Is Tether (USDT) Trustworthy? – Bitcoin System

Tether As of today, it is the largest stablecoin with a market cap of $67 billion.

Representing 75% of the stablecoin market up to 1 year ago Tether Recently, this market has lost its dominance.

As of 2022, USDC, managed by the US company Center, made a significant attack and added some of Tether’s market dominance to its own household.

The biggest factor in this growth of USDC was its transparency policy. Because unlike Tether, the Center, which is responsible for the management of USDC, keeps 1 USD in a special bank account that is constantly monitored and audited for each USDC it issues. In this way, it is aimed to fix the price of USDC to 1 USD.

As the battle for market share between USDT, USDC and BUSD continues, investors are concerned about how reliable these stablecoins are.

Is Tether Trustworthy?

First of all, the fact that these stablecoins are pegged to 1 dollar does not mean that it is an immutable rule.

The largest stablecoin by market cap, USDT is not a decentralized currency. Behind it is the Tether company and this company provides its stability for 1 dollar.

Coins can provide trust with different parameters. Today, Bitcoin is powered by decentralization, while the real dollar is powered by the reputation of the US government. Private currencies also derive power from the companies behind them.

When you give your 100 USDT to Tether, it gives you 100 real dollars. As long as Tether provides this, 1 USDT will continue to be 1 dollar.

Tether If you can’t make this payment one day, your USDTs may lose their stability to 1 dollar and you may not get as much dollars as you deserve. We faced a similar picture in the LUNA collapse. (The mechanism used by LUNA and Tether to stabilize the dollar is completely different. The example here is given only to explain that the collapse can be experienced severely.)

When you buy USDT, you trust Tether and think that your USDT will be returned to you in the future. Apart from this sense of trust, there is no mechanism that can protect you against Tether.

Tether has been on the agenda of free USDT printing claims for many years. The investigation at the New York Attorney General’s Office on this matter was closed with a fine of $18 million, which Tether paid through compromise. However, in subsequent statements, the Attorney General’s Office reiterated the allegations that Tether was printing money for nothing and asked it not to operate in New York.

Although Tether has an independent auditor prepare quarterly reports and share them with its investors, it does not share the content of the investment instruments in these reports in detail.

For example, it is stated that some of the provisions are commercial papers, but what they are and Tether’s risk here is not disclosed. Again, if you can’t constantly monitor these reserves. This casts a shadow on Tether’s transparency.

In other words, if Tether sells all its assets (bonds, commercial papers, funds) that it displays as the equivalent of USDT today and allocates a small amount of liquidity to distract investors and disappears, there is no mechanism to warn us against this.

Therefore, even when investing in stablecoins in the cryptocurrency markets, it is useful to divide the risk and be selective. When you wake up one day Tether If the company disappears, your USDTThere won’t be a place where you can get your money’s worth.