Tether overtakes Bitcoin and PayPal in terms of daily transfers

Oct 5, 2020 8:39 PM ET

Oct 5, 2020 4:39 PM ET
iCrowd Newswire – Oct 5, 2020

Tether has just overtaken PayPal and Bitcoin in average daily transfers. Also, stablecoin surpasses BTC in popularity in East Asia.

The aggregate volume of daily transactions in August with the most popular stablecoin – Tether (USDT) – surpassed Bitcoin. This is the conclusion reached by CoinMetrics analysts.

According to the research, the average volume of daily transfers of funds in Tether for 7 days is about $ 3.55 billion. The Bitcoin indicator is $ 2.94 billion, which is 20% lower. It is noteworthy that stablecoin also managed to overtake the largest electronic payment system PayPal. According to the company’s report, its users make transfers worth $ 2.94 billion every day.

We will remind you that recently it became known that in the near future, within the framework of PayPal, functionality for working with cryptocurrencies may appear.

It is noteworthy that Tether overtakes Bitcoin not only in terms of daily transaction volumes but at the same time in popularity in East Asia. We should also note that gradually it is gaining a foothold in the financial industry and various forex trading brokers in Australia accept deposits in Tether. USDT enjoys wide acceptance in the world and the financial industry is one of the main users of it so far.

At the time of this writing, USDT is in fourth place in the cryptocurrency capitalization rating of the CoinMarketCap resource (with a result of $ 10,022,678,639).

There are 9 998 221 723 Tethers in circulation (with a total amount of 10 281 372 504 USDT). The project representatives do not exclude that in the future the volume of issued USDT will exceed 20 billion.

Meanwhile, the volume of transactions with stablecoins in the digital asset market continues to grow. The researchers believe that the popularity of “stable” cryptocurrencies will allow them to enter the path of competition with national cryptocurrencies, including the digital yuan. At the same time, Tether, according to experts, will become one of the main competitors of fiat crypto-versions.

What is Tether in general and how does it work?

USDT or Tether is a token from Tether Limited, the purpose of creating this cryptocurrency is that, unlike others, its value is provided not only by supply and demand but also partially by the stock of US dollars. This is one of the so-called stablecoin or, in other words, stable digital coins. By providing the value of the coin with fiat money, its volatility is reduced in comparison with Bitcoin, Ethereum, and other unsecured counterparts.

This quality is both an advantage and a disadvantage of stablecoin. After all, less volatility means less opportunities for intraday trading and the opportunity to make money on the rise of the rate, as well as less investment potential, but at the same time lower risks.

However, the USDT cryptocurrency also boasts that it is anonymous and decentralized. It is an alternative to classic fiat currencies and digital currencies, as it combines the properties of both. Tether is powered by the Omni Layer platform built on the Bitcoin blockchain.

You can buy USDT on cryptocurrency exchanges. Tether is also very popular on crypto exchanges where fiat currencies are not represented. There it is used as an analogue of the dollar and most crypto assets are rolled to it. USDT is also actively used for money transfers and payments since its rate is almost stable.

How does Tether work?

Tether is implemented on the Omni platform, which is used for various digital assets and relies on the Bitcoin blockchain. The claim that the Tether token is worth one dollar cannot be unfounded – for USDT to really have any value, it must be backed by real dollar reserves.

Indeed, for 1 USDT you can get a dollar at any time. Likewise, any dollar sent to the exchange must be converted one to one for USDT, and this mechanism works by pegging the USDT rate to the dollar. Then dollars are converted into USDT through intermediary cryptocurrencies, mainly through Bitcoin. So 1 USDT is worth 1 dollar because the exchange has a reserve of dollars in the amount of all existing USDT.

However, some of the statements on the Tether website raise questions. The mechanism described above means the complete and inevitable centralization of Tether, as it depends entirely on Tether’s willingness to maintain a peg. For example, if an exchange runs out of dollars for those wishing to sell their USDT, Tether must promise and deliver the required amount of dollars to a particular exchange within a reasonable time, otherwise the price peg will be broken. It turns out that the work of Tether depends on good financial relations with banks and on the permission of the authorities, and on the other hand, it includes interaction with cryptocurrencies that are not related to fiat money. In other words, Tether (to one degree or another) can do without permission and is not subject to censorship, but Tether users must verify their customers themselves.