Earlier this week saw the cryptocurrency markets in an uproar as a staple of the market came down; the price of USDT, a supposedly stablecoin, lost its pegleg and went down by almost 10%. What happened to this coin to make it fall from such heights? Here is a brief history of its rise to fame, and subsequent fall.

Stablecoins are cryptocurrency issued pegged, meaning linked to, stabble assets, such as gold or fiat currency. This was done to answer the high volatility the cryptocurrency markets are famous for, and propose more stable payment or exchange methods.

Tether issued their Tether stablecoin, or USDT, and pegged it to the US dollar in July 2014; it was then named Realcoin. The stablecoin is backed by Tether and exchangeable on their platform at any time; to this purpose Tether claims to have the necessary funds to, at all time, back up all USDT currently in circulation.

Since 2014, USDT rose through the ranks of cryptocurrency in terms of volume traded, finishing second, behind BTC, in daily volume traded.

In 2017 fears that Tether did not have the necessary fiat currency to back up all USDT lead to widespread criticism and demands for Tether, and it’s Hong Kong based partner Bitfinex, to launch a full audit.

While Tether’s balance sheet on its website claims to have the necessary funds, no third-party audit could be provided to back up this claim, and this despite a tempted cooperation with Friedman LLP to conduct a full audit. This issue continued on to the year 2018, it was further aggravated with complications in their cooperation with several banks, and an unexplained temporary fiat deposit suspension from Bitfinex.

The final nail hit with the September launch of two new stablecoins, Gemini and PAX, pegged to the US dollar on a 1:1 ratio. These two coins not only offer the same ratio as the USDT, but also use the Ethereum blockchain ensuring full transparency, and thus negate the need for a third-party audit.

All this, along with the loss of the HSBC/Bitfinex cooperation earlier this month, resulted in the USDT losing it’s peg leg and dropping to an all-time low of $0.92 on most exchanges, and even down to $0.90 on one exchange. The bears had taken the market this last few days.

It has since recovered partially and is heading back to it’s pegged $1.00, but all of its underlying issues have been left unsolved and it may thus in the future still be subject to a bear attack.

The main question, however, remains: what happens after the major stablecoin lost its distinguishing feature, the pegleg, and will the stablecoin recover from this blow or will it need to adapt?

But not all news are bad, as one man’s misery is another man’s fortune, and the price of BTC went up to a new high this month, breaking the $7000 barrier and reinvigorating confidence in the market.

What do you think, do you still trust in the stablecoin or will it change in the near future? Let us know in the comments section below.

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