Tether is a cryptocurrency developed as a proxy for the US Dollar i.e. the value of Tether is designed to be one dollar and can thus be used as a digital dollar. Some of the popular cryptocurrency exchanges use Tether as a dollar replacement on their trading platforms.
According to their site, Tether converts cash into digital currency, to anchor or “tether” the value of the coin to the price of national currencies like the US dollar, the Euro, and the Yen. Like other cryptos it uses blockchain. Unlike other cryptos, it is [according to the official Tether site] “100% backed by USD” (USD is held in reserve).
How does Tether work?
Tethers exist on blockchains through the Omni Protocol. The Omni Protocol is open source software that interfaces with blockchains to allow for the issuance and redemption of cryptocurrency tokens, in this case, “tethers”.
Tether Platform currencies are 100% backed by actual fiat currency assets in our reserve account. Tethers are redeemable and exchangeable and the conversion rate is 1 tether USD₮ equals 1 USD.
For a more detailed technical explanation of how the Tether Platform works, please download the Tether white paper.
Who can use Tether?
The main use for Tether is to enable businesses such as exchanges, wallets, payment processors, financial services and ATMs to duplicate the use of fiat currencies on blockchains. There are quite a few businesses in the digital currency ecosystem that have integrated tether.
View industry supporters.
Individuals can also create a Tether wallet or use tether-enabled platforms to transact with tethers.
There has been some controversy as both Bitfinex and Tether have experienced some issues with the banking system.
In April 2017, Tether underwent a cut to wire transfer services from Taiwanese banking partners and later that month it was international customers who found their wire deposits frozen. It seemed that the banking system is not supportive of the system of proxy fiat currencies.
Since April 18, 2017, all incoming international wires to Tether have been blocked and refused by our Taiwanese banks. As such, we do not expect the supply of tethers to increase substantially until these constraints have been lifted. For customers with bank accounts outside of Taiwan, we are diligently pursuing alternate funding channels. New banking corridors are in the process of being established, and we are speaking with integrators of USDT about the possibility of intermediate customer redemption processes. Until then, we are asking our customers not to send any additional incoming wires until we can provide a reliable method of receiving funds.”
Bitfinex and Tether filed a lawsuit against Wells Fargo, after the US bank refused to execute international transfers for the companies.
The lawsuit was dropped later without any official statements and there still seems some uncertainty surrounding Tether.
For more information – Read the Official Tether Website
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