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Tether Q3 Attestation Reveals Highest Percentage of Cash & Cash Equivalent Reserves, Over $330M Reduction in Secured Loans and Maintains $72 6B exposure in US T-Bills Oct 31 2023

what is tether

SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. SmartAsset does not review the ongoing performance of any RIA/IAR, participate in the management of any user’s account by an RIA/IAR or provide advice regarding specific investments. Tether is immensely popular and easy to buy on any cryptocurrency exchange. So if you’re interested in getting into the crypto game, this could be a good place to start.

  • Most notably, in 2019, iFinex Inc., the parent company of Tether Ltd., was accused of trying to cover up an $850 million loss by taking over around $700 million of Tether’s cash reserves and using it to repay investors.
  • This is especially true in international platforms such as Binance, which cater to traders from dozens of countries.
  • So, if you’re thinking of buying or trading Tether, you shouldn’t expect a windfall or the type of volatility you might see from a cryptocurrency like Bitcoin or Dogecoin.
  • These digital currencies, which are pegged to other assets such as the US dollar or the Euro, are primarily used as payment mechanisms.

Tether’s critics remain unconvinced that its token is fully backed by cash reserves; in the past, its most vocal critics have claimed that the company was allegedly minting coins out of thin air. Tether is—by far—the most widely accepted and traded crypto asset around. According to CoinGecko, Tether’s current 24-hour trading volume is over $101 billion. Coming in a distant second is Bitcoin, with a 24-hour trading volume of under $42 billion. In a nutshell, Tether is meant to work as follows; whenever a user deposits a US dollar to Tether’s account, Tether Inc—the company behind Tether the stablecoin—mints one Tether in return.

Uses and Benefits of Tether

Tether tokens can be bought and sold on cryptocurrency exchanges, including Binance, CoinSpot, Bitfinex, and Kraken. A report from JP Morgan in February pointed out that USDT does a lot of the same things in the cryptocurrency world that banks do in traditional finance, but what is tether without the same supervision and without deposit insurance. So if people were unwilling or unable to use Tether tokens, “the most likely result would be a severe liquidity shock to the broader cryptocurrency market,” which could lead to everyone trying to sell at once.

  • With the rise of cryptocurrencies like Bitcoin and Ethereum, a new type of digital asset has emerged to help stabilize the volatile crypto market – the stablecoin.
  • But even staked to the U.S. dollar, Terra is far from a safe investment.
  • This signifies a commitment to maintaining liquidity and ensuring stability within the stablecoin ecosystem.
  • Maintaining a constant and intensive connection to the internet, and also to your tethered device, consumes a lot more power than regular smartphone tasks.
  • Tether tokens are the most widely adopted stablecoins, having pioneered the concept in the digital token space.

When a user deposits fiat currency into Tether’s reserve, selling fiat to buy USDT, Tether should then issue the corresponding digital amount in tokens. USDT is pegged to the US dollar, and in theory, it should be unaffected by the market volatility that can so dramatically impact the valuation of other cryptocurrencies, such as Bitcoin. Presently Tether is the largest stablecoin, accounting for approximately 53% of the total stablecoin market capitalization.

But Tether’s still worth a dollar?

In addition, there are very little speculative elements to Tether, which makes it a relatively safe and stable cryptocurrency investment. Some even consider it akin to buying and holding cash or another foreign currency. If you anticipate large fluctuations in the market for the U.S. dollar or the Euro, for example, this could be a worthwhile investment.

Right now, there’s no standardized way for stablecoins to disclose the assets that back them. It seems like an obvious target for regulators, but there’s also a way to do an end run around the needs for stablecoins at all. In fact, the way to get rid of stablecoins might just be… the dollar but digital. The attestation seems unlikely to reassure Tether’s most vocal critics, some of whom fear that its real use is to keep the price of Bitcoin high. The company has also been investigated by the New York attorney general for claims around its backing and settled with the NYAG earlier this year.

What is tethering?

Sky Mobile also allows its customers to use tethering as part of their mobile plans, so while it won’t cost any extra money it will use up data. Remember, Sky Mobile is very flexible about data and any data you haven’t used at the end of the month is automatically rolled over and stored in your Piggybank. Three lets all its new Pay Monthly phone and SIM-only customers use tethering (which it calls Personal Hotspot) as part of their plans. If your plans has data limitations, any Personal Hotspot usage time will come out of your monthly allowance. Each of us has extensive theoretical and practical experience in trading, cryptocurrencies, and blockchain.

what is tether

Although Tether is mainly used as a digital currency for conducting transactions online, it can also be bought as an investment if you choose to store money in crypto. Launched in 2014, Tether (USDT) is one of the most popular stablecoins in terms of volume. Unlike other cryptocurrencies such as Bitcoin, whose price tends to fluctuate more unpredictably, Tether tries to hold its value around a specific asset. As a stablecoin, Tether is pegged or “tethered” to the US dollar, as the coin’s name suggests, in order to minimise price volatility. Tether can be purchased on just about any cryptocurrency exchange — in exchange for fiat or cryptocurrencies. However, before you buy some, keep in mind that USDT tokens are not insured.

What are the key risks?

Stablecoins like Tether may not make much sense as an investment because they aren’t meant to increase in value. They only operate as a store of value, since one USDT should always equal one dollar, using the theory outlined above. “The idea is that 1 Tether can always be traded for $1, regardless of market conditions,” says Steve Bumbera, chief operating officer of Many Worlds Token. Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk. First, we provide paid placements to advertisers to present their offers. The payments we receive for those placements affects how and where advertisers’ offers appear on the site.

what is tether

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