Tether: How a cryptocurrency you’ve never heard of could tank the price of Bitcoin
Bitcoin is crashing, but you probably already knew that. However, if you haven’t spent the past few weeks desperately refreshing CoinMarketCap (or one of the other sites that tracks the value of cryptocurrencies) you may have missed a shocking drop that’s erased much of the value built up over 2017.
Tether
It’s still unclear exactly what’s causing the price of Bitcoin to drop so rapidly (currently hovering at around $8000, down from $21,500 a month ago). Of course, it’s no secret that the value of cryptocurrencies can be volatile, but recent reports suggest that one particular currency could be responsible for artificially driving up the price of Bitcoin, leading up to this plunge.
Tether was designed to create stability in the cryptocurrency market, but it could bring it crashing down instead. Here’s what you need to know about the theoretically stable cryptocurrency that may not be stable at all.
What Is Tether?
Tether belongs to a family of digital currencies called “stablecoins”, the idea being that they’re pegged to something with real-world value. This helps keep the price stable compared to currencies like Bitcoin. In Tether’s case, each token is worth exactly one one US dollar, and the company behind it (also called Tether) claims to have $US1 in the bank for every token in existence.
Tether was founded in 2015. The company also has close ties to Bitfinex, a popular digital currency exchange based in the British Virgin Islands that’s been fined by US regulators in the past. Tether previously denied a direct connection to Bitfinex, but a New York Times report last November revealed a clear line between the two companies.
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