IIAwards - Review of Tether
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13 November
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As part of the recently announced IIAwards, in which we celebrate innovations in the fintech and crypto industry, today we will review Tether.

General information

Tether (₮) (USD₮) is a cryptocurrency with digital tokens designed to replicate the value of the United States dollar. The origins of Tether came from J.R. Willett, a software developer who set out to build new currencies on top of the Bitcoin protocol. Credited with "inventing the ICO" to fund the project, Willett went on to implement his idea in the form of the "Mastercoin," whose protocol became the technological foundation of the platform. Tethers exist on blockchains using the Omni Protocol, and as ERC-20 tokens.

Commissions & fees - (3/5)

The fee per fiat withdrawal is equal to the greater of 1,000 USD or 0.1%, which falls behind some of the more competitive pricing models in the industry. Additionally, the fee per fiat deposit is equal to 0.1%, however, there are no fees on deposits or withdrawals in Tether. There is also a verification fee of 150 USD in Tethers. This amount is non-refundable but can be part of your Redemption. The verification fee is intended to ensure that only those who are serious about establishing an account apply. The fee also helps offset a portion of the costs Tether incurs through the execution of a robust verification process.

Markets & products - (3/5)

Tether is a cryptocurrency with digital tokens designed to replicate the value of the United States dollar. The owners of the platform claim that Tether is a token backed by actual assets, including USD and Euros. One Tether equals one underlying unit of the currency backing it, e.g., the US Dollar, and is backed 100% by actual assets in the Tether platform’s reserve account. Being anchored or “tethered” to real world currency, Tether provides protection from the volatility of cryptocurrencies. Tether enables businesses – including exchanges, wallets, payment processors, financial services and ATMs – to easily use fiat-backed tokens on blockchains. By leveraging blockchain technology, Tether allows you to store, send and receive digital tokens person-to-person, globally, instantly and securely for a fraction of the cost of alternatives. Tether initially supports US Dollars (USD), Euros (EUR) and the offshore Chinese yuan (CNH). Represented by ₮, Tether platform currencies are denoted as USD₮, EUR₮ and CNH₮.

Innovative account opening - (2/5)

In order to register with Tether, it is possible to choose between creating an Individual and a Corporate account. In order to register either of the accounts, prospective users must complete the verification process by submitting all of the required documents. Once the client has identified his eligibility and provided the required verification fee, he/she will receive an e-mail saying that a deposit has been detected on the account and that it is ready to be used. The process may take a few days to complete.

Customer service - (1/5)

In case any issues arise, it is possible to contact the company's support staff, but only via e-mail. The responses are comparatively quick, however, the presence of a phone line or a chat service would be of great benefit to the users. It is possible to find an FAQ section on the company's section, however, it only covers a total of 12 questions.

Trading - (2/5)

Tethers exist as digital tokens built on Bitcoin (Omni and Liquid Protocol), Ethereum, EOS, Tron, Algorand, SLP and OMG blockchains. These transport protocols consist of open source software that interface with blockchains to allow for the issuance and redemption of cryptocurrency tokens, or in this case, “Tethers.” Tether platform currencies are 100% backed by Tether’s reserves. Tethers are redeemable and exchangeable, pursuant to Tether Limited’s terms of service. The conversion rate is 1 Tether USD₮ equals 1 USD. Tether was originally created to use the Bitcoin network as its transport protocol (specifically, the Omni Layer) allowing transactions of tokenized traditional currency. Since this original version of Tether uses the Bitcoin blockchain it inherits the inherent stability and security of the longest established blockchain network. Tether on the Ethereum blockchain, as an ERC-20 token, is a newer transport layer, which now makes tether available in Ethereum smart contracts or decentralized applications on Ethereum. As a standard ERC-20 token it can also be sent to any Ethereum address. As things currently stand, Tether does not have a proprietary mobile app.

Digital security - (3/5)

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. All Tethers 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. As a fully transparent company, they publish a daily record of their bank balances and the value of our reserves. Tethers can be securely stored, sent and received across the blockchain and are redeemable for cash (the underlying pegged asset) pursuant to Tether Limited’s terms of service. While the company claims that the Tether platform is fully reserved when the sum of all Tethers in circulation is less than or equal to the value of our reserves, it is clear that the project notably lacks transparency as Tether reserves have never been audited. This vital issue may play a bad trick in a long-term game as no one knows what assets Tether is currently collateralized with, or in what volumes.

Novelties

In September 2020 it was announced that US banks have been permitted to hold “reserves” on behalf of customers who issue stablecoins in Tether. It concludes that national banks and federal savings associations may hold “reserves” on behalf of customers who issue stablecoins, in situations where the coins are held in hosted wallets.

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