The Summary

The idea behind Tether is to create a Non-Volatile token in blockchain as a medium of exchange between individuals and organisations. Tether aims to keep cryptocurrency valuations stable. Tether is pegged to fiat currency dollars so as the value of the token remains stable. Tether uses the advantage of blockchain technology and uses a cryptographically secured global ledger as its financial system. Tether was the first to be termed as the stablecoin and each Tether token would be backed by a US dollar. Tether is the first bitcoin-based fiat-pegged cryptocurrency in the market.

The Problem

The use of cryptocurrency as a medium of exchange is critical due to the highly volatile nature of tokens in the industry. Converting a crypto asset to fiat requires banking interference and hence the process is usually slower and not suitable for business transactions. It impairs transaction costs and increased delays due to the involvement of banks and financial institutions in the process. Tether is considered a truly stable instrument for storing value. High Volatility and convertibility between fiat and cryptocurrencies are the major problems Tether is built to solve.

The use of fiat currencies in exchanges is vital to trading digital assets and it requires banking integrations. Exchanges are platforms used to buy and sell cryptocurrencies. Working with the banks to coordinate compliance, security and build trust is a crucial factor. Time delays in international wire transfers and unfavourable currency conversion fees are the major setbacks in the current system.

The Solution

• Created a decentralised currency that works on a blockchain network to provide a p2p, decentralised and cryptographically secure environment
• Tether is designed to connect the gap between fiat and cryptocurrencies in the market to offer stability and transparency
• The Tether can be integrated with payment channels to accept crypto as a mode of payment and avoid volatility issues
• The price spread is a major issue when buying and selling a huge quantity in crypto exchanges, but Tether is always pegged to the value of the US dollar
• Tether also avoids market risks during black swan events and mitigates price risk
• The high liquidity of converting fiat to cryptocurrency is made effective using Tether
• Tether eliminates the need to deposit and withdraw Fiat in exchanges to buy and sell cryptocurrencies, thereby reducing the transaction charges to users.

The Team

Tether was founded by a group of Bitcoin enthusiasts and early adopters, passionate about facilitating the use of fiat currencies as a digital asset.

JL Van de Velde - Chief Executive Officer

Claudia Lagorio - Chief Operating Officer

Giancarlo Devasini - Chief Financial Officer

Stuart Hoegner - General Counsel

Paolo Ardoino - Chief Technology Officer

Leonardo Real - Chief Compliance Officer

Tokenomics

Tether uses a simple way to manage the tokens in circulation. The value of Tether is retained by pegging it to the fiat currency fund backed by Tether’s reserves. USDT is collateralized by the dollar in a 1: 1 ratio. The stability of USDT is managed by maintaining its value as USDT = $ 1 always, with small fluctuations.

Roadmap

There is no roadmap provided in the whitepaper.

CONCLUSION

Tether tokens are the most widely adopted stable cryptocurrencies in the market. They have pioneered the concept of the fiat-pegged digital asset. Considered a disruptor to the current financial system, the Tether is one of the most traded tokens by volume. Individuals use Tether to arbitrage in the crypto market. Merchants adopt Tethers for the consumers to purchase products and services. Exchanges use Tether tokens as a market to trade against other digital assets. Adoption and usage of Tether in the crypto space have proved it to be a modern approach to money.