Category: Bitcoin

Tether, created to simplify cryptocurrency trading and conversions, has a 1:1 ratio of the asset it is “tethered” to. In the case of the US Dollar, one tether is worth approximately $1.00, with minuscule daily fluctuations. The strange nature of the coin goes against simple economic supply and demand. Unlike Bitcoin, Ethereum, or other limited-supply coins, Tether has no production cap and an unlimited supply but flat demand, keeping the price at $1.00. 

If you have a background in economics, this is a huge red flag. The price control of Tether isn’t sustainable. Furthermore, for each Tether in circulation, there must be one dollar held in reserve backing it. For more information you can follow A Guide to the Best Ways to Make Money Forex Trading.

Holders, skeptics, and large firms have continued to fire backlash at Tether. They fail to release audit records proving that they hold the equivalent amount of USD in reserve as USDT in circulation. The company has refused to be transparent with that information. In January alone, 850 million Tether were produced, however, no records indicate that the dollars held in reserve increased by $850 million. Some people believe these accusations to be unfounded

But if they have nothing to hide, why hide it?

If this is found to be the case, it could send cryptocurrencies to crumbling price levels. Tether has become an integral element in purchasing coins, removing ambiguity and the need to convert Bitcoin prices to the dollar. If Tether has been just arbitrarily produced, Bitcoin and other coins would essentially have been bought with thin air. Skeptics believe that Tether production has been inversely linked to drops in Bitcoin prices, using Tether to purchase Bitcoin at low prices and sending the prices back up. What would happen next?

If faith was lost in Tether, people would demand their dollars back, supposedly held in reserve. However, there wouldn’t be enough. The possible effects could lead to a complete reversal in the more positive recent public perception of cryptocurrencies. It would further link coins to fraud and illegal activity. Exchanges could topple overnight with billions of dollars vanishing

Wells Fargo and Bank of Taiwan have already removed support for Tether transactions. Bitfinex, the sister company of Tether, may even completely shut down, taking millions of coins with them. This news comes at a troubling time. If Tether is found to be guilty of fraud, holders of Tether would rapidly dispose of USDT for other coins, temporarily sending coins to new highs, before an inevitable crash.

This is a wake-up call to investors. 

People love to trade using cryptocurrency as it makes them do transaction in a carefree manner. There are many applications and agents that allow you to buy cryptocurrencies. We must all do our due-diligence and be informed investors when investing any amount of money in any asset. Fraud and greedy motivation can dominate this space and it is your own responsibility to protect yourself.

As the so called ‘crypto-currency’ Bitcoin rose to over US $100 it has generated a wildfire of criticism and predictions that it will inevitably bust in a short time. This is not new as the Bitcoin phenomenon has been many negative articles and stories from its initial released on 3rd of January 2009.

The exchange rate for Bitcoins to major currencies has nearly tripled in the last month, which has once again spurned the Bitcoin mining industry to new heights. The sources of new Bitcoins are the miners that ‘hash’ transactions and earn new generated Bitcoins as these blocks of highly encrypted hashes are processed.

The value of the total amount of Bitcoins is approaching $2 billion dollars and the new technology and larger mining rigs that miners are bringing online is rapidly increasing the amount of Bitcoins that are being brought onto the market. This would in most other currencies signal to the market that it should discount the exchange rates. Many analysts are confused and negative about Bitcoins because they do not react in a typical fashion to normal indicators making them very nervous.

While there is a small but growing Bitcoin economy, it has almost nothing in common with traditional economies that are naturally, based on the economic conditions in the physical area the country is situated in. The mistake that many people are making is that they are treating a currency that is mainly used as a convenient exchange mechanism or that is used in very limited circumstances the same as a mainline currency.

Bitcoin is convenient for people that want to transfer currency to different physical places in a secure transaction. It is like giving a person or business cash in the hand but they can be anywhere in the world. The ability of anyone to then allow someone with Bitcoins to exchange them for local currency is both amazing and slightly worrying.

I have witness a transaction where a person looked up a local Bitcoin exchange person, called them up and arranged to meet in a local bar. They both had Smartphones and the person counted out the local currency equivalent to about US $1000. When the tourist was satisfied he logged onto the internet and transferred the agreed upon amount of Bitcoins to the person doing the exchange. Within three minutes the transaction was completed with no names, addresses, bank accounts or any other identification exchanged.

This shows two sides of the Bitcoin currency, the entrepreneurial businesses that it generates and the almost untraceable nature of this digital currency. The entrepreneurial side has led to a raft of businesses opening and more than a few failing in a spectacular fashion. The lack of regulation and oversight that makes many support this currency can also leave investors with little recourse if things go wrong. The interesting longer-term question is what will stop this currency growing when it has no government to control it and no economically draining support such as healthcare or pensions to influence the economic development of the Bitcoin economy.

How many stars would you give Bitcoin? Well, there are many people that would give it 5 out of 5 while others feel that it is not worthy of getting less than negative but it goes without saying that Bitcoin economy has provided a great influence for youngsters to invest their hard earnings into this field despite it not being stabilized most of the time, which is why beginners’ need to be tutored about the entire process before they take the plunge.