The Race to Replace Tether (In 3 Charts)

The crypto market has a dominant stablecoin, make no mistake.

Tether, which aims to keep its token (called tether or USDT) at parity with the U.S. dollar by backing each token with $1 in bank deposits, accounts for the vast majority of the stablecoin market by total value, exchange volume and other metrics.

But the market has begun to show signs of anxiety around tether, centering on the firm’s access to banking services and its claims to have fully collateralized the outstanding tether supply.

The token has not traded at $1 with any consistency since early October. It hit a low of $0.85 on one market on Oct. 15, and while the exchange rate has largely recovered, it still lags below target, trading at $0.99 Sunday, according to CoinMarketCap.

Meanwhile, several rival stablecoins have arrived on the market, including – just since September – Circle’s USD Coin (USDC), the Paxos Standard Token (PAX) and the Gemini Dollar (GUSD). Older rivals include TrustToken’s TrueUSD (TUSD) and Maker’s Dai (DAI).

As one might expect in such a perfect storm, tether has begun to lose some market share to these competitors in the week and a half since it broke the buck, data analyzed by CoinDesk shows. Yet while TUSD and USDC have made the biggest inroads, the data shows no clear winner at this stage, and tether remains firmly on top.

All these coins are vying for a critical role in the crypto ecosystem. Stablecoins, in theory, allow traders to move money between exchanges quickly – without having to rely on access to traditional banking. They also allow traders to move their funds into a less risky asset during times of heightened volatility, without having to withdraw funds from an exchange.

Below we dive into the data.

Market capitalization

There are several ways to measure market share for stablecoins, none of them perfect indicators. One is simply by looking at the market capitalization, which, when the asset is supposed to trade 1-for-1 with fiat, should be about the same as the overall supply.

“Tether has definitely lost market share in terms of the supply of USD allocated to different stablecoins,” Nic Carter, creator of the blockchain data site Coinmetrics, told CoinDesk. TUSD and USDC, he added, have been “the major beneficiaries.”

Indeed, according to Coinmetrics data analyzed by CoinDesk, tether’s market capitalization as a share of the broader stablecoin market has steadily declined, with most of that decline coming from a reduction in tether supply (a token’s market capitalization is equal to its price multiplied by its total supply).

market capitalization tether stablecoins
Charts by Nolan Bauerle and Peter Ryan of CoinDesk Research. Data for all charts sourced from Coinmetrics.io. Note that vertical axis scales differ between charts.

“Prior to the run,” Carter said, referring to a period in mid-October when tether’s exchange rate dipped below $0.93 according to CoinMarketCap, “tether consisted of about 94 percent of the total supply in stablecoins; that collapsed to 83 percent after the run.”

But it’s important not to overstate the competitive implications of that collapse. The primary reason for this shift is that Bitfinex – a cryptocurrency exchange that shares executives and owners with Tether – has sent 780 million USDT to a company-controlled wallet known as the Tether Treasury since Oct. 14.

This process, which the company (controversially) refers to as “redemption,” removes tokens from the supply and therefore reduces the market capitalization, which has fallen to around $1.9 billion from a peak of nearly $2.8 billion in September.

Hence, reductions in tether’s supply haven’t benefited rival stablecoins as much as might be assumed, Carter noted. “It looks like some USDT that were redeemed did not, in fact, flow into other competitors, but simply exited to BTC or fiat.”

Volume

Another way to gauge stablecoin market share is to look at what’s happening at cryptocurrency exchanges.

Unsurprisingly, during and shortly after the “run,” a number of exchanges – including OKEx and Huobi – rushed to list alternatives to tether.

Yet Coinmetrics’ data shows only a slight increase in trading volume for tether alternatives over the course of October, and from a tiny base (note that the vertical axis ranges from 96 percent to 100 percent, and tether remains clearly dominant by this metric):

stablecoin exchange volume
Coinmetrics exchange volume data is sourced from CoinMarketCap.

“Exchange volume is small for alternatives because traders aren’t really accustomed to them yet,” said Carter, adding “tether still is considered a useful (albeit risky) coin for traders to get fiat-denominated risk. It just has the accumulated financial infrastructure.”

But there’s one more metric to consider: the volume of transactions on the blockchains for these stablecoins.

By this yard stick, tether alternatives have made more headway. Compared to modest on-exchange volumes, total on-chain transaction volumes were considerably higher for non-tether stablecoins throughout the month, and they appear to have increased after tether broke the buck:

onchain transaction volume tether stablecoins

All told, tether is still dominant, but competition from its many rivals is heating up.

According to Carter, however, “it’s still too early to say which competitor is best positioned to win long term.”


Source
Author: David Floyd
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Why Crypto Traders Are So Worried About Tether: QuickTake Q&A

It’s one of the most hotly debated questions in the world of virtual currencies: Is Tether telling the truth when it says that each of its digital coins is backed by one U.S. dollar? The answer could have big ramifications, given that Tether’s coin (also called Tether or USDT) is among the most actively traded cryptocurrencies — treated by many as a substitute for the greenback on crypto markets around the world.

Over the past few days, USDT has broken out of its historically tight trading range around $1.00, fueling fresh speculation that investors may be losing faith in the coin. On Oct. 14, USDT traded at about $0.97 on San Francisco-based crypto exchange Kraken.

1. What is Tether?

It’s an issuer of a cryptocurrency with a twist. Unlike Bitcoin, whose value fluctuates wildly from day to day, Tether’s tokens are designed for stability. Prices for the coins have historically stayed near $1 because Tether says each one is backed by a dollar in its bank accounts.

2. Why are the coins popular?

Many traders use them as a substitute for dollars. Tether’s coins are more easily transferable between cryptocurrency exchanges and other online platforms because they don’t have to travel through the banking system. Stable prices have made the coins handy instruments for betting on the direction of other cryptocurrencies.

3. Why are there skeptics?

While Tether has repeatedly said that its coins are fully backed by dollars, the company has yet to provide conclusive evidence of its holdings to the public. There are also questions about Tether’s relationship with Bitfinex, one of the world’s biggest cryptocurrency exchanges. Some market watchers have alleged that trading in Tether’s coins on Bitfinex, which has the same CEO as Tether, has helped prop up Bitcoin’s price.

In a Medium post on Oct. 8, Bitfinex dismissed allegations that it was insolvent and said that withdrawals were functioning as normal. It added that “Complications continue to exist for us in the domain of fiat transactions, as they do for most cryptocurrency-related organisations. However, we continue to do our utmost to minimise any waiting times associated with fiat deposits and withdrawals.”

4. What are U.S. regulators doing?

The U.S. Commodity Futures Trading Commission sent subpoenas to Bitfinex and Tether in December, Bloomberg reported, citing a person familiar with the matter. “We routinely receive legal process from law enforcement agents and regulators conducting investigations,” Bitfinex and Tether said in an emailed statement in January. “It is our policy not to comment on any such requests.”

5. Why is Tether so important for cryptocurrency investors?

Despite their modest total market value of about $2.7 billion, Tether’s coins play an outsized role on cryptocurrency exchanges. They were the second-most traded among all digital currencies after Bitcoin as of Oct. 14, according to data compiled by CoinMarketCap.com. While there are many other so-called stablecoins, none have come close to challenging USDT’s popularity.

6. What’s next?

If authorities were to find any evidence of wrongdoing at Tether or if traders lose faith in the company’s ability to redeem its coins for $1, USDT could quickly lose value. But only time will tell if the coin’s recent slide is just a blip or the start of something bigger. “Tether’s stablecoin dominance will only persist if they can settle community criticisms about their lack of transparency once and for all,” said Jehan Chu, managing partner at blockchain investment and advisory company Kenetic Capital.


Source
Author: Andrea Tan, Benjamin Robertson and Matthew Leising
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$500 Million In Tether (USDT) Has Made No Impact On Bitcoin (BTC) Price

Injection of Over Half a Billion Dollars worth of USDT Has Made Little Impact on the Crypto Markets

Bitcoin (BTC), Tether (USDT)–Despite Tether (USDT) printing over half a billion dollars worth of new coinage throughout the month of August, [a]financial news outlet reported the move has had little to no impact upon the crypto markets.

LIONBIT

USDT No Longer Impacting Bitcoin Price

While the company behind the most popular stablecoin cryptocurrency, now ranked 8th in total market capitalization with $2.84 billion in circulation, has been the target of numerous investigations, particularly those pertaining to the assets backing the coin, August’s massive influx of new tethers is apparently not swaying the crypto markets. Despite adding an additional $500 million worth to the total market capitalization, a move that has in the past brought accusations of Tether and its partners artificially propping up the price of the industry, Bloomberg reports that the link between new USDT hitting exchanges and an increasing Bitcoin price has eroded over the past year. Whether because of the prolonged bear cycle of 2018, which is already drawing attention for its investor fatigue, or a new market force at work, Tether no longer has the same impact as in the past.

Several economists and market analysts, most recently a group out of the University of Texas, have been observing Tether, it’s regular injecting of USDT into the market and the impact that has upon crypto prices to conclude that some form of manipulation or price stabilization is occuring. With the massive influx of freshly minted Tethers throughout the month of August, Bloomberg feels confident concluding that the input of the high-profile stablecoin is no longer swaying prices. Bloomberg also refutes another paper by the research group Chainalysis, which made the claim that USDT is influencing prices of altcoins and smaller capitalization cryptocurrencies, even if the stablecoin fails to move the price of BTC as it did with some regularity throughout 2017. Citing as an example, Bloomberg looks at August’s push of half a billion dollars worth of USDT into the crypto markets, without a corresponding price increase–or stabilization–for Bitcoin, in addition to other popular currencies such as EOS and NEO. Instead, altcoins have been largely in decline, with the price of Bitcoin fluctuating throughout the $6000 – $7000 range since the beginning of the month.

TIP

Whereas past injections of Tether, particularly to the tune of half a billion dollars (or roughly 17 percent of the total Tether now in circulation) would have corresponded to a significant price movement for Bitcoin, and the crypto markets in general. Instead, August 2018 has seen one of the steepest declines across the board for BTC and altcoins, with most currencies experiences double-digit losses in an already prolonged bear market. This has led some to the conclusion that either Tether is not directly manipulating the market with its timing and method for USDT injection–or at the very least not attempting to do so–or that the same forces that coupled Bitcoin rallies so closely with Tether injections have evaporated from the market.

Some have found stablecoins to be an interesting caveat to the high volatility, high risk of cryptocurrency investing. Compared to BTC and other altcoins, USDT and its brand of stablecoins provide the benefits of cryptocurrency while pegging the valuation to a fixed amount–in this case the U.S. dollar. Some find that the currencies exhibit too much centralization, and lack the departure from government fiat that has been so enticingly portrayed in the majority of cryptocurrencies. However, with the slumping crypto markets throughout 2018, Tether has become a safe harbor for investor funds, particularly those left on exchanges to ride out the price volatility of the market.


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Bye-bye USD Tether? Circle Partners with Bitmain to Issue USD Coin

Circle is a company that has seriously focused on the growth and expansion of its services in the recent months. Ever since the announcement of the acquisition of Poloniex —one of the oldest and most recognized exchanges in the crypto sphere— the company’s renewal efforts have been extremely beneficial both to the corporation and to the ecosystem as a whole.

In an official press release, Circle revealed the release of USD Coin, a stablecoin backed by real FIAT currency (in this case US Dollars) that would be used on a daily basis in Poloniex, to begin with. This way users will be able to freeze their money with a currency that would not be theoretically subject to inflation or speculation.

Breaking Tether Hacked for 30 Million
Related News: Ethereum Network Tokenized U.S. Dollars Trade made Possible by Tether

Poloniex used to list USDT as a stablecoin in the past, but the development of its own crypto seems to be an appropriate decision after the scandals that put into question the feasibility of USDT as a genuinely dollar-backed token.

The use of tokenized US Dollars permits the creation of less volatile trading pairs, an option that many users will appreciate as it would imply less exposure to the risk of a sudden change in the value of a defined crypto. According to Circle, two characteristics that make USDC a better option over other stablecoins are the fact that USDC is an ERC20 token and also that they as the issuer comply with national banking standars when it comes to information publishing policies:

Existing fiat-backed approaches have lacked financial and operational transparency, have operated in unregulated jurisdictions with unknown banking and audit partners, and have been built as closed-loop ecosystems and closed proprietary technologies.
Circle USDC addresses these problems by providing detailed financial and operational transparency, operating within the regulated framework of US money transmission laws, and reinforced by established banking partners and auditors. It is built on an open source framework with an open membership scheme that eligible Financial Institutions (FI) can participate in (CENTRE). USDC will be ERC-20 tokens minted, issued, and redeemed based on network rules defined by CENTRE.

Circle Announce a Strategic Partnership with Bitmain

Another important announcement was the commercial alliance with Bitmain, the largest ASIC manufacturer in the market and responsible for one of the largest mining pools in the world.



 

Bitmain is investing $110M in the development of the CENTRE platform and its USDC project as well as series E strategic investment in Circle. An initiative that other companies like IDG Capital, Breyer Capital, General Catalyst, Accel, Digital Currency Group, and Pantera, along with new investors Blockchain Capital and Tusk Ventures are also joining.

According to the company, the business vision of Jihan Wu, Bitmain’s CEO, is very similar to the expansionist interests of Circle, so they expect the market positioning of the famous Fintech becomes ever more significant:

Bitmain is one of the most important and forward-thinking companies in crypto and has become a critical infrastructure provider for the entire crypto economy. Bitmain Co-founder and CEO Jihan Wu is well known for espousing a vision similar to ours regarding the creation and adoption of a new global economy powered by cryptographic assets, distributed contracts, and open source blockchain technology. We are excited to be working directly with Bitmain on realizing our shared vision.
Bitmain will also join CENTRE’s efforts to introduce multiple fiat-backed stablecoins and provide financial interoperability around the world. This partnership will help drive global interoperability that benefits consumers, business ventures, institutions, and marketplaces everywhere. Specifically, Bitmain will help CENTRE introduce multiple fiat stablecoins in a variety of geo-currency zones.

Jihan Wu at the DC Blockchain Summit. Credit: Coindesk
Bitmain’s CEO Jihan Wuat the DC Blockchain Summit. Credit: Coindesk

Previously, at the DC Blockchain Summit 2018, Jihan Wu had mentioned that he wanted to venture into the financing of “Central Banks” projects for cryptocurrencies around the world. This news generated a lot of controversy about the dangers of centralization that this strategy would represent vs. the ease that it would imply for traditional users.

For Circle, the race is just beginning. They state that their five years of age are just the beginning of a series of successes, claiming that they are “thrilled for what’s to come.


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Top 10 “Winners” and “Losers” in April!

April was an interesting month in the cryptoverse: prices have picked up pace from their bear run of the first quarter of this year, Tax Day in the US had crypto as an additional stress factor, and Malta established itself as the crypto country of Europe. Let’s take a look at how coins fared during this bull run.

TOP 10 WINNERS

From a total of 50 biggest coins by market cap, the top ten winners are mostly from the lower part of the set. This may be attributed to the fact that they are less established than the upper half of the list, and so prone to more variation in price. Still, those HODLing these coins will love seeing them at the top of our list.

TOP 10 LOSERS

With how often we speak about the merits of April’s bull run, the data listed below may not come as a shock to our readers: only one coin has a net decrease in value, and that is Tether (USDT), sitting at exactly USD 1 at the time of writing – which is exactly where it wanted to be, as their endgame is becoming the crypto replacement for the US dollar. The others are not losers in the traditional sense – they simply increased the least.
In the light of mostly positive changes for the crypto space, a bullish, optimistic summer may not be too much to hope for.


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author: Sead Fadilpašić
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