Tether is a blockchain-based cryptocurrency that is based
in the United States. Tether is the world’s third-biggest cryptocurrency by
market value. But it’s very different from bitcoin and other digital
currencies.

What
is Tether?

It is an open-source, peer-to-peer blockchain digital
currency. Blockchain allows data to be stored in multiple locations in
chronological order. It’s used to safeguard the system from being overtaken by
a single entity.

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Tether is referred to as a stablecoin. These are digital
currencies that are tied to real-world assets such as the US dollar to maintain
a stable value, unlike most cryptocurrencies which are known to be volatile and
whose value is determined on a more speculative basis.

Tether was designed to be linked to the dollar. While
other cryptocurrencies often fluctuate in value, tether’s price is usually
equivalent to $1. This isn’t always the case though, and wobbles in the value
of tether have shocked investors in the past.

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Tether tokens are issued by Tether Ltd. It was created in
2014 under the name Realcoin and was rebranded to Tether. Brock Pierce, Reeve
Collins and Craig Sellars are the co-founders of the cryptocurrency. It was
first launched on the Omni Layer of the Bitcoin blockchain and began trading in
2015.

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Crypto investors often use tether to purchase
cryptocurrencies, as an alternative to the greenback. This basically provides
them with a way to ensure safety in a more stable asset during times of sharp
volatility in the crypto market. According to a report from CryptoCompare shows
that around 80% of Bitcoin trading is done in Tether, which makes it a major
source of crypto liquidity.

However, crypto isn’t regulated, and several banks
hesitate doing business with digital currency exchanges due to the level of
risk involved. That’s where stablecoins tend to come in.

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Tether isn’t the only stablecoin in the market, but it’s
by far most popular and biggest one. Others include USD Coin and Binance USD.
Currently, there are four Tether stablecoin currencies: USDT (tied to the US
dollar), CNHT (tied to the Chinese yuan), EURT (tied to the Euro), CNHT (tied
to the Chinese yuan) and XAUT (tied to one ounce of gold per token).

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Controversy

Tether has some controversial history a well, as it was the
first cryptocurrencies to root its value directly to an existing fiat currency.
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. The company said that the money
had simply been seized and safeguarded. In 2017, Tether underwent an alleged
hacking where over $31 million worth of tokens were stolen.