Why is Tether considered a stable coin?

[JohnLocke]

I have reading around the forum that the crypto coin Tether is the most stable coin around the crypto market. I also read it in a few books about using crypto as alternative currency.

Now if I'm looking at Tether, Tether (USDT) price, charts, market cap, and other metrics | CoinMarketCap and see it is going up and down like most other currency so I don't understand why it should be considered stable?

 

[KJK]

Hmm funny question. Yes it is going up and down though usually in the $0.99 to $1.01 range. When the price goes too far away from the range, Tether/Bitfinex intervenes by buying or selling tether and thus maintaining the peg.

There have been some periods where there were huge doubts about how is tether backed, during those times tether was often 1 USDT = 0.97 USD or similar.

So Tether is behaving kinda like a central bank trying to maintain a currency peg, just like Danish krona (DKK) aims to maintain peg with the euro (EUR) by staying near 1 EUR = 7.46 DKK with a 2.25 % range. If the currency goes out of the range, central bank intervenes in the international forex market.

One more thing tether may be doing - and again behaving like a central bank - is running a fractional reserve. If all tethers were truly backed by fiat, they'd have to have a bank account with 4.65 billion dollars somewhere which is difficult (and even more difficult after some of their money was confiscated in Poland and the Caribbean).

There is a case ongoing in the USA related to this (Feds just seized part of Bitfinex’s ‘missing’ $850 million, arrest made | Modern Consensus.)

 

[Martin Everson]

Tether is a joke it used to claim 1 USDT to 1 USD. It is not even close to that and they admitted it. Some sites claim it is only 74% backed. However it is backed by garbage assets of their own and some USD cash. They were forced to change the 1 to 1 claim on their site after they got caught in the lie and they now give a more generic statement that it is backed by other assets including USD...lol. Avoid like the plague it will go pop at some point once reality sets into the holders.

--- quote from their site

"Tether is a token backed by actual assets, including USD and Euros. One Tether equals one underlying unit of the currency backing it, e.g., the U.S. Dollar, and is backed 100% by actual assets in the Tether platform’s reserve account. Being anchored or “tethered” to real world currency, Tether provides protection from the volatility of cryptocurrencies."

--- quote end

 

[7889]

As long as OTCs agree to exchange any amount of USDT to USD (and they do), i'm fine with it

 

[happyjohn]

What would you consider to be a stable and trusted ALT coin similar to Tether?

 

[7889]

What would you consider to be a stable and trusted ALT coin similar to Tether?

MakerDAO

 

[KJK]

Honestly MakerDAO (DAI and MKR) is a bit difficult to understand (MakerDao - Learn about Maker & Multi Collateral Dai) but I agree it is an alternative. Other similar coins are USD Coin (USDC) by Coinbase (USD Coin (USDC) - Stablecoin by Coinbase) or Trusttoken (TUSD).


They can be helpful if e.g. there is formal difference between selling to fiat versus selling/converting to another crypto - for tax and declaratory reasons. None of them are probably something you should trust 100% or hold long term.

 

[Martin Everson]

Other similar coins are USD Coin (USDC) by Coinbase (USD Coin (USDC) - Stablecoin by Coinbase)

Seems a more credible stablecoin provider than Tether.

None of them are probably something you should trust 100% or hold long term.

I have heard of people moving all their cash into Tether . I would rather skinny dip in a pool of piranhas before doing that.

 

[Bandito]

Makerdao and DAI is the only way to go, it's the only trustable stablecoin.

 

[blockchain4ever]

MakerDAO is the thing. What makes it different from the rest is that it is relatively trustless. USDC and TUSD are both based on trusting auditors. Tether is a fantasy, a sort of psychosis that still shows how gullible people in the crypto space are.

 

[Tax Cow]

Tether's value is a result of human micro-management, it's not substantiated by any technological innovation, so it's first and foremost a shitcoin.

But why is it a "stable" coin? It has held it's value against the USD better than GBP, EUR, YEN and other major currencies over the last few years. At least there's a small argument.

In summary, it's "a stable shitcoin". Good for quick AML-free transfers, even in low-margin business. But it's certainly not for long-term wealth storage. The reasons why are beautifully outlined in @KJK's post.

 

[JohnLocke]

Thank you for your replies it has been really helpful in order to figure out whether to use Tether or not. The alternatives mentioned i.e. MakerDAO and USD COIN and STABLECOIN looks like a better alternative which I will look deeper into.

 

[Elve]

Tether, the most capitalized stablecoin is a time bomb, in addition to being linked to bitfinex that are involved in murky issues:

Antonopoulos Writes to Judge Vouching for Law Team Suing Bitfinex for BTC Manipulation

Andreas Antonopoulos has filed an affidavit with a New York court in support of a firm looking to spearhead the class action against Bitfinex over 2017 BTC price manipulation

cointelegraph.com

Bitfinex Cries Fraud as Crypto Capital Executive Indicted by US

A look at the history of the mysterious firm Crypto Capital and its ties to Bitfinex as court cases brew

cointelegraph.com

I have never investigated this token, but there is also the EURS (stasis) as a stable currency in euros but which is not very well known and available on few platforms (dsx, globitex, and Hitbtc).

Stasis - Bridge to Web3 Finance Services for a new financial system

We have been providing a viable alternative to USD stablecoins in the digital asset space since 2018

stasis.net

If you have opinions about stasis, I am interested.

 

[nomad999]

Regarding the Tether stable coin, i wouldn't worry too much at this point, too big too fail now i would say.
Also to note is a lot of the fud came from the difficulties they had to deal with the banks and regulations as they were very early in the game.

A good alternative is Home | Paxos
They are regulated by NYDFS and their stable coins are 100% backed by USD held in US bank which are FDIC insured and can be exchanged 1 to 1 in their platform with no fees.
They also have a gold backed token.
Also Binance is using them for their usd stable coin.

Haven't deal with them yet but looks very legit and will probably switch from Kraken to paxos.

 

[Delaney]

"Regarding the Tether stable coin, i wouldn't worry too much at this point, too big too fail now i would say. "

This is a bold statement, they are basically Liberty reserve with a blockchain controlled by a central entity. Bitfinex & Tether sharing the same Holding company, they are under multiples investigations, and one of them is linked to a Cartel & shady shadow banking in Panama. I will go more far, i wouldnt even touch any stablecoin at this point.

 

[Delaney]

"Regarding the Tether stable coin, i wouldn't worry too much at this point, too big too fail now i would say. "

This is a bold statement, they are basically Liberty reserve with a blockchain controlled by a central entity. Bitfinex & Tether sharing the same Holding company, they are under multiples investigations, and one of them is linked to a Cartel & shady shadow banking in Panama. I will go more far, i wouldnt even touch any stablecoin at this point.

Sorry for the double post as i pushed the button too fast without speaking my humble opinion haha!

Well, regarding USDt (Tether) & iFinex/Bitfinex operators:
a) USDt represent almost 60-80% of the entire volume pairing spot vs the €/$ fiat spot is so tiny that even a children could notice the ridiculous of this situation.
They are playing the apprentice bankster and here how:
b) They are wash trading and spamming/listing on obscur unregulated exchanges, it permit them to run an absolute monopoly driving the price up/down as a tool for liquidating traders on margin + sustaining the price.

It's a massive fraud. USDt is basically Liberty reserve on blockchain, and regulation will make a good example with them.

Source: NYAG, Governement of Polland, Governement of Portugal, Governement of Panama ( You can google it!)

 

[Martin Everson]

Wow Liberty Reserve that brings back memories. Back in the day them and e-gold is where everyone in the scene flocked too. Both killed by US.

Anyone here still using Tether deserves to lose money. They cannot say they were not warned

 

[Delaney]

Wow Liberty Reserve that brings back memories. Back in the day them and e-gold is where everyone in the scene flocked too. Both killed by US.

Anyone here still using Tether deserves to lose money. They cannot say they were not warned

Indeed, i couldn't said it better. Lets see if in future we see a better way to transact, mixing a perfect synergy between Offshore & Crypto currencies.

 

[maureen lewis]

Tether is a stable coin, whoes value is pegged to that of US dollar. 1 USD= 1USDT,The value of USDT can sometime fluctuate by a few decimal points due to demand but its price is never that far away from $1 mark. That's why when there is much fluctuation in the crypto currencies, Investors usually prefer to go for stable coins.

 

[JohnLocke]

Reading between the lines it is not TETHER we should put all out crypto money into, thank you all to post your thoughts in this thread