What Is Tether?
Tether is a USD-pegged stablecoin. Tether, otherwise referred to as USDT accounts for around 57% of all transactions from fiat currency to Bitcoin according to Investopedia.
It is also the #4 ranked cryptocurrency by market cap according to Coingecko with a cap of around 58.2 billion USD.
The point of Tether and stablecoins like it is to bridge the gap between the worlds of fiat and cryptocurrency. Every Tether token is supposed to be backed with 1 USD or fiat equivalent of one of these four fiat currencies/gold: USD, EUR, CNH, XAU
Is It Trustworthy?
Well when I first began writing this article, I was planning on telling you that it is not trustworthy. There can't possibly be accountability measures to make sure all of their tokens are backed by fiat. With so many alleged hacks and breakdowns on their end, along with being accused by the New York Attorney General of hiding 850 million USD in losses, I figured there must have been some shady business going on.
With that being said, I don't know anymore.
They publish their balance sheets and update them on a 'daily basis' to provide transparency to token holders here: https://wallet.tether.to/transparency
However, this is also in their terms of service:
The composition of the Reserves used to back Tether Tokens is within the sole control and at the sole and absolute discretion of Tether.
Now whether or not this statement is solely for liability purposes, it does reinforce the fact that nobody really has the right to these transparency reports; rather, they are offered as a sort of sign of good-will.
This is also in their terms of service:
JURY TRIAL WAIVER: TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING OF ANY KIND WHATSOVER ARISING OUT OF OR RELATING TO THESE TERMS OF SERVICE OR ANY BREACH THEREOF, ANY USE OR ATTEMPTED USE OF THE SITE OR THE SERVICE BY YOU, AND/OR ANY OTHER MATTER INVOLVING THE PARTIES.
So as I said, I am not quite sure how to feel about Tether as a company. This ambiguity has also led me to be a little skeptical of whether their reserve numbers are accurate. It appears to me like they may have positioned themselves to avoid liability at extreme levels. This is not to say they don't just have a great lawyer. What I am saying is, it is not quite clear whether or not this group is to be trusted.
Conclusion
If you truly believe that Tether has upwards of 59 billion USD equivalent of value in their reserves, then there is little to worry about here. To me that seems like a lot of money to keep on reserve, but it is being done in other sectors with no issue.
This article is not insinuating that Tether is doing anything wrong at all, but rather just offering some information that is clearly (or not clearly) listed on their website to provide some thought-provoking interpretations of their business.
Let me know what you think about Tether and whether or not you trust them. I currently think that the USDT is a very important token and I think we should all collectively know what we are getting into.
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My name is Rob and I am a college student doing my best to get involved in the crypto world. I have enjoyed blogging thus far and thank you for reading my article! Give me a follow and let’s build the community together through consistent engagement.
