What if Tether (USDT) Is Used As Digital Asset For Ripple’s (XRP) Products?
Ripple (XRP) – A whole lot of criticisms have surfaced regarding why Ripple has not soared despite its claimed collaborations with top companies especially financial firms around the world. Many things may be involved. For an ardent observer of happenings in the cryptocurrency world, it is easier to link the fall in the value of Ripple to FUD, to comments made by billionaires and respected risk takers in the world about cryptocurrency.
The pace at which cryptocurrency move at this time may not be enticing, it has had a great movement, at say, the speed of light in years back. Even last year cryptocurrencies had a nice outing with Bitcoin staying in front and leading with large expanse in price and market cap.
Where are the problems with Ripple?
Talking about Ripple, and it recent fall despite collaborations with bigwig companies in the world and recognition by oil-rich countries like Saudi Arabia and UAE, there is need to think beyond the surface, it requires digging dip to understand how to escape the from the aftermath of moribund commentaries on cryptocurrency, with a few to make Ripple stand out in the face of any clog in the wheel of its success
To an observer, the cryptocurrency world, to which Ripple is among, is facing many slaps from distance and within. Everybody understands this! Today it may be Hack, tomorrow it may be a call for regulations or ban. Recently Bill Gate, one of the world’s most respected gentleman and successful business mogul raced a negative observation on cryptocurrency, increasing the level of FUD that this space is suffering from.
In a Reddit AMA, the successful co-founder of Microsoft, spoke tough on the technology alien, saying there is not “a good thing,” about it.
Image Source: Youtube.
“The main feature of cryptocurrencies is their anonymity. I don’t think this is a good thing. The Government’s ability to find money laundering and tax evasion and terrorist funding is a good thing,” he commented.
Bill Gate posited that cryptocurrency has “caused deaths in a fairly direct way,” adding that “Right now cryptocurrencies are used for buying Fentanyl and other drugs so it is a rare technology that has caused deaths in a fairly direct way. I think the speculative wave around ICOs and cryptocurrencies is super risky for those who go long.”
Beyond Gate’s statements, America’s President has also raised concern on cryptocurrency, he imposed an executive ban on the purchase of Venezuela’s ‘petrol’ crypto. Donald Trump said: “All transactions related to, provision of financing for, and other dealings in, by a United States person or within the United States, any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018, are prohibited as of the effective date of this order.” While the President has not tendered a generalized statement, his comment on Venezuela signals a negative body language on cryptocurrency.
If all these are not enough a problem, it appears Ripple team has a long way to go in realizing the promised dream. I have deposited 5 Enthusiasts-Demanded Milestones That Ripple (XRP) Must Cover Within 6 Months, it is worth being read to cover some salient points ripple lovers raised regarding the cryptocoin.
An Observation by Reddit User on Ripple
After understanding that the problem of Ripple may not be personal and that cryptospace is facing maniac turbulence from different angles, a question was raced on Reddit by an astute observer of Ripple. The observer, whose question is the basis for this discussion grilled that using USDT as Ripple’s digital asset for its product should speed up adoption.
While identifying the problems plaguing Ripples may be a service garnered towards strengthening the market cap and value of the altcoin, then is USDT the solution?
What is USDT and How Does it work?
Tether token is a cryptocoin estimated to be steadily equal to one Dollar. It does not dance to FUD, hence it is not susceptible to volatility come what may. The reason for this, according to analysts is that it is backed up against USD. While it is dependent on Bitcoin, it has a separate protocol called Omni Layer.
Despite Tether’s dependent on Bitcoin’s blockchain, the price of Tether is fixed even in the face of Bitcoin’s fluctuation.
The claim that 1USDT is equivalent to 1USD may be false if it is not proved genuinely. What this is saying is that, Tether may appear stable, but for it to be substantiated, it must be backed up by genuine USD reserve, it must be bankable at any time at the said equivalence using Fiat currency, and must be open to audit at any time as well.
However, some doubts have been raised on Tether:
- Tether, in April 2017, made known that its banking partnership in Taiwan had been cut off, resulting in the complete suspension of deposits and withdrawals for retail customers.
- Another thing that concerns the cryptoworld is that Tether thwarted its said September 2017 audit without any tangible reason other than the fact that the accounting company disengaged itself from the said audit.
- Before the accounting firm backed out, an internal memo revealed that total USD balances of around $440 million, which is multiple of the amount claimed in that same year, 2017.
- In January, the US Commodity Futures Trading Commission (CFTC) released subpoenas to Bitfinex and Tether on December 4, 2017.
Tether, which is closely tied to Bitfinex, according to critics has been allegedly patching Bitcoin up by printing more USDT than it has dollars in the bank. The idea is just to increase Bitcoin, critics have said. Commentators say anytime Bitcoin needs a support, Tether is allegedly printed to serve a backup.
This is a ticking time bomb for Bitcoin and the cryptocurrency world entirely. If Tether does not have a tangible fiat Currency somewhere, there is a possibility that it may be shut down, and this may reduce the value of Bitcoin by 80%. A Bitmex report goes into detail about the shortcoming of Tether and warns that it may soon shut down.
In another sense, a reputable investment research firm, Weiss Ratings has warned investors of the dangers of Tether, saying “Tether is the only ‘cryptocurrency’ with trading volume that regularly exceeds that of its market cap. This means the entire Tether supply changes hands regularly, sometimes more than once a day. … This is important to know because it tells us that Tether is used for trading A LOT. It’s one of the main sources of liquidity in the cryptomarkets.”
The report explains further: “Liquidity is the lifeblood of a market. It’s what makes prices stable and seamless trading possible. The consequences could be far-reaching. What happens if Tether does turn out to be shaky? … What if this large source of liquidity suddenly evaporates?”
In theory, it may not be possible for Ripple’s product to be backed up by USDT owing to the fact that XRP is used as a digital asset for the products from inception. Adding USDT does not in any way add to the value and adoption of the altcoin. Note that Ripple was not created to be a stable coin, the digital assets of Ripple won’t go anything beyond 1USD if it were designed like Tether (USDT).