It is evident the creation of Tether’s USDT tokens has always been considered rather controversial. Every USDT in circulation represents one US dollar. One would expect the Federal Reserve to oversee the issuance of such pegged tokens, rather than a company known as Tether. So far, there has been no negative backlash, although it may only be a matter of time until the US government decides to pay closer attention to this particular project. It doesn’t seem as if Tether violates any regulations, though.
What has most enthusiasts concerned, however, is that the USDT supply is increasing very rapidly. A few weeks ago, daily “prints” of 10 million USDT were not all that uncommon. It seems Tether has ramped up production quite significantly, as it issued an additional 400 million USDT this week alone. That is a very steep amount of currency being brought into circulation. As long as the company has the financial assets to back these tokens, there is no cause for concern. So far, we don’t know if that is the case, which fuels even more speculation.
Thanks to its increasing rate of issuing new USDT, Tether has reached a major milestone. With over 2 billion USDT in circulation at the time of writing, there seems to be an endless supply of these tokens. The company also recently announced that its USDT tokens now exist on the Ethereum blockchain as well, which may explain the sudden increase in demand. Whether or not this is a driving factor has yet to be determined at this point.
One thing a lot of cryptocurrency users have pointed out in recent months is that new USDT tokens are always printed at “convenient” times. When the Bitcoin price faces major adversity, Tether brings more currency into circulation than it would otherwise. When the Bitcoin price rises, it will issue USDT in order to keep the trend going. This all sounds like a major conspiracy, as no wrongdoing has been proven to date. However, there seems to be no such thing as coincidence in the cryptocurrency world these days. People are suspicious by nature, and it’s only normal they would voice such concerns publicly these days.
Whether or not Tether’s recent “milestone” is a good thing remains to be seen. Given the negative focus on this company prior to this event, it is very likely it will receive even more negative press because of this development. At the same time, if the company simply is succeeding by legitimate means, there is absolutely no cause for concern. Given that there is no arbitrage opportunity with Tether, or any chance of it appreciating in value, it remains to be seen where this demand for USDT is coming from. One USDT will always be valued at approximately US $1, although there has been a 7% discrepancy in the past. Only time will tell whether or not this is all on the up-and-up, but for now, no one can fault Tether through anything other than circumstantial evidence.
Thanks for the post.
This poses a few questions. The coin isn't backed by USD, it's tethered and we see in high volatility across the crypto market, the value against USD wavers.
The currency has 2 billion in circulation you say, that's some way off the 1.2 trillion USD that is available, so the answer is right there, it's probably UNDER valued if it is truly tethered.
But we need to move beyond fiat and look at tether for what it SHOULD be and that's a stable coin in a choppy sea. I'm sure most of us that trade coins just want a safe haven when things go south. Both BTC and ETH are too volatile, as many of us that have been checking portfolios over the past week can attest!
This also brings up the question of BTC being the base currency against all others are traded. Maybe once upon a time this held true as it was the 1st gen of coin, but with it's future is somewhat of a question mark, can it really continue to be the base currency, or is that job best suited to something more stable against fiat (which, until we get to futuristic age where crypto is a defacto currency across the board, we will always measure the value of crypto against fiat) and USDT, if the inflation/deflation is kept in line against fiat, should fit the bill perfectly.
I see bright things for USDT, we are rightly skeptical though, but since we removed the gold standard USD isn't backed by anything, but we have ultimate trust in that.
Interesting times!
Great read, Always felt funny about tethers and never too keen to use them. but they are here and serving the purpose they are meant for.
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