Q&A with Tether
Back in December, we announced that we've launched a series of stablecoins on the Wirex platform. One of these is Tether (USD₮), a hugely popular stablecoin pegged to the US Dollar. As the first stablecoin to ever be created, the team behind it having some incredibly unique insights into the world of crypto, and what potential crucial role they believe stablecoins will play in the future of the global economy.
We've spoken to Paolo Ardoino, the CTO at Tether, to get some industry insights into Tether.
What is the USD₮ stablecoin and what makes it different from other stablecoins?
Tether is a stablecoin, a digital currency whose price is pegged to the U.S. dollar.
Tether's stablecoin originally launched on Omni Layer, a protocol built on the Bitcoin blockchain, and has since expanded onto the Ethereum blockchain as an ERC20 token, and to several leading blockchains including Algorand, Bitcoin Cash’s Simple Ledger Protocol (SLP), Ethereum, EOS, Liquid Network, Omni, Tron and Solana.
Tether offers the deepest liquidity of all the stablecoin options, allowing it the ability to support high volume, high-value transactions. As we speak, Tether has more than 17m of active wallets across different blockchains.
It also enables p2p payments, cross-border transactions and opens up an array of opportunities for consumers to purchase products and services using a stable digital currency. Tether is not only a mean of exchanges like other stablecoins but is also a store of value for entire populations as it is widely used in emerging markets where national currency has high risk of devaluation such as Turkey, Argentina or Venezuela.
Why do you think it’s important to bridge the gap between traditional and digital economies and what role is Tether playing in this?
Bridging the digital and traditional economies will create a more equitable market for all participants. Stablecoins like Tether are core to providing financial access to the unbanked and underbanked; it also enables people to participate in a global economy. Tether represents a more modern approach to money and has led the way for currency digitization.
Why is transparency so important when it comes to stablecoins?
Transparency is not only important when it comes to stablecoins, but when it comes to blockchain technology in general. Blockchains maintain a public ledger of all transactions, and anyone is able to access this ledger at any given point in time. This transparency is core to the decentralized movement, whose mission is to disintermediate centralized products and services that have historically extracted and monetized user data.
When it comes to stablecoins, transparency is important to build trust and confidence among users who are using it to transact billions of dollars in volume each day. In fact, Tether releases quarterly assurance reports that attest to the backing of Tether’s reserves, exceeding the transparency that traditional banks and fintechs afford to consumers.
What role does security and stability play within USD₮?
USD₮ is one of the most secure stablecoins. Tether is built on top of the revolutionary and cryptographically secure open blockchain technologies and adheres to strict security and global government laws and regulations. Tether also works regularly with law enforcement to aid in recovering stolen funds from hacks, scams and more.
Additionally, Tether provides a service for users to recover USD₮ in the event they have been sent to a destination that Tether determines to be recoverable. Some users make mistakes when sending tokens to DeFi projects or trading platforms, which result in tokens being sent to smart contracts or addresses that do not have the functionality to recover the funds.
All Tether tokens are pegged at 1-to-1 with a matching fiat currency (e.g., 1 USD₮ = 1 USD) and are backed 100% by Tether’s reserves, which consists of traditional currency and cash equivalents, and may include other assets and receivables from loans made by Tether to third parties.
The value of one USD₮ may fluctuate above or below one USD due to market forces, however, through several black swan events, the Tether peg remained solid and has never refused a redemption in its history.
How has the popularity of stablecoins changed since USD₮ was first created?
Tether invented the category of stablecoins in 2014 – before cryptocurrencies were even a glint in the eye of the world’s smartest investors. Tether has been the sole onramp into the crypto capital markets since the total trading volume was just $21M per day. Now, with $140 billion in daily trading volume, the cryptocurrency industry has taken the world by storm and stablecoins are being utilized as the blueprint for dollar digitization around the world.
Do you think stablecoins will be a key component in mainstream crypto adoption?
Yes. The volatility of most cryptocurrencies makes them unusable as a stable unit of account for denominating the price of goods and services. Stablecoins solve that volatility problem and makes crypto payments possible. Crypto platforms like Bitpay, Bitfinex Pay, and Coinbase Commerce are already allowing merchants to accept stablecoins as payment for goods and services, while leaders in the digital payment space, like Venmo and Cash App, have also enabled crypto payments.
Tether is also being used to facilitate cross-border trade and remittances to emerging market currencies. It provides a stable and efficient way of transmitting dollars. It is widely used by tens of thousands of traders daily across Asia, Latin America, and Europe simply because it makes trading and arbitrage, among other things, more efficient. Tether also provides great alternatives to populations from emerging countries with no access to financial services.
What different benefits can Tether offer to individuals and businesses?
Tether can be used by individuals to move in and out of trading positions, remittances, send payments cross-border and participate in the decentralized finance ecosystem. Businesses can integrate Tether to accept stablecoin payments, devise new treasury strategies and enable fast transactions at lower fees than traditional fiat gateways.
Where do you hope Tether will be in the next year or so?
Tether is focused on being a catalyst for the freedom of communications, freedom of money, and equality in access. It looks forward to continuing to emphasize these messages by bringing digital dollars to the real world. Tether has its sights set on reaching retailers and shops in the future. It believes that Tether tokens are set to outpace traditional credit and debit cards solutions because they are cheaper, faster, and more transparent.
What do you think is in store for the crypto movement going forward?
Tether’s executive leadership team understands its responsibility as the market leader and fully embraces its role in helping educate the world about how stablecoin technology fits into traditional finance, and how it will reshape payments technologies and the financial infrastructure of the world in decades to come.
What’s one interesting fact about Tether/USD₮ that we might not know?
Tether invented the framework upon which digital dollarization will be built. For close a decade, Tether has shepherded the emergence of a new digital economy. Many of the trials and tribulations Tether has gone through directly contribute to the future of finance, and the future of money.
To find out more info about Tether, check out our spotlight here.