Are Tether and Bitcoin related? How Tether affects Bitcoin?
The purpose of Tether is to enable transactions between cryptocurrency exchanges with a rate pegged to the USD. What is more, Tether is the fifth-most widely held coin by value after Ethereum and Bitcoin, and the interest on this crypto is growing rapidly.
Tether, as a stablecoin, is a type of cryptocurrency which aims to keep cryptocurrency valuations stable. It is used by crypto investors who want to avoid the extreme volatility of other cryptocurrencies while keeping value within the crypto market, and it is needed; it has great utility.
How can Tether and stablecoins help with Bitcoin and other crypto volatility and other problems?
Despite the fact that bitcoin is the most popular cryptocurrency, it does suffer from high volatility in its price valuations. Only last year, the price of bitcoin was around $5,000 at one point; now, it is more than $50,000. There is nothing to say that it cannot decline again; but it can also reach new highs, with some commentators suggesting it may reach $100,000. Its day-to-day price swings can be noticeable; it is not uncommon to see the cryptocurrency moving by 10 percent in either direction.
Fiat currencies, as opposed to cryptocurrencies, are relatively stable as they are backed by central, controlling authorities. Their value is pegged to underlying assets such as gold or forex reserves.
“Stablecoins attempt to bridge this gap between fiat currencies and cryptocurrencies”.
To be exact, stablecoins are marketed as a way of making cryptocurrencies usable in everyday life. As far as stablecoins are concerned, their value can be easily understood by everyone; as it is tied to another asset.
How does the market use stablecoins?
Last year, Tether achieved an all-time high of daily transactions. Part of the stablecoin’s upcoming popularity may be due to the fact that crypto exchanges are starting to raise awareness about them. For instance, OKEx, the sixth-largest exchange, is planning to launch its own stablecoin. And Binance is also planning to add more stablecoins to its offering.
Some issues and solutions
The questions about Tether’s dollar reserves have been answered: a recent unofficial audit of June 2018 confirmed that its reserves are in order.
Stablecoin advocates, such as Jeremy Allaire of Circle, which launched USDC back in autumn 2018:
“have called for an open standard that many companies can implement. Greater levels of self-governance would give peace of mind to users, help tokenize the global economy and result in a joined-up ecosystem for the crypto industry that would pose a more compelling alternative to fiat”.
This approach could be the future for stablecoins.
All in all, stablecoins have become a crucial component of the cryptocurrency ecosystem, and their usage is growing. Their benefits are widespread and they will only become more needed as time goes by. With many big firms working on launching their own stablecoins, the future seems bright both for Tether and other similar tokens.
Tether, as a stablecoin, is a type of cryptocurrency which aims to keep cryptocurrency valuations stable. Stablecoins have become a crucial component of the cryptocurrency ecosystem, and their usage is growing. Their benefits are widespread and they will only become more needed as time goes by. With many big firms working on launching their own stablecoins, the future seems bright both for Tether and other similar tokens
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