Can Tether Weather...It Better
Apologies for the corny rhyme, but it just fit so beautifully. Anyway, most of you have likely heard of the stablecoin called Tether. And with that, most of you have likely heard the debate about it, commonly known as "Is it a sh*tcoin?" Well, let's see…
In July 2014, the cryptocurrency "Realcoin," Tether's precursor, was launched. By January of the next year, it was officially listed on the Bitfinex exchange, a subsidiary of iFinex.
Despite all that complexity already, Tether (aka USDT) has been one of the most relied-upon stablecoins in the industry. For the uninitiated, stablecoins are essentially proxies for $1 USD in crypto markets, designed so 1 [stablecoin] should always = $1.
As of last night (bc who knows what could happen), USDT was the third largest cryptocurrency in the world, obviously behind BTC and ETH. But allegations are swirling, and have been for most of its existence, that the firm isn't exactly-what's a good word-honest about the "assets" backing the coins' value.
Originally, the promise was 1 USDT would always be backed by $1. However, this is confirmed to be no longer the case and hasn't been for a while.
The problem now is that as the tides of crypto liquidity and subsequent bullishness recede, market participants are starting to examine exactly who might be swimming naked, as Warren Buffett would put it.
For example, Tether and Bitfinex originally hid their relationship. Or for another example, Tether was ordered by the NY Attorney General to produce monthly "attestations," which are basically just lowkey audits. And, of course, the "stable" coin has lost its peg to the USD before, which just kinda destroys the whole reason it exists, no?
Now, in the latest edition of shady allegations, Coinbase CEO Brian Armstrong has sounded the alarm on Tether. The exchange now offers free conversions of USDT to the second largest stablecoin, US Dollar Coin, or USDC. To be fair, Coinbase itself is basically a co-founder of USDC, so raising an eyebrow at this is absolutely valid.
For now, not much is known. Tether has a reputation as a sketch ball among tokens, but it also has plenty of supporters. Time will tell if they, or anyone else, is swimming naked.
The big question: What happens to the broader crypto market if the world's largest stablecoin and underbelly of token trading goes kaboom?
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