The specifics of Tether
Many cryptocurrencies offer great opportunities thanks to their high volatility, but also some risks for investors. From big wins to total losses, practically any scenario can occur. The cryptocurrency Tether differs in its properties from Bitcoin, Ethereum, Cardano and Co. While the value of these cryptocurrencies fluctuates daily, this does not apply to Tether. The course of the tether token is very stable. The reason for this is that Tether is a so-called stable coin.
Stablecoins are tokens based on blockchain technology that represent a fixed value. In the case of Tether, this value corresponds to the US dollar currency. A tether token is accordingly worth one dollar. The tokens are issued by the company Tether Limited. Tether Limited describes the currency as particularly stable, transparent and 100 percent covered by USD. According to the company, there is one dollar in the company’s reserve accounts for every Tether token.
Tether cannot be mined. While Bitcoins are created through Proof of Work and in the future Ethereum 2.0 through Proof of Stake, there is no consensus process by which new tethers can be generated. Instead, tethers are issued and deleted by the holding company. Accordingly, Tether is managed centrally and thus contradicts the basic concept of decentralization.
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