged cryptocurrency ‘Tether’. Tether being linked to U.S Dollar, the value of one Tether token is equals to the value of U.S Dollar at any point in time. The cryptocurrency is currently being used by many exchanges in order to purchase other digital assets on their platform.
Tether was first created in 2015 and as said its value remains stagnant at one USD. This means that Tether is quite a lot stable in comparison to other cryptocurrencies that exhibit huge price swings. According to coinmarketcap.com which is one of the most go-to services for tracking crypto prices, there are around 2.2 billion Tether coins currently in circulation.
Who Made Tether?
A company named as Tether Limited created the digital coins which are governed as per the laws of British Virgin Islands, according to the legal portion of its official website. The company was incorporated in Hong Kong.
Advantage of Using Tether
As said earlier, one Tether coin being fixed at a price of one USD is used by many exchanges to buy other cryptocurrencies on its platform. Tether says that this method to buy cryptos using Tether tokens makes it easy for investors to purchase digital currencies as well as move the fiat currencies in and out of the exchange very easily. Also, exchange usually doesn’t share a cordial relationship with banks and so using Tether helps them to have a hassle free process at their end.
In its white paper on the official website, the company explains “Exchange users know how risky it can be to hold fiat currencies on an exchange. With the growing number of insolvency events, it can be quite dangerous. As mentioned previously, we believe that using tethers exposes exchange users to less counter-party risk than continually holding fiat on exchanges.”Recent Controversy Surrounding Tether
Over the past few months, there are a growing number of accusations and allegations being made about Tether’s involvement with Bitfinex exchange wherein Tether is said to have disproportionately created extra tokens which are actually not backed by USD, and have further transferred them to Bitfinex. Analysts say that Bitfinex has been using those extra tokens to its benefit and has been manipulating the price of Bitcoin.
Last week, Bloomberg reported that the U.S. Commodity Futures Trading Commission sent subpoenas sighting anonymous sources to both Bitfinex and Tether on December 6, 2017.
Nicholas Weaver, a senior researcher at the International Computer Science Institute at Berkeley, California, said: “Over the past couple of months, a huge amount of tether has been created, it has shifted to the Bitfinex exchange and presumably buys bitcoin and other cryptos. This, I believe, has been keeping the price up.”Moreover, these claims were backed by an anonymous analysis which shows that Tether is being created when Bitcoin is falling. The analysis reads: “Tether printing moves the market appreciably; 48.8 percent of BTC’s price rise in the period studied occurred in the two-hour periods following the arrival of 91 different tether grants to the Bitfinex wallet.”
It remains to be seen as to how things unfold ahead. But everyone is still waiting for some official word from Tether which can help boost the investor confidence in this heavily falling crypto market.
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