What is Tether (USDT)? Full guide on the most stable coin

Tether (USDT) is a cryptocurrency that supports virtual internet payments and is … Coins like Tether that serve the purpose of being stable currency …

What is a Tether coin?

That’s the most common question many cryptocurrency investors ask themselves when they come across the coin for the first time. Tether (USDT) is a cryptocurrency that supports virtual internet payments and is pegged on the American dollar.

It is essential to understand that USDT coin is by far the most stable cryptocurrency with its value at an almost stagnant position of about one dollar, unlike other currencies that rapidly decrease and increase in value over time.

Coins like Tether that serve the purpose of being stable currency replacements on the internet are known as stable coins.

Brief history of Tether

Tether was first brought into the market in the year 2014 after re-branding from Realcoin. Realcoin is what laid the foundation for the creation of the Tether existing today and was founded by Craig Sellars, Brock Pierce, and Reeve Collins.

The main aim of Realcoin founders was to provide people with a cryptocurrency that would have a direct 1:1 ratio with common currencies such as the US dollar so that it could facilitate international internet payments.

Unique features of USDT coins

Just like most cryptocurrencies, Tether has some specific and unique solutions it brings to the crypto community. Below, we shall outline a few of these solutions.

Image result for advantages and disadvantages of tether
  • USDT Supports cross-currency transactions; unlike other cryptocurrencies which are usually limited to exchange with the same currency, you can easily use Tether to transact with US dollar, Euros and the Japanese Yen.
  • Tether is highly stable; this crypto coin has high stability in the cryptocurrency market. The USDT is pegged on a single US dollar, and the value does not change or will not change any time soon.
  • USDT is one of the few coins that actually tether ‘real world’ currencies to digital currencies. The other two coins that support the same are Nubits and Timekoin.

HowTether works

Just like many other cryptocurrencies, USDT also exists on the blockchain running on an Omni protocol layer. The Omni protocol layer is a software that works with blockchains to facilitate the transfer and redemption of Tether coins.

Image result for usdt tether

The blockchain technology completes USDT transactions just like other cryptocurrencies such as Bitcoin and Dogecoin. Also, USDT coins are usually issued by Tether limited.

USDT’s stability is brought about by the fact that it was created to use the Bitcoin blockchain technology in its inner core which is by far a very secure and stable blockchain.

It is important to note that over time, USDT has accepted the Ethereum transport protocol which now makes it possible to transfer Tethers into any Ethereum address directly. However, Tether users are cautioned to be very careful when making the transfers so that one does not end up sending his/ her USDT coins into a Bitcoin destination address instead of an Ethereum address.

You can easily exchange your Tethers on common exchange sites such as Kraken, shapeshift, Bitfinex and GoCoin.

Image result for tether stability

Advantages of Tether

  • Transparency of the stable coin

Transparency is by far the most importantbenefit of using Tether coins; openness has made it easy for people tounderstand how it functions, sells and is regulated. Many people tend not toinvest in cryptocurrencies because of the complex nature and non-transparentnature of the market.

Unlike other coins, one Tether is equivalent to one common currency such as USD and the Yen. Therefore, an investor will invest knowing the actual value of the coins he/ she is buying and that the value will not change anytime soon.

With most coins, investors are not certain of what the price of their coins will be in the future since most cryptocurrencies undergo rapid price fluctuations which makes it a risky investment.

In 2017 for example, we saw Bitcoin increase in price by over $1,000 within a few hours and also drop several hundreds within a short period.

Additionally, the company managing USDT usually shares all transactions related to tether which reaffirms the confidence people have in tether.

  • Safety of the stable coin

As stated earlier, Tether runs on the bitcoin network which has high-security measures compared to most new platforms. Therefore, Tether users can trade safely knowing that their money has been stored safely. It is also widely known across cryptocurrency communities that it is difficult to break into the blockchain technology.

  • Low volatility of the stable coin

(Chart showing the stability of the USDT)

The general perception of people about the cryptocurrency market isthat it is a highly volatile market associated with great risks (this has beenbrought about by many factors such as negative publicity created by governmentsand media, rapid price fluctuations, etc., but this is a topic for anotherday). The negative perception has made it hard for many people to invest inthis market.

However, with the USDT, there is no such volatility. The value of tether is always fixed at one US dollar regardless of the market situations.

  • Quality of customerservice at Tether limited

Tether limited has highly skilled and professional customer care agents to serve Tether traders. Their services are usually available for 24 hours throughout the week which makes it convenient for traders to get help at any time. However, the team currently serves English speaking traders, but plans are underway to include other languages.

Set backs of USDT

While Tether brings much into the crypto space it is, however, good to point out that the profits associated with investing in the tether market are minimal if any, and thus people that wish to gain money from the cryptocurrency world should avoid investing in Tether. Once you make the purchase of Tether coins for one dollar, you are not going to sell it any higher price because already its value is fixed at that one dollar.

The primary purpose of the stable coin is to preserve currencies and purchase other Cryptocurrencies when need be and not for direct profit making.

Also, there are unconfirmed allegations that the stable coin is being used to manipulate the price of Bitcoin

Furthermore, though it is said to be secured, the stable coin reportedly lost over $31 million the past to hackers.

Lastly, USDT is considered to be controversial because it has not been able to provide audits it had promised to release showing the reserves backing it.

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ETH Slips Out Of SEC Net, For Now

SEC Chairman Jay Clayton has personally weighed in on the debate over when a digital currency is classified as a security. This is significant for the …

SEC Chairman Jay Clayton has personally weighed in on the debate over when a digital currency is classified as a security. This is significant for the adoption of cryptocurrency because if/when the security designation is applied to a particular digital asset or an initial coin offering (ICO), the SEC’s registration and disclosure requirements kick in, and the SEC’s Enforcement Division will come down hard on violations.

Clayton sent a letter outlining his views to US Congressman Ted Budd (R-NC) after Budd, along with the nonprofit advocacy group Coin Center, requested clarification.

The big news is that Chairman Clayton underscored the validity of the Howey Test and the way in which it can serve as the definitive field trial. As reported by ETHNews last summer, the SEC’s William Hinman, director of the Division of Corporate Finance, pointed to the Howey Test, first developed in 1946, to determine if a project falls under the guidelines of an “investment contract, which is a particular type of security that includes some token offerings.”

Clayton said he is on board with Howey, which does provide useful guardrails:

“I agree with certain statements concerning digital tokens in Director Hinman’s June 2018 speech. I agree that the analysis of whether a digital asset is offered or sold as a security is not static and does not strictly inhere to the instrument. A digital asset may be offered and sold initially as a security because it meets the definition of an investment contract, but that designation may change over time if the digital asset later is offered and sold in such a way that it will no longer meet that definition.”

So, it depends on who, when, and how, with decentralization a key factor.

The SEC applies tests developed through case law, including Howey. Clayton said in his letter:

“As those cases explain, the ‘touchstone’ of an investment contract ‘is the presence of an investment in a common venture premised on a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.’ The determination of whether a digital asset is an ‘investment contract’ depends on the application of Howey and its progeny to the particular facts and circumstances of the digital asset transaction.”

Clayton gave an example: When investors (who have pooled assets to contribute to funding a project) no longer expect a developer (or group of developers) to carry out managerial or entrepreneurial efforts, their investment may no longer be considered a security.

Think of it this way: If you fund the production of a Broadway show and expect to receive a handful of prime-seat tickets as part of the deal, you are an investor because you expect to profit from your investment if the show is a big hit. The prime seats are just the cherry on top. But if you sell the tickets, those are not securities transactions.

In a speech earlier this year, crypto-friendly SEC Commissioner Hester Pierce addressed the issue and referred attendees to a report published by Coin Center, which describes its own report as follows:

“This report, originally published in 2016 and updated in 2018, presents a framework for securities regulation of cryptocurrencies – e.g. Bitcoin and derivative projects or ‘alt-coins.’ The framework is based on the Howey test for an investment contract as well as the underlying policy goals of securities regulation. We find that several key variables within the software of a cryptocurrency and the community that runs and maintains that software are indicative of investor or user risk.”

Coin Center stated that larger, more decentralized cryptocurrencies (e.g., bitcoin), pegged cryptocurrencies (e.g., stablecoins), as well as distributed computing platforms (e.g. Ethereum) do not easily fit the definition of a security and also do not present the sort of consumer risk best addressed through securities regulation. Coin Center added, “We do find, however, that some smaller, questionably marketed or designed cryptocurrencies may indeed fit that definition.”

Note that in his letter to Budd, SEC Chairman Clayton made no direct reference to Ethereum. Still, some in the crypto press have jumped on the Budd letter to imply that Ethereum is forever out of the SEC’s registration reach. More will no doubt be reported on this topic in coming months.

Meanwhile, it’s best to remember that the SEC is not out to get crypto. It is just doing its job: Protect the markets and individual investors. The spirit with which it carries out this mission is deeply rooted in the legacy of the Great Depression of the 1930s, which tore the country apart. Crooks, scoundrels, and grifters had gone to town, and the result was a travesty that took a world war to change.

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‘Ethereum is Not a Security’, Said the Pied Piper of Hamelin

SEC Chairman, Jay Clayton had sent an official letter to the United States Representative, Ted Budd regarding the ‘application of federal securities to …

SEC Chairman, Jay Clayton had sent an official letter to the United States Representative, Ted Budd regarding the ‘application of federal securities to digital assets.’ The uncertainty over cryptocurrencies being classified as investment security has kept the minds at SEC occupied from a long time.

For SEC, Investor’s Security Comes First

Meanwhile, Clayton noted that the SEC has successfully curbed down on the illegal and immoral ICOs that was prevalent during 2016-2017.

The Divisions of Corporation Finance, Investment Management, and Trading and Markets had issued a statement in November 2018

The Commission has brought a number of actions involving offerings of digital asset securities. To date, these actions have principally focused on two important questions.

First, when is a digital asset a “security” for purposes of the federal securities laws? Second, if a digital asset is a security, what Commission registration requirements apply.

Jay Clayton reaffirmed in the letter that thorough analysis of a digital currency or asset will be made by the Departments at the SEC.

—regardless of the terminology used to identify the digital asset—will depend on the facts and circumstances, including the economic realities of the transaction.

Conditions To Not Being Classified As a Security

The necessary and sufficient condition for any digital asset to ‘not’ be classified as ‘security’ is its autonomy and decentralization. The hopes of the token holder must reside with the efforts of the entire community and not with a particular set of people.

Clayton mentioned that digital currency’s definition as a particular asset class could change with time. Therefore, a cryptocurrency released as ‘security’ can later be exempted from the Securities Exchange Act after it achieves autonomy.

In the letter he said,

I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract if, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstances, the digital asset may not represent an investment contract under the Howey framework.

Hence, when the conditions are applied on Ethereum, the following can be proposed:

Ethereum has achieved a high level of decentralization through a fair and open distribution of Ether (ETH) tokens. However, the hopes of the Ether (ETH) holder currently reside with the Ethereum Foundation’s successful implementation of the Serenity Update. The expectations of the token holders rest with Vitalik Buterin and the Ethereum Foundation. Therefore, Ethereum might still be classified under ‘security.’

The cryptocurrency media publications have announced that ‘Ethereum is not a security.‘ However, a clarification came from the Executive Director of CoinCenter who clarified that the headline was not appropriate. The publication has confirmed on changing their title.

Some folks interpreted the headline on my post earlier today to mean Clayton said explicitly that ether is not a security. Not what we meant and have changed headline accordingly. He agrees with Hinman’s method of applying Howey (which concluded ether today is not a security).

— Jerry Brito (@jerrybrito) March 12, 2019

Summary
Article Name
‘Ethereum is Not a Security’, Said the Pied Piper of Hamelin
Description
SEC Chairman, Jay Clayton had sent an official letter to the United States Representative, Ted Budd regarding the ‘application of federal securities to digital assets.’ The uncertainty over cryptocurrencies being classified as investment security has kept the minds at SEC occupied from a long time.
Author
Nivesh Rustgi
Publisher Name
Coingape
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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Forte and Ripple launch $100M fund to spark blockchain games development

These two games also provide a way for players to pay real money into virtual economies, creating a real-world value for virtual currency and items.

Forte Labs Inc., a provider of distributed ledger blockchain technology for the gaming industry, and Ripple Labs Inc., a cryptocurrency payments company, today announced the launch of a $100 million fund to support game developers.

The fund will tie together Xpring, Ripple’s developer ecosystem, and build atop Forte’s blockchain platform using open-source developer solutions in a bid to accelerate the mainstream adoption of blockchain technology for gaming applications.

“Blockchain technologies’ key innovations unlock vast potential for nearly all forms of digital interaction,” said Brett Seyler, chief platform officer at Forte. “Gaming is a $140 billion global industry driven predominantly by digital micro-transaction economies, which we believe will benefit immensely from the integrity and resilience of blockchain technology.”

Blockchain technology has the potential to help game developers create more efficient, more transparent and more secure gaming economies by decentralizing trust in underlying transactions.

It does that by creating a massively distributed ledger of transactions that is at the same time cryptographically designed so that it becomes difficult to forge past activity. The history recorded into the blockchain — be in real-money payments, in game currency activity, virtual item trades or a myriad of other economic activities — becomes an auditable point of truth that can be used to verify past transactions.

Massively multiplayer online games such as “World of Warcraft” and “Guild Wars 2” support millions of players, each of whom transacts with the in-game economy on a regular basis. These two games also provide a way for players to pay real money into virtual economies, creating a real-world value for virtual currency and items. That means faults and fraud that affect the in-game economy can have a substantial impact on game publisher revenue.

The trend for multiplayer gaming has been moving from selling games by the box, with a price tag, to releasing games with what is called a free-to-play model. The game publishers make money from selling virtual items for real money.

With Forte’s blockchain platform, free-to-play game developers gain support for a system that would provide a template for automated, distributed and secure economies. The tamper-proof mechanism of a blockchain ledger would also help reduce potential fraud, detect the exploitation of bugs that lead to the inflation of in game currency (such as item duplication) and keep things running smoothly in a game.

“Both Forte and Ripple have a shared belief that blockchain technology will have a massive impact on games,” said Ethan Beard, senior vice president of Ripple’s Xpring. “Providing tools that are easy-to-use, chain agnostic and interoperable is a necessary step in driving scale consumer adoption.”

Multiplayer games with their own internal economies from the same publisher also have a different problem: It’s difficult for traditional systems to mix separate economies. For example, moving value between “World of Warcraft” and “Diablo III” (pictured), both published by Blizzard Entertainment Inc., is possible but not easy. Many players do it by finding one another on forums or social media and exchanging virtual items between the games — or sometimes for money, although this is against the terms of service for both games.

To ease the exchange of value among separate game economies, which would be on different blockchains, Ripple’s open-source Interledger Protocol with XRP — the underlying currency Ripple uses to settle payments — will act as the layer through which currency and item pair trades are executed. The protocol will also use the container-based hosting solution Codius to support seamless transaction exchanges between blockchains.

By focusing on cross-channel interoperability, Forte expects that large multigame publishers will be able to put these systems to immediate use. The idea is to allow publishers to maintain interest by customers who move between numerous games, so they don’t feel trapped in one title or feel the risk of abandoning virtual valuables for a more trendy game.

For Forte and Ripple, that means developers adopting blockchain technology will be able to build more sustainable, long-term relationships with customers that remain persistent across entire gaming ecosystems. In turn, that should help break down the walls within “walled gardens” and promote social economic activity between players. “The industry needs solutions that can support these economies at scale with cross-chain interoperability,” said Seyler.

The inaugural fund, managed by Forte, will seek out developers that operate in game economies with more than 50,000 daily active users and have an interest in implementing blockchain technology to automate those economies.

Allen Ma, vice president of partnerships at Forte, said the company is actively seeking “developers who are running live game economies with tens of thousands of daily active users or more and have an active interest in using blockchain technology to improve their business.”

Photo: Blizzard

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Facebook’s New Version Of Bitcoin – Not A Lot To It Really

But it’s not really going to be crypto, the Bitcoin-like parts, which make it so. This is … Facebook’s cryptocurrency: a financial expert breaks it down.

Facebook is said to be preparing a new crypto. Essentially, to cash in on the remittance market. The ability to send money internationally, something that can often be remarkably expensive. It might well arrive and it could even be useful. But it’s not really going to be crypto, the Bitcoin-like parts, which make it so. This is much more about being able to side step some of the regulatory issues over money transfers. From The Conversation:

Facebook’s cryptocurrency: a financial expert breaks it down

Facebook is reportedly preparing to launch its own version of Bitcoin, for use in its messaging applications, WhatsApp, Messenger and Instagram. Could this “Facecoin” be the long-awaited breakthrough by a global technology giant into the lucrative market for retail financial services? Or will it be yet another exaggerated “crypto” project, buying into the continuing excitement about decentralised peer-to-peer exchange but, in the end, not delivering very much? Time will tell, but my two decades of research into the economics of payments makes me sceptical.

We know little about Facebook’s plans. So far there is just one company statement about a new group set up to look into cryptocurrencies reported by Bloomberg: “Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.”

Some investigative journalism from Bloomberg and the New York Timesreveals a little more. Facecoin (and the similar “Gram” cryptocurrency being developed by the privacy focused messaging app Telegram) will apparently be a “stablecoin”. Rather than having a fixed amount of currency that fluctuates in price, depending on demand, Facecoin will have a fixed price and the amount of it in circulation will vary. So unlike Bitcoin it will not be a vehicle for speculation.

What will the fixed price be? Bloomberg reports it will be fixed against the dollar. The New York Times says that it will be against a combination of dollar, euro and yen. Who will use it? Facebook is apparently focusing on providing a technology solution for the large and lucrative remittance market for payments into India. Will transactions in Facecoin be anonymous like those in Bitcoin? No, they will be associated with Facebook accounts, so they won’t be an easy means to avoid laws and regulations.

Reasons to be sceptical

While this is a fascinating development, some scepticism is in order. If there is one common feature to the many hundreds of crypto and blockchain finance projects announced over the past four years, it is exaggerated early claims. In one ongoing research project, I have found that of 103 projects announced since 2015 applying so-called blockchain technologies to financial services, all but a handful have quietly disappeared. None have yet been taken through to commercial-scale launch (although around half a dozen may achieve that by 2021).

Is there anything about Facebook’s plans to suggest a different outcome? The obvious parallel is with the Chinese payment solution WeChat Pay, globally the largest mobile and internet payment solution used by “900 million active users”. In Beijing and Shanghai “even beggars have QR codes” that allow passers by to scan and give them money using their smart phones. The integration into the WeChat messaging system is what gave WeChat Pay the critical mass to achieve widespread acceptance. Facecoin’s integration with WhatsApp and other Facebook services could support a similarly rapid take-off.

Tina Kanagaratnam@TMK_TinaManiK

Even Shanghai’s beggars take WeChat payments. I gave to the fellow sitting on the ground, and his mates whipped out their QR codes. As ever, Shanghai is the future.

3,172 people are talking about this

But WeChat Pay doesn’t involve cryptocurrency. It uses established server technologies to enable people to transfer money in and out of conventional bank accounts as well as to other users.

The New York Times reports, rather surprisingly, that Facecoin (unlike WeChat Pay) will be based on integration with cryptoexchanges, which trade conventional money for digital currencies, rather than with the conventional banking system. But given that cryptoexchanges are coming under increasing regulatory pressure because of their lack of transparency and irregularities in how they operate, linking with them is hardly likely to encourage people to adopt Facecoin.

It is also difficult to make sense of the intended use of Facecoin for remittances. Major banks already send dollars virtually instantaneously and costlessly from one country to another. Costs and inefficiencies arise in the final mile when converting funds to local currency and allocating them to a local bank account or for cash collection. The Facecoin technology will do nothing to address these problems.

Who pays out?

Another question mark is about the backing for Facecoin. Unlike Bitcoin, which is not pegged to any other currency, Facecoin will need the backing of real money to maintain its fixed price. The safest approach will be full reserving: for every $1 of Facecoin issued, Facebook could hold $1 of reserves in a segregated account.

Fractional or partial reserving is also possible but who then guarantees the safety of those reserves? If reserves do not cover withdrawals, who is then responsible and what compensation is there for holders of Facecoin? Facebook would need a banking licence and subject itself to the full burden of banking regulation. Ideally, reserves would be held with a central bank. But central banks will be reluctant to support a private currency.

Perhaps the biggest reason for scepticism comes from the challenges Facebook already faces over user data, privacy and authenticity. If Facebook takes as big a role in daily payments as it already has in personal communications and social media, then it will become an even bigger target for the growing anti-trust movement that seeks to break upthe tech giants.

Fundamental change is possible. Cryptocurrency technologies could be used to eliminate the instability of fractionally reserved banking. But this will have to be through a state currency replacing fractionally reserved bank transaction accounts and not through a private currency.

It would probably be wiser for Facebook to outsource Facecoin to an established international bank. But then, of course, this wouldn’t be such a major disruption of established financial services.

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