Shortly before the hard fork in early August, an underdog stormed the top lists on CoinMarketCap. Tether (USDT) took fourth place among the most traded crypto currencies, securing a firm place ahead of Dash, Monero and other top-10 currencies.
The illustration of Bitcoin news
Since no Bitcoin news could really foresee the impact of the upcoming fork, many users exchanged their crypto currencies for tether. Even today, the digital currency is number 19 on Bitcoin news and has a total of over 390 million tokens – which means 390 million US dollars for most users, because Tether linked the price of a USDT to the US dollar.
The question that many people are currently asking is: Does this USDT peg become a real US dollar?
At least the company behind Tether states that it has dollar deposits for each tether, so one could assume that one could exchange tether for real US dollars.
Recently, a controversy arose about a section in the “legal” section of Tether’s website:
“Once you own Tether, you can trade it, keep it, or use it to pay people who accept Tether. But Tethers are not money and not a monetary instrument. Also, it is not a stored value or currency. There is no contract law or any other right, nor any legal claim to payment or exchange of your Tethers for money. We also do not guarantee any right to pay out or exchange a tether on our site for money. There is no guarantee against losses if you buy, trade or sell Tether”.
The company does not refer to its crypto currency (if it is any) as money. Moreover, according to this paragraph, there is no right to payment. If you also consider that millions are exchanged daily between money and “non-money”, then you understand the following criticism.
Bitcoin news about Security
After Bitcoin news were heard of cut connections to American Wells Fargo and a Taiwanese bank, the community asked for audits to confirm the US dollar reserve.
Indeed, last night the Bitcoin news published an official statement on the outstanding audits. However, the problem is that the last audit was carried out in March and since then several hundred US dollars have been newly issued per tether.
The statement states that the audits are only of interest to shareholders and therefore not suitable for the public. Nevertheless, Tether published the last four audits, with the audit of 31 March 2017 being the last known one.
After angry accusations on Reddit that Tether’s policy could theoretically seriously damage crypto currencies, Tether corrected his position on his own Terms of Service. A payout is still possible, but limited:
“We have a duty to ensure that our service is not used by persons who come from sanctioned countries, are otherwise subject to sanctions, or cannot provide background evidence. In short, disbursements are not denied without reason, but we reserve the right to decide on a case-by-case basis”.
For crypto enthusiasts, this is a knockout criterion. A security is missing, a temporary exchange in USDT is therefore associated with a great risk, because the Terms of Service preserve the rights of the tether company, but do not grant any rights to the holder of a USDT token.
USDT is therefore not the same as US dollar. But one thing has now become clear through the continued existence of Tether: Traders need a token that represents the US dollar. Perhaps someone will develop a “real” alternative in the future.