Ok wait. Just a moment. What is Tether?
Please pardon me for my strings of crypto post recently. But let me simplify it, so what on earth is Tether?? Tether is a cryptocurrency that has the representation of 1 USD and "backed by a U.S Dollars held in the reserevs of the Tether Limited and can be redeemed through the Tether Platform" is used for transaction.
Using USD to buy USD..? What??
Now, it is said to be backed by U.S dollars held in the reserves of Tether Limited??
Please take a look at this:
Now here's a joke. The market capitalization of USD Tether is standing at $646 million, a 43x increment since January 2017. Which in another words, 630 million (43x) more USDT are created in this short duration.
To my knowledge, USDT are used in some exchanges like Bitfinex. A number of customers actually cashed out from their trades, and receive USDT instead of USD! The best part that I've not known anyone that has successfully cashed out from USDT!
This is Tether's response towards the issue mentioned above:
Incoming international wires to Tether have been blocked and refused by our Taiwanese banks?! On April 18 2017?! And the supply of USDT is still growing? Does it mean the issue had been resolved?
Or people are willingly pumping in money knowing that they won't be able to cash out? Wait. Or is this printing money out of the thin air?
Maybe their "Taiwanese Bank" has a really high interest and is offering 4300% interest rate for their deposits!! I don't know. But sounds really fishy here.
Fortunately, I have not been in any encounter with USD Tethers so far. However, I've find that this is a ridiculous joke in the crypto market. Why would anyone take USD to buy a representation of USD when all of the coins here can be represented by USD??
Printing money from thin air, then injecting it into other crypto to inflate the market capitalization of the coins? Many today are starting to realize this thing about USD Tether. Will Tether blow up? I don't know.
But should Tether blow up now, I do not think that the impact will be that big at this moment as $600m is actually a small sum in the crypto market. I don't think that it will be affecting the big coins much (Tho, I hope that it will actually cause the market to blow up!)
Let's assume that most of the Tethers are pumped into almighty big daddy Bitcoin and with BTC's market cap today is standing at $136.645 billion @ at price of $8,183, with a circulating supply of 16,698,075
BTC. If I were to strip 600m off it's market cap, it will barely shave anything off Bitcoin. The revised price after shaving 600m off BTC will stands at $8,144. Nothing much isn't it?
Now, let's assume only half of it is pump into some other coins. Let me take ZCash (ZEC) for example.At a price of $306.22 with a circulating supply at 2,688,006, it's market capitalization stands at 828m. Shaving 300m off it's 828million will mean that the price would be tumbling by 37%.
How about the other coins like DogeCoin with a market cap of 200m? Just half the tether in and evaporated, it will send them straight to hell!
So will a market crash because of Tether? I don't think so. But I actually believe that there is a chance. This is coupled with investors' mentality towards it. Once scared, everyone is rushing to sell their coins, worrying that their holdings/life savings will turn worthless soon and inevitably spark off a big sell down, just as how it's reflected in the multiple financial crisis! But well. That's just be 2 cents. Who knows? This is a completely different world we're in today, and this is the all-time-famous cryptocurrency yea? Maybe it's time for some taste and look into the dot com bubble?
For those holding USDT, the best way to cash out, is to change your Tethers to another coin (Bitcoin/Ethereum) and cash it our from the fiat-crypto exchanges.
Earlier this week, it's also announced that Tether got hacked and lost $31 million , just after GMGH's post on Tether.
Let's take a look what Tether is saying about it
"Printed" due to the demand. Alright. Blame me all you want :(
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