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Tether Explained Last Updated: 1st November 2018 Given the recent speculation that has surrounded Tether, I thought it would be appropriate to take a detailed look at what exactly Tether is, and why it has become so integrated in the cryptocurrency eco-system. It has become very common place for people to talk about the token without fully understanding it. This article will help you to develop a comprehensive understanding of Tether, so you can make better informed investment decisions given the recent controversy that has engulfed it. What is Tether

Issued on the Bitcoin blockchain via the Omni Layer Protocol, A Tether (USDT) is an asset backed token that is intended to serve as a gateway between fiat and cryptocurrencies. Each Tether has a value equivalent to that of a single US Dollar, i.e. the Tether is pegged to the USD. In-order to ensure that the value of a single Tether is always the same as the value of a single US Dollar, for every Tether that is issued, an asset of an equivalent value must be held by Tether Limited. Tether Limited being, the government registered company that is responsible for the issuance of Tethers. Tethers can be purchased and redeemed via Tether Limited. An important point to note: Each Tether issued is represented as a liability for Tether Limited.

Source: Coinmarketcap As can be seen from the graph, the price of a single Tether is always trading at roughly around $1.00. As previously mentioned, this is done to by ensuring an equivalent value of assets are held in reserve for each Tether issued. Use Case of Tether

The use of case of Tether is as a gateway between fiat and cryptocurrencies. Users typically purchase USDT (Tether) with their fiat, which is then used to buy a cryptocurrency of their choice. An advantage of Tether is that for new users, it becomes much more straightforward to transact. Depending on which exchange you use, it can often be a timely and frustrating experience when trying to send fiat to trade with. If you want to buy an altcoin, users are often required to first purchase a more well known cryptocurrency, such as Bitcoin or Ethereum, and then send that to another exchange in-order to buy the altcoin. If an exchange supports Tether, this process is simplified because you can often just buy the altcoin immediately depending on the trading pair. However, these advantages offered by Tether are not enough to detract from some of its issues. One such issue Tether faces, is one of transparency. Transparency

In-order for Tether to be taken seriously as a gateway between fiat and cryptocurrencies, it must demonstrate that each Tether being issued is actually backed up by an asset. In-order to prove this to its users and the public, Tether employs what is known as: Proof of Reserves. At the time of writing this article (one day after the Tether Hack), I would have liked to display the transparency page that Tether Limited uses to show that each Tether issued is asset-backed. However, when I try to access the page, this is what I get: Source: Tether.to Source: Tether.to Instead, a slightly older, but still interesting Proof of Reserve page will have to do: