This controversial cryptocurrency could be the downfall of Bitcoin

Bitcoin prices plummeted earlier this week as news broke that the U.S. Commodity Futures Trading Commission (CFTC) had subpoenaed a cryptocurrency and company called Tether, as well as the popular cryptocurrency exchange Bitfinex. The CFTC’s apparent investigation (which was actually issued Dec. 6) renewed fears that had been swirling in the cryptocurrency world for months that parent company Tether Limited may not hold the cash reserves it claims.

A subpoena for Tether is a pretty bad look for a company initially called a “stablecoin” and designed to minimize market volatility. While a spokesperson from Tether labeled the summons as a “routine legal process,” it’s possible these allegations are just the tip of a crypto-controversy iceberg that could have vast ramifications for the future of blockchain technology.

Tether’s crash could indeed lead to a downturn for many cryptocurrencies and exchanges, due to the centralized role it plays in the market. People are freaking out. One New Zealand paper ran the headline, “A true bloodbath’: The time bomb that may bring down bitcoins.” So is Tether’s investigation just fodder for FUD (fear, uncertainty and doubt) in the digital space? Or is it actually a threat to investors with holdings in mainstream and altcoins?

Here’s everything you need to know about Tether.

What is Tether?

Tether’s original hook was that it claimed that each unit, or USDT, was backed by one real-life U.S. dollar held in reserve by its parent company, Tether Limited. This price-matching hoped to take the price-stability of fiat currency and mix it with the cryptographic technology of the blockchain to make a “stablecoin.” Tether also used tethering to U.S. currency as a means of circumventing regulation and government oversight. (Well, until it got subpoenaed by the U.S. government.)

Tether Limited was founded in 2015, by a somewhat mysterious Dutch-expat living in Hong Kong, Jan Ludovicus van der Velde, who also owns Bitfinex. The coin was first issued under the name Realcoin. (Should the allegations of Tether be true, the irony of it formerly named “Realcoin” are not lost here.) According to its site, Tether Limited is based in the U.S. Virgin Islands, incorporated in Hong Kong, with offices in the United States. Also, Tether’s coins are often referred to as “tokens,” which, if you were keeping your life savings in Tether, is a bit of a red flag.

When Tether reached its peak, many traders were using the USDT as a substitute for U.S. dollars. Because crypto-to-crypto transactions are currently way easier and faster than crypto-to-fiat transfers, people were using them as stable substitutes for real dollars. In theory, traders should be able to sell their USDT back to Tether for $1. This conversion caused many cryptocurrency exchanges to rely on Tether to support their transactions. (If Aesop was alive, he’d write a fable about the foolishness in substituting real dollars for a cryptocurrency IOU when daytrading, but I’m not here to scold.)

CoinMarketCap

The problem with Tether

Transparency has always been a pillar of the decentralized cryptocurrency manifesto. So, it shouldn’t have been a problem when people on the internet (redditors and Twitter users mostly) started to ask for literal receipts proving that for every $1 on the market, one Tether existed. In November, the New York Times wrote, “One persistent online critic, going by the screen name Bitfinex’ed, has written several very detailed essays on Medium arguing that Bitfinex appears to be creating Tether coins out of thin air and then using them to buy Bitcoin and push the price up.”

One easy way to prove Tether’s reserves would have been by providing proof through an internal audit. Tether Limited initially agreed to do so with the help from accounting firm Friedman, LLP. A September 2017 document, posted on the company’s site, claimed holdings of ~$443 million to match the Coinmarketcap ~$420 million valuation of Tether tokens that day. However, information about where that money was held, or with what banks, is missing in the document, along with the names of account holders. On Jan. 29, 2018, Tether announced that it was cutting ties with Friedman.

Skeptics have also pointed out that, since the September document, the number of Tether tokens in circulation has increased five-fold and Tether has released over 850 million tethers in January alone. These figures, and the fact that USDT releases curiously correspond with dips in Bitcoin, was highlighted in an anonymous document published last week dragging the company.  

READ MORE:

If the Tether allegations are true

If Tether fails to produce receipts, it means that Tether can print any arbitrary amount of money because it doesn’t play by the rules other cryptos have built into their code to prevent artificial inflation. If the rumors about timing USDT releases to coincide with dips in Bitcoin are true, then it means that the company was using its new (fake) currency to purchase Bitcoin and pump up the price of BTC. Tether has also been used to stabilize some crypto exchanges. If it goes down, those exchanges will go down too, and so will billions of dollars of investments in the cryptoworld, which could shake public confidence in cryptocurrency.

Tether, of course, denies these allegations completely and calls the claims “uninformed and baseless.” A spokesperson told Business Insider earlier this week: “Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame. As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success. We remain committed to the process and, as we’ve consistently done, we will continue to provide material updates at the appropriate times.”

Tether

What’s next for Tether?

It’s still too early to tell, but either way, this is a benchmark moment in the cryptocurrency world. If Tether survives their audit, it will be a historic first that many cryptocurrencies will likely endure in the future, as digital currency tries to fit IRL. If it doesn’t, a valuable lesson will be learned by investors, hobbyists, and people who have built their career on the future of digital currency.

Either way, let’s hope the public confidence isn’t shaken. In a downturn, it’s the last thing cryptocurrencies needs right now.

More From this publisher : HERE ; This post was curated using : TrendingTraffic

 


RELATED PRODUCTS
  • Teaches you how to buy, store and profit from cryptocurrency investing.
  • This guide has everything you need to know share grow and protect your wealth starting today
  • The stunning secret of turning your wife on with the push of a button.
  • Black ops hypnosis,the most controversial,the most effective mind control secrets.
  • A controversial video presentation on how to catch your cheating spouse.
  • Controversial Hypnosis Session Activates Your Inner Wealth Switch In 28:17 Minutes, Or Less
  • Packed full of the info you need for profitable horse racing
  • Start forecasting today and see the results before you invest
  • Clickbank Ads
     

    If you like our content help us with a share… or two …  

    Also -  I have some free stuff for you .......

    Nr 1. In This FREE Report you can Discover:

    Secrets to acquiring the freshest, hottest leads via YouTube In-Stream ads quickly and easily! Best secret tips for the most effective targeting for your ads! Totally legal, but little-known method for literally stealing traffic from your competitors! Get more traffic to your videos and landing pages without spending a fortune! And much more - all within this special FREE report!

     

    Nr 2. Did you know you can Absolutely EXPLODE YOUR EMAIL LIST FOR FREE with UNTOUCHED offline sources?

     

    Nr 3. The #1 secret to becoming an affiliate superstar - Earn your first $100 online – without a dime to invest.

    If you’re still looking to “make it online – I have just the thing for you. It’s a video series that shows how to make your first $100 online – even if you don’t have a dime to invest. Yes – nothing.  Free.  Nada. Is this possible? You bet. It’s the most powerful system used by those “in the know”. Good things don’t have to be difficult. And they don’t only come to those who wait. Have A Look

     

    Nr 4. Top 10 Email Marketing Mistakes. Which of these mistakes do you make?

     

    Nr 5.  You can learn about : The hottest social networking site that will send an unlimited stampede of traffic to your site - for FREE! How to quickly locate a swarm of hungry buyers using "information portals"! The fast and easy way to use simple images to siphon targeted traffic, on command! Learn how to get the most possible traffic from Instagram, and make sure that traffic converts! And much more ...

     

    Nr 6. It’s no secret… Facebook is an incredible place to get tons of free, viral traffic. But… most people are going about it all wrong.  How many of these mistakes are you making? Download the free report to find out.

       

    Nr 7.  Special free report .  It's called "Operation Midas Touch" and you can download it here...

    The report features a surefire method for generating at least $1000 per week online,without a website or product of your own!

    Nr 8.  Instagram is still one of the hottest ways to get a LOT of traffic fast. All by sharing images. Sounds easy enough, yeah? Well, yes and no. If you want to really start driving a lot of  traffic and making sales using Instagram then you should download this report.

    Nr 9.  When it comes to creating a product online there are so many ways to approach it. Wouldn’t it be great to just get the meat of it all so you can get started faster? Well, the good news is, today you can download a guide called the Product Creation Formula Quickstart Guide. It’s as the title suggests - a Quickstart guide. You’ll get a list of action steps to take right away. Download your copy today !

    Nr 10. Would you like to finally USE all of that dusty PLR you have sitting around on your harddrive? Or maybe find the resources for the best PLR available - at the best prices? What about how to use that PLR to make you money with just a few minutes of work. Well, you’re not going to want to miss this!

      Nr 11. Buzzfeed’s top post has more than 21 million views. Think about that for a sec… ONE of their articles has had over 21 million people who have read it! And they have thousands of articles... what would you do with that kind of traffic? A friend of mine hacked their method and was able to use it to get 11,592 targeted new subscribers in 2 weeks on their very first attempt!

    Nr 12. Push notifications are one of today's hottest trends in website traffic and conversions, and for good reason. Studies have shown that as many as 40% of people will opt-in for push notifications, which is about TEN TIMES the rate of people who opt-in for emails! That’s huge! Not only that, but they're also highly effective at pulling clicks, as well. Some studies have shown CTR at an average of around 40%, with highs of as much as 80%! Again, that’s huge!

    Nr 13. Would you like to know how to get more money from the exact same number of website visitors you’re currently getting? Even if you’re website is getting as few as 1-2 visitors a day, this report will show you how to increase your profits using these few handy hacks.

    Nr 14. People have now realised that it's not the size of the list which matters, it's the quality. ... and the only way to create a quality list is by launching your own products. Let it be $7 ebooks, $17 info products, $27 video training product or software's... all of these work. My good friend Kevin Fahey has is revealing how he's launched over 20 products in the past 4 years, many of them top sellers. Needless to say he's banked a handsome amount in this time.

    Nr 15. Do you ever feel that the man you like or even love, just doesn't see you or desire you in way you want him to? Or... maybe you're able to get a man's attention though not the right kind of attention? Or... maybe you're still single because you wait and wait for men to approach you first? What you may not know is that the way we flirt will either attract the "wrong" man for us or the "right" man.

    Nr 16. When it comes to getting sales and leads online, there is ONE thing that 95% of marketers use... it's called a LIST. My friend Jimmy just released a free book that explains WHY a list is important and how YOU can build your own list. It's available right here (and it won't cost you a penny)

    Nr 17. If you have tried everything, and still aren't able to get your Ex back, then you need to pay attention.

    Nr 18. What if I told you that you could make ANY woman WANT to do ANYTHING for you? Would you think I'm crazy? Well... what If I told you that you could also make her LOVE every minute of it and come back for more?

       

    Nr 19. I have a special free plugin for you today. It's called "Covert Hover Mini"

    This plugin will triple your blog traffic by compelling your visitors to share your images on social media. This is some really clever stuff and it works like a charm. After you grab your free plugin, don't  forget to read the free bonus report as it will show exactly how and why this strategy works like crazy.

    Nr 20. The days of being able to get away with a basic WP theme and a pic or two are gone, your site needs to look good. Even Google are looking for you to have engaging graphics on your site. But getting good quality graphics made for your site is a pain, AND it will cost you both time and money (if you outsource it). But I have a special free download for you today. A virtual treasure chest of over 21K profit pulling graphics you can start sing today to generate more traffic & sales!

    Nr 21. 20 professional full HD background videos. These background videos are perfect for giving your videos that extra kick they need to stand out from the crowd Oh yeah they are in full 1080p HD too, I hope you'll enjoy them.

    Nr 22. If you've ever failed to create a WordPress site of your own or typically waste hours & even weeks trying to figure it all out on your own....

    Nr 23. No doubt, you've seen all of the video launches lately! There is a reason for it... Video marketing is a GREAT way to make money, and with the recent creation tools making it super accessable for anyone to get started... It's no surprise that more people are making videos. However... there is a missing element to most video marketing products...

    Nr 24. For the first time ever... You can get the straight scoop on how someone is selling over $1,000,000/year of t-shirts on Facebook!

    Use them  .... and have fun !