The promise of a cryptocurrency pegging 1:1 with the USD was an ‘Aha’ moment in the crypto space. However, Tether executes it at just the right moment. Tether USDT has been dominating the crypto space ever since. The recent drop in its price shows an uproar and speculation in the crypto community.
Digital assets like cryptocurrencies have no intrinsic value, hence are volatile, subjecting to a wide range of fluctuations. This might be good, however, the bad outweighs the good. Investors who are not thorough with their research can lose their investments.
To avoid this and bring stability to a crypto world, digital assets are pegged to real-world stable assets like Gold, or fiat currencies as collaterals. Regarding the concern of goal, stablecoins desire recognition and mainstream adoption in a financial system.
Tether did the same by launching just at the right time, causing it to dominate the entire crypto market. A few weeks back, Tether’s prices dropped to as low as $0.86 in Bitfinex. This causes a mass panic and speculation in the space. The questions, if Tether was actually pegged to the US dollar rose.
Bitfinex is a cryptocurrency exchange that overlaps with Tether in terms of ownership and management. It has also joined the rumors since Bitfinex is the exchange that introduced USDT to a major part of the world. On October 14, 2018, a total of 500 million Tether coins were dumped by the company. Meanwhile, the announcement was done on their official Twitter page. The exchange in itself has faced a ton of speculations of insolvency as the exchange liquidated a massive amount of Bitcoins for an undisclosed reason.
Opportunity For Stablecoin Competitors
This Tether fiasco has opened up a path for a lot of hungry stablecoins to enter the space for absolute dominance. Some examples of stablecoins are, Gemini USD, by the Winklevoss twins, Paxos Stablecoin, Circle’s USD Coin etc. Gemini and Paxos have the approval of the New York Department of Financial Services (NYDFS).
In October, top exchanges paced up their adoption and introduction of their own in-house stablecoins. OKEx, one of the top three cryptocurrency exchanges by volume, listed TrueUSD, Paxos Standard, Gemini Dollar, and Circle’s stablecoin USD Coin. Moreover, Huobi, another exchange also follows OKEx and listed the same stablecoins.
Tether needs to solve its rumors by providing facts and conducting audits to satisfy the hungry audience. What do you think?
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