09 Jan 2018 Samantha McLauren
Crypto Spotlight: The Controversial Sides of Tether
Tether brings together the essentials from blockchain technology and cryptocurrencies, allowing fiat currency to be used as Bitcoin. The network is based on Bitcoin’s blockchain and the Omni Layer Protocol.
The network’s current mechanics make Tether centralized, which is an issue with fiat currencies that altcoins strive to overcome by providing decentralized services. This triggers another issue with the network - although it claims to be thoroughly audited and transparent, the community can’t verify the system entirely.
One of Tether’s key features is causing plenty of debate - the network states that each of its USDT tokens is backed by one dollar, with a fixed value in the altcoin world. All resources are kept in Tether’s reserves, allowing users to redeem them at a later stage. Tokens can be stored, transferred, and used like any other cryptocurrency.
The network operates with a Proof of Reserves audit, ensuring that the amount of USDT coins in circulation corresponds to or is higher than the amount of money in Tether’s bank account at all times. The account administers fiat currency transfers on the platform made from users to purchase or redeem their Tethers. The reserve ensures that all user demands can be met immediately.
Tether is transaction fee-free and is user-friendly. Tethers can be exchanged to purchase other cryptocurrencies.
Tether’s app and wallet are simple, providing a swift registration process, as well as identity verification, sending, receiving, and withdrawing funds. The fixed, backed-up value of this coin offers stability that other crypto projects lack.
Despite the concerns above raised by crypto experts, Tether has been successfully operating as a platform that provides a useful set of tools for storing and trading coins. The steady value and ability to trade tethers on big exchanges make them versatile and valuable in day-to-day financial operations.
As far as comparisons go, Tether stands next to Ripple concerning centralization, away from traditional smart contract platforms. The abundance of coins to choose from makes investors consider their investments carefully, taking into consideration the advantages and disadvantages of the project.Bitcoin Blockchain Cryptocurrency Tether Smart contract altcoins exchange tokens USDT