After the first inauguration of cryptocurrencies in 2009, they formed many new facets in the later years. Tether is one of the first cryptocurrencies and a stable one. The base for tether coin is Mastercoin or Omni. It has a specialty of fiat-collateralized stable coin concept that provides users with the benefit of trading in the Bit Index AI and other crypto exchanges with reduced risks. The issuance of Tether is primarily on Bitcoin and Ethereum.
In this article, we will briefly discuss about the history of Tether.
History of Tether
In 2014, the creation of Tether had the basis of Omni or Mastercoin. At the same time, its token distribution started in 2015. The main reason behind the development of Tether was to resolve two significant backlashes in cryptocurrency trading, the high volatility of the crypto market and the easier transition between fiat currencies and cryptocurrencies.
The cryptocurrency of Tether has a power of US-Dollar deposited in banks with a ratio of 1:1. Therefore, the value of Tether is always around 1 USD. Compared to other cryptocurrencies like Ethereum, a single tether coin equals 20 Ethereum coins. At the same time, it uses the Omni protocol, which is the base of Tether, to compare with Bitcoin.
The primary users of the Tether tokens are the crypto exchanges, as it enables them to operate without interacting with external banking that may cause delays in transactions and other setbacks on these exchanges. These exchanges include BitFinex, Kraken, Binance, Coinbase, OKEx, and others.
The operations of Tether tokens exist in a decentralized format. The British Virgin Islands-based company behind the creation and redeeming of these tether tokens is Tether Limited. It is a sister company to BitFinex exchange as both share the same parent company of iFinex Inc. Tether Limited is the company responsible for maintaining the US-Dollar-based Tether token at a ratio of 1:1.
In 2019, tether has traded more volume as compared to any other cryptocurrency trading volume.
Tether has been subject to controversial stories since its creation back in 2014. It was a continuous controversy as the audited financial statements disclosed a lack of financial reserves that can reflect the actual worth of USDT. It is a part of Tether’s history. The absence of relationships with banks might make it suspicious in financial terms. Recently, Tether ended the controversy by providing details of banking partners in 2018.
Later in 2019, Tether announced the shifting of backing power from US-Dollar deposits to reserves that may include conventional currency, commodities, and assets referred for value worthiness.
Currently, Tether depends on the circulating tokens to match the assets in reserve. A practice called Proof-of-reserves. It requires timely financial statements of auditing by third-party auditing firms to ensure the presence of an ample amount of US-Dollar equal to the available tokens.
The sole entity that can change the circulation of Tether tokens is Tether Limited. The token issuance is regulated in a way that uses deposit fiat currencies into bank accounts of Tether Limited, and in exchanges, Tether limited issues tokens. Tether Limited eliminates these redeemed tokens when users withdraw funds for the tokens bought to avoid any foul trades.
In November 2017, an unexpected event took place. Almost about $31 million USDT tokens were embezzled from Tether. The matter was indeed handled by the Tether entity, however, they were unable to trace the theft. The trading was deferred and postponed and a strategic scheme was meant to follow and form an emergency hard fork to recover all the identified stolen tokens.
In December 2017, Tether Limited announced the reinstatement and return of digital wallet services and the remaining trades. During this time, Tether could not meet all the appeals for withdrawals as initially promised. But later on, they recuperated efficiently and became the running cryptocurrency once again.
The crypto market is ever-evolving and it is already a mystery to new users. A brief history is a requirement for many individuals as they continuously fail to analyze cryptocurrency. Before investing in Tether, it is mandatory to understand its history and operations to derive the best results. The relation of cryptocurrency to fiat currency reflects these blockchain securities’ existence and stability. Tether became the bridge between traditional and latest digital currencies as it offered the best of both worlds.