CZ Explains How Binance Dealt With Aftermath of $40 Million Theft

8m
cryptoglobe

The End of the Bitcoin (BTC) and Crypto Winter Is Here

10m
dailyhodl

Renowned Dev Crafts Two Improvement Proposals For Bitcoin Privacy

19m
cryptonewmedia

Bitcoin’s $2,200 correct could prove to be a swing trade buy, claims old-school trader |

19m
cryptonewmedia

Top Altcoins Gainers in USD and BTC Value – 2019 Week 20 Edition

19m
nulltx

Just 732,000 Bitcoin Addresses Own At Least 1 BTC

26m
bitcoinist

Netherlands: Odyssey Announces Winners Of 2019 Blockchain And AI Hackathon By Diana Ngo - April 25, 2019 0 269

27m
coinjournal

How to Travel the World With Bitcoin Cash

38m
thebitcoinnews

Bank of America has yet to find any blockchain use case for financial services sector, says Bessant

44m
bitcoinnews

Upper echelons of exchange’s board sparks debate; compliance…

1h
cryptonewmedia

BitMax.io (BTMX.com) Announces Strategic Listing Partnership with DREP

1h
cryptonewmedia

Bitcoin Bulls Wipe Out Losses on Another Strong Weekend

2h
bitcoinnews

Binance Coin (BNB) Heads Toward $30 With A $4 Billion Valuation

2h
zycrypto

Bitcoin Cash Upgrade and 30K Stores Accepting BCH in the Weekly Update From Bitcoin.com

2h
thebitcoinnews

Binance Coin [BNB] registers ATH as it surges by over 16,000% since inception |

2h
cryptonewmedia

Bitcoin Cash’s hashrate comes dangerously close to being controlled by one mining pool |

2h
cryptonewmedia

Kik CEO Says Firm Spent $5+ Million on Negotiations With US SEC: Report

2h
cryptonewmedia

BitcoinNews.com Ethereum Market Analysis 19th May 2019

2h
bitcoinnews

Coinbase CEO Talks About Staking, Voting, Margin Trading, Lightning Network, and More

2h
cryptoglobe

Can Monero (XMR) Trade At $100 By End Of May?

3h
zycrypto

A Perfect Cryptocurrency With No Flaws, Is It Ripple’s XRP?

3h
zycrypto

BitcoinNews.com Bitcoin Market Analysis 19th May 2019

3h
bitcoinnews

Ethereum Is Popular, but It’s Probably Not Perfect

3h
livebitcoinnews

Binance Coin [BNB] registers ATH as it surges by over 16,000% since…

3h
cryptonewmedia

How Microsoft (and Others) Plan to Empower Users to Own and Control Personal Data

3h
cryptonewmedia


UnTethering the Cryptocurrency Market – Coinjournal

Last week, the New York Attorney General (NYAG) launched an investigation into Tether, arguably the most controversial stablecoin in the crypto space, over an alleged $850 million fraud. Tether’s legal counsel have since admitted that the stablecoin is now only 74% backed by it’s asset reserves.

Tether (USDT) is a cryptocurrency that can be categorized under the term, ‘stablecoin’. A stablecoin is a token that attempts to exhibit stability, in this case 1:1 dollar parity with every Tether token backed by fiat-reserves. The primary use cases of a stablecoin is to allow users to access an appropriate unit of account, store of value, and medium of exchange for the turbulent crypto markets which can exhibit large swings in volatility. From its inception, Tether aggressively defended its first mover advantage – building scale, creating a global footprint, and establishing barriers to entry by amassing market share and ferociously protecting its foothold. At the start of 2018, Tether had an extremely strong hold on the stablecoin space, owning 94% of the market’s total supply.

Between this controversy and the emergence of alternatives, is Tether’s dominance over the stablecoin market coming to a close? Once an industry forms, it moves through a clear lifecycle — single start-up, fragmentation, and, finally, consolidation into larger economies. Cryptocurrency markets are at the fragmentation stages, and Tether could potentially be losing its grip.

Since Tether’s launch in 2015, the token has repeatedly featured in a series of news headlines calling into question the 1:1 dollar parity and reserves-backing. When pressed, time and time again, Tether’s leadership have refused to provide legitimate, independent audits of assets backing the token, showing a blatant lack of transparency.

Tether’s modus operandi has a familiar and unsettling feeling about it. It brings to mind some of the opacities from the traditional banking system, methods we are trying to move away from. In these initial stages, especially, this lack of transparency seemed to have few if any damaging impacts.

However, by November last year, Tether’s dominance in market supply experienced a sharp drop to 74%, with at least 8 new challengers entering the space. This was still a significant share but the drop was indicative of the market moving into a state of fragmentation.

An increasing number of reputable players have been offering stablecoins with similar functionality to USDT, breaking down reliance on Tether. Unlike Tether, the companies behind these coins are disclosing their banking relationships, submitting their reserves to regular attestations, or facilitating on-chain audits. These include Gemini (Gemini Dollar), Paxos (PAX Standard), Circle (USD Coin), Neutral Dollar (NUSD). This fragmentation of the market is predeterminer of the next stage, consolidation.

We have yet to witness a complete consolidation stage of the life cycle in cryptocurrency markets in a successful manner. Tether itself does not present an umbrella solution to serve as the standard for what stablecoins can exhibit, which other stablecoins are looking to capitalize upon. Given the current allegations levied at it, Tether is ideally looking less likely to play a systemic role within crypto.

Its continued market status is evidence of investors continuing to somehow place trust in the token. But how much should investors, and the industry, really trust Tether? I would estimate that we should trust them 74%.

Regarding any copyrights issue, please contact us:content@hashbee.com.

0 comments