Published on Feb 21, 2020
Tether is a cryptocurrency token claimed by its creators to be backed by one dollar for each token issued. This claim is widely doubted and Tether Limited has not issued a promised audit backing the claim.
Tether provides tokenized traditional government backed currencies[clarification needed] on the Bitcoin and Ethereum blockchain.
Tether was issued on the Bitcoin blockchain through the Omni Layer Protocol. Tether claims that each unit of Tether is backed by one United States dollar held in reserve by Tether Limited, and may be redeemed through the Tether Platform.[7] The primary objective is to facilitate transactions between cryptocurrency exchanges with a rate fixed to the United States dollar allowing traders to take advantage of high speed arbitrage opportunities without resorting to slow bank wires. As of February 2018, Tether is ranked around the 15th highest market cap cryptocurrency in the world, with a market cap around $2 billions United States dollars as of 5 February 2018.
The Tether model is to hold all United States Dollars in reserve so that it can meet customer withdrawals upon demand. Tether purports to make reserve account holdings transparent via external audit; however, currently no such audits exist.[15] In January 2018 Tether announced that they no longer had a relationship with their auditor.
About $31 million of USDT tokens were stolen from Tether in November 2017. In response to the theft, Tether suspended trading, and stated it would roll out new software to implement an emergency "hard fork" in order to render untradable all of the tokens that Tether identified as stolen in the heist. Tether has stated that as of 19 December 2017, it has re-enabled limited wallet services and has begun processing the backlog of pending trades
A blockchain critic has raised questions about the relationship between Bitfinex and Tether, accusing Bitfinex of creating "magic Tethers out of thin air". In September 2017, Bitfinex and Tether published a temporary accounting document proving the reserve in response to this critic ; however, according to the New York Times, independent attorney Lewis Cohen stated the document, because of the careful way it was phrased, does not prove that the Tether coins are backed by dollars". The documents also fail to ascertain whether the balances in question are otherwise encumbered." The posted document itself, opens with the statement that "The undersigned have audited Tether Limited's Bank Confirmation and hereby certify that the balance amount set out in this letter are the true and complete balances
Tether.to was the first blockchain-enabled platform to allow traditional currency to be used like digital currency, allowing its customers to transact with fiat currencies across the exchange and blockchain without the relative volatility associated with digital currencies. Tether provides a secure platform that allows deposited US dollars, and soon Euros, Japanese Yen and other fiat currencies to be tethered and converted into a 1-to-1 backed digital currency called tether ₮. These currencies can be held in online/offline/mobile wallets, or easily sent peer-to-peer.
Tether is pegged to the United States dollar – it operates as a currency board, holding United States dollar in reserve and issuing a cryptocurrency token for each reserve dollar. The exchange rate is 1 Tether (USDT) to 1 United States dollar (USD$). Tether can be stored as value,[8] spent as a medium of exchange[30] and has a fixed unit of account like a traditional fiat currency.
Tether is not a legal tender currency or a financial instrument. The ownership of Tether has no contractual rights, other legal claims, or guarantees against losses.
Tether Limited is not a bank and is not required to, and does not, hold its reserves at the Federal Reserve. Tether tokens are not legal tender currency and are not covered by deposit insurance.
Tether does not operate[clarification needed] in countries and locales which do not regulate cryptocurrencies. Tether is not a legal tender currency
