Tether is digitizing dollars on blockchain
Many have been convinced that the blockchain provides a number of advantages over mainstream financial infrastructure, as it offers cheap, fast and borderless transactions without requiring intermediaries. However, the volatility of the underlying currency discourages wider use.
Tether, backed by bitcoin entrepreneur Brock Pierce, connects the bitcoin technology to actual fiat currencies, allowing users to leverage the blockchain advantage whilst trading in currency backed by the US treasury. (Or the European Central bank, as the case may be). Or in the words of CEO Reeve Collins, Tether “digitizes the dollar, and gives that digital dollar access to the blockchain”.
How it works
The Tether platform allows the conversion of dollars, euro or yen into corresponding tether+ tokens, each with a one to one value peg. Tether coins are backed 100% by actual fiat currency held in the company account, which is meant to be transparent and audited to ensure 100% reserves. Tether can be exchanged through the platform to its corresponding currency at any time.
Tether utilizes the mastercoin/omni protocol for the creation of its tokens. Thanks to Omni, Tether transactions are hashed and passed to the bitcoin blockchain, where they are confirmed and secured, alongside all the other bitcoin transactions, by the massive network of bitcoin miners.
In January 2015, Bitfinex integrated Tether as a method of depositing and withdrawing from the exchange. This was presented by Bitfinex as a method of circumventing many of the problems facing bitcoin traders when interacting with the traditional banking system. Poloniex, a popular crypto-only exchange, integrated Tether as a stand alone market in February 2015, offering Tether holders the ability to trade against a number of different cryptocurrencies. The currency can be held in designated wallets like Omni Wallet or HolyTransaction, and also works with any HD wallet. The integration into these different platforms offers some indication that Tether is resonating within the crypto-marketplace, but it is still early stage, with a market cap hovering around $250,000.
Read its white paper for detailed information.
Tether has a huge market potential, it is working in the same direction where ripple is operating but it is connected with bitcoin protocol, which makes is a services to watch out in crypto market.
Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.