Stable future with a stable USDT coin?

6 min readJul 15, 2019

This article is dedicated to the analysis of history and prospects of one of the most popular stable coins on the cryptocurrency market, USDT. Buying USDT can make your life easier when entering crypto trading. However, there are many speculations on what USDT is and how to make the most out of Tether ( USDT) currency.

What Is USDT?

USDT is a cryptocurrency asset manufactured on the basis of the Bitcoin blockchain via the Omni Layer protocol. Each USDT unit is backed by a United States dollar that is held in reserve by Tether Limited and can be obtained through the Tether platform. USDT can be transferred, stored, spent, like bitcoins or any other cryptocurrency. Users can transfer and store Tether’s cryptocurrency using any wallet that supports Omni Layer, such as Ambisafe, Holy Transaction or Omni Wallet.

The USDT and other Tether currencies were created to facilitate the transfer of national currencies, providing users with a stable alternative to bitcoin and checking exchanges and wallets that are currently unreliable. USDT is an alternative to the methods of confirming solvency (Proof of Solvency), introducing the process of confirmation of reserves (Proof of Reserves).

In the Tether reserves confirmation system, the volume of USDT in circulation can be easily checked on the Bitcoin blockchain using tools provided by Omnichest.info, which corresponds to the total amount of US dollars in reserve, which, in turn, is confirmed by publishing the balance of Tether Limited invoice and periodic inspections conducted by experts.

The volume of USDT in circulation can be checked here. The volume of USDT in circulation at any time can be denoted as TUSD. The volume of USDT in circulation must always correspond to the volume of US dollars held in Tether Limited accounts in order to receive and send fiat currency to users who buy/sell Tether cryptocurrency directly through the Tether platform.

In order to confirm that the volume of US dollars in bank accounts is equal to or exceeds the amount of USDT in circulation, Tether Limited publishes the balance of its bank account on the Transparency page. Professional auditors constantly confirm, sign and publish information about the balance on the account and financial transfers.

USDT’s History

The USDT and other Tether currencies were created to facilitate the transfer of national currencies, providing users with a stable alternative to Bitcoin and checks of exchanges and wallets.

At the end of April 2019, a scandal erupted in connection with the investigation by the prosecutor’s office of the State of New York regarding Tether. It turned out that the Bitfinex exchange borrowed from Tether about $ 600 million dollars to cover the gap in the balance sheet.

Recently, a company representative Stuart Hegner confirmed that Tether was provided with cash and short-term securities only 74%. This information was made public during a lawsuit in the state of New York, in the case of Tether. It is also known that in January 2019 about $ 2.2 billion were kept in Tether’s accounts in Puerto-Rican Noble Bank. Despite Tether’s ambiguous reputation associated with scandals and investigations, it still remains the most popular stable coin in the world.

Who Uses USDT?

USDT can be transferred, stored, spent like bitcoins or any other cryptocurrency, users can store their savings in purses with Omni Layer support: Ambisafe, Holy Transaction or Omni Wallet. But do not take Tethers as a copy of the dollar, the developers themselves are insured, and in the license agreement they note that the token is not fiat money in their electronic form.

USDT And Exchanges

Cryptocurrency Tether USD is presented on a number of exchanges, including Binance, Bitfinex, Poloniex, and Kraken.

USDT is quite easy to use. It can be used on such exchanges as Poloniex or Bittrex to buy Bitcoin or other cryptocurrencies. It can be easily transferred from the exchange to any wallet that supports Omni Layer. Tether does not charge fees for transfers, however, third-party wallets and exchanges can do this. To transfer USDT to USD and back, users must pay a small fee. More information here.

The purchase and sale of Tether for Bitcoin are carried out by a large number of exchanges, including the above, or through the platform Tether.to, which supports transfers of US dollars from/to your bank account.

USDT’s Future

The main useful feature is that there is no need to calculate the price in other units. The familiar and most popular fiat currency becomes a reference point. In addition, the classical advantages of cryptocurrency: cryptographic security; decentralization, transparency and openness for everyone; accessibility for individuals and legal entities under the same conditions.

Today, Tether and Bitfinex are under pressure from the press: lately critical articles have been published by the New York Times, Bloomberg and Fortune — they reflect doubts and fears that have been haunting the cryptocurrency community for several months. Much of Tether’s criticism comes from bitcoin opponents — they are interested in the failure of both the Bitfinex exchange and the entire Bitcoin ecosystem.

However, the toughest, hottest and most consistent criticism comes from the mouth of a person hiding under the pseudonym Bitfinex’ed. All of them accuse Bitfinex and Tether of using a partial reservation scheme, that is, USDT is issued more than there are fiat dollars that provide them. It is also alleged that unsecured Tether accounts are used to inflate Bitcoin exchange rates for market manipulation.

The very same system reports a full and even redundant reservation. In September, the company passed an audit that did not reveal any irregularities, but critics consider the report unsatisfactory. However, it is likely that the Bitfinex scale exchanges have $ 1 billion needed to fully secure all of the USDT. This story is difficult to separate the truth and fiction, but there are several facts: Tether does not guarantee the convertibility of their tokens to the dollar, moreover, they reserve the right to refuse to serve customers who do not meet their conditions.

This story is difficult to separate the truth and fiction, but there are several facts: Tether does not guarantee the convertibility of their tokens to the dollar, moreover, they reserve the right to refuse to serve customers who do not meet their conditions.

For many ideological fans of Bitcoin, Tether is unpleasantly similar to fiat currency — and not because of the peg to the dollar. Tether is also centralized, requires permission to use and depends on user confidence in an organization — which is contrary to the principles on which Bitcoin is based.

Not surprisingly, this confuses many cryptocurrency enthusiasts and creates an audience willing to believe the rumors of a dishonest game. Nevertheless, it must be admitted that, as long as there are no facts, the accusations against Tether and Bitfinex are nothing more than a campaign launched with the aim of denigrating this system, a “conspiracy, exposing the plot”.

Perhaps the campaign against Tether will bring some benefit — criticism can push the system to raise professional standards and rid it of its weak points. If you want to use Tether, do it with caution. Make only short deals and transfers with USDT. If you need to convert a large amount, break it into several parts to reduce risks. Do not rely on the ability to exchange a significant amount of USDT for 1:1 USD. Remember that the main advantage, that is, the exchange rate peg to the fiat currency, turns the user to the risks inherent in both financial systems.

Originally published at https://changenow.io on July 15, 2019.