For a long time, USDT has occupied more than 70% of the stable currency market. It has always been the dominant player in the stable currency. Although there are also stable coins such as PAX, GUSD, Circle, TrueUSD and DAI, they are unable to shake the status of USDT. However, the USDT is often criticized for its problems such as unregulated non-compliance, audit opacity, arbitrary issuance, misappropriation of funds, and price manipulation. It can be said that people love and hate USDT.
However, with the arrival of Libra, the monopoly position of USDT will be broken, and the stability of the currency rivers and lakes will set off a radical change. It is no exaggeration to say that at that time UDST will face survival? Still ruin?
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USDT has long been "endangered"
On the afternoon of June 18th, international social giant Facebook released a white paper on its stable currency, Libra, under the eyes of the public. And just before the release of Libra, Tether issued a $250 million USDT.
According to data from the PeckShield Situational Awareness Platform, Tether added $150 million and $100 million USD to the Ethereum network at 18:15 pm on June 11 and 21:21 on June 16, 2019. .
In less than a week, the USDT has been issued twice, and this frequency is unprecedented. And the amount of additional is not small, is it to feel the threat from Libra and eager to consolidate its status? Or are you eager to make money "blood sucking" to prepare for your "afterlife"?
USDT has been increasing in the past few years. Since 2015, as of June 18, USDT has been issued 104 times. If you add this year's additional, the number will be an amazing number. But the industry has been full of doubts about how much US dollar reserves Tether exists in banks. Anonymous sources have pointed out that the USDT is a sum of money created by Bitfinex through its controlled Tether, and whether the $3.5 billion USDT in circulation has actual dollar deposit support is questionable.
The USDT is Tether USD based on the stable value currency US Dollar (USD) launched by Tether in November 2014. However, since its birth, USDT has been suspected by investors: accounts are not regulated; random issuance; always obscured during the audit process, some core information is not willing to disclose; and the relationship with the trading platform Bitfinex is complicated… Tether’s unrestrained operations have also caused repeated crisis of trust.
On February 8, 2017, an author nicknamed "Bitfinex'ed" published an article on Medium called "Bitfinex Don't Want to Hear". The multiple recordings included in this article show that the Tether team and the Bitfinex team are discussing bank fraud, money laundering, and even acknowledging financial fraud. Tether, who is caught in the "super-sending" and "manipulating the market", is once again pulling back into public opinion.
In April 2017, due to financial fraud, Tether’s three bank accounts in Taiwan were banned.
On November 19, 2017, the USDT of $309,500 was hacked from Tether's wallet and sent to an unauthorized Bitcoin address. The event forced many exchanges, such as fire coins, OK, etc., to suspend USDT recharge and cash withdrawal services.
On December 6, 2017, the US Commodity Futures Commission (CFTC) issued a subpoena to Bitfinex and Tether. In an e-mailed statement from the two companies' official responses, Bitfinex and Tetherx's attitude is, "We don't comment on any such requests." At the same time, the other CFTC spokesperson of the regulator also declined to comment on the issue of digital currency business. As for why the CFTC issued a subpoena to Bitfinex and Tether, there is almost no public information.
On January 24, 2018, an anonymous report stated that as of January 4, 2018, Tether had issued a total of 91 additional USDTs. And raised the question: whether Tether will transfer USDT to Bitfinex's wallet without receiving the US dollar, and use USDT to buy low-priced bitcoin for profit or trade.
On June 20, 2018, Tether issued a "Transparent Report" issued by a law firm. This transparent report not only did not reassure investors, but also caused more doubts. Tether explained that because the four major accounting firms are not willing to endorse them, they can only ask for help from law firms.
A few days later, on June 28th, Slow Mist Technology released a warning and vulnerability analysis for USDT, reminding major exchanges to suspend the USDT recharge function as soon as possible, and self-check the code for the existence of this logical defect. According to analysis, the security problem of USDT is a kind of bug that looks like feature. This feature is very scary. It needs special care of technicians and cannot be ignored. But the quality of the technicians was jagged or careless, and the feature couldn't be taken care of. A time bomb was buried.
On October 1, 2018, Bloomberg reported that USDT's custodian bank, Noble Bank, was insolvent and had lost many customers, including Tether and Bitfinex, and is currently looking for buyers to sell it. assets. On November 1, Tether announced that it had established a partnership with the Deltec Bank in the Bahamas and announced the bank's approximately $1.83 billion in assets. According to CoinMarketCap, the total circulation of USDT was approximately 1.776 billion.
On November 7, 2018, the Brazilian prosecutor accused Tether partner Deltec Bank & Trust of accepting money laundering funds and requested the Bahamian authorities to assist in investigating suspicious transactions by Deltec Bank & Trust. On November 20, Bloomberg quoted three sources as saying that the US Department of Justice has initiated a job to verify whether Tether is suspected of illegally manipulating the price of bitcoin last year. On November 26th, Tether disregarded market doubts and issued another 50 million copies after arbitrarily destroying 500 million USDTs.
Just two months ago, on April 26, the reason was that the Office of the Attorney General of New York issued a statement saying that the Office of Audit (OAG) was investigating "fraudulent conduct by Bitfinex and Tether." According to NYSAG, at least $700 million was withdrawn from Tether's reserves to cover Bitfinex's trading losses. The USDT plummeted, in exchange for the start of the BTC situation in early May. In just one month, the BTC rose from 5200 at the beginning of the month to 9,000 at the end of the month.
The consensus collapsed, and the last layer of the USDT's fig leaf was opened again and again, and the question was also higher than the wave. Even the currency circle has produced a brand new term—empty quilt cover, which refers to those who sell all kinds of coins for USDT, wait for bargain-hunting, and are “harvested” by USDT. Because of the frequent negative events of the USDT, the price will fall sharply, and as a result, many people will be cut short.
Then, although the USDT is negative, why can it be saved every time? The USDT's market share has stabilized at around 70%-90%. The first-mover advantage brings its existing position on all exchanges around the world, and the high liquidity it represents, even after the crisis. The USDT can still dominate the stable currency market. There is currently no stable currency on the market that can replace USDT.
Stabilizing the currency rivers and lakes will change
Libra is coming, the USDT's one-size-fits-all pattern is about to end, and the prelude to the competition has already begun!
Libra's white paper published by Facebook shows that Libra's mission is to create a simple, borderless currency and financial infrastructure that serves billions of people.
Libra plans to open Internet 3.0. The essence of this plan is: centralized wallet + alliance chain payment structure + internationalized stable currency.
Since it is a stable currency, it will undoubtedly have a certain competitive relationship with the stable currency such as USDT, GUSD, PAX and so on. Libra comes with a halo and has the advantage that other stable coins can't match.
First, Facebook is a US social networking service station with 2.66 billion active users worldwide, which is 1.66 billion more than WeChat. And Facebook has joined forces with nearly 30 organizations around the world to form the non-profit Libra Association (Libra Association), which also includes: MasterCard, PayPal, Visa and Booking, eBay, lift, Uber and other financial, payment, e-commerce, Travel giants.
Second, Libra will anchor assets such as various world currencies or gold. If more than 50% are anchored in US dollar assets, this means that Libra is a strong dollar output to the rest of the world, which will accelerate its financial integration and strengthen the dollar. Libra's anchoring assets will be one of the core governance agendas of its Libra committee.
At the same time, Libra is bound to bring more regulation. For example, after the release of Libra, French Finance Minister Bruno Le Maire said that digital currencies like Libra cannot be considered as a substitute for traditional currencies. He also called on the central bank of the Group of Seven to prepare a report on Facebook's stable currency and to discuss it at the July meeting. He is concerned about privacy, money laundering and terrorism finance.
Facebook’s staff in charge of the project said in an interview, “At present, Facebook’s technology is fully mature. In fact, it is better than stable currency. We provide a certain amount of reserves of dollars, euros and other currencies. Stored on Facebook's accounts in countries to ensure the value of the stable currency. The best part is that these reserves will be supervised in a decentralized manner, and reviews from all sides are welcome."
The report issued by the Fire Coin Research Institute makes a good summary of Libra compared with other existing stable coins. Libra has the following characteristics: 1. Decentralized issuance and management; 2. Relying on compliance traders, similar to TUSD The distribution model; authorized dealers may become the middle layer of the custodian and users, real-time exchange of legal currency and Libra; 3, create a new accounting unit; 4, locate the payment function of the consumer Internet, the application scenario is broader .
Obviously, Libra's functional attributes are more powerful and the application scenarios are more powerful than the USDT and other stable currencies that currently act as the general equivalent of currency transactions. More importantly, Libra's goal is to become a compliant and capable The stable currency exchanged with the currency in real time, which is far beyond the functional scope of several stable coins in the currency circle.
Although Libra is still a part of the official release. The circles have already had a heated discussion around it, and for a time, there have been many different opinions.
Some believe that Libra, which was born out, will become a new super-sovereign currency and challenge the existing dollar hegemony. Others believe that Libra will not develop into a super-sovereign currency, and even a complete currency will not be counted. Others believe that the so-called “no borderless currency” and “financial infrastructure for the services of billions of people” are just Facebook’s gimmicks. This currency in the name of freedom is in fact just a monopoly giant. Take the tool of "coin tax"…
But what is certain is that Libra will have the most direct impact on the USDT. Libra's advantages just make up for the many shortcomings of USDT. The status of the USDT stable currency hegemony is likely to be unprotected or even eliminated.
Insiders pointed out that the bank risk of USDT deposits is very high. The financial audit of Tether has not been completely transparent, but everyone still has to use USDT. You think, according to the size of Facebook, if Mazars went to the stable currency in the same year, is there a way to live with USDT?
For Libra Stabilization Coins, more people are optimistic about the background of their big companies. “Big companies care about credibility. The more important reason is that they can't run it. At this point, Facebook and Wall Street have a consensus. So both In promoting the harmonization of the blockchain and the pass, Zuckerberg has adjusted its focus to the stable currency. It may be the end of the USDT on the day of the official launch."
National Distinguished Expert, Beihang University, and MIT Bachelor of Science and Technology Cai Weide said that Libra has the biggest impact on USDT. In my opinion, Facebook's cryptocurrency Libra can completely replace USDT. When the real stable currency appears, the fake will die.
BitMEX CEO Arthur Hayes seems to see more thoroughly, commenting in this month's BitMEX crypto dealer digest that Libra is not a cryptocurrency. Libra will destroy all the stable coins. “Libra may put commercial banks and central banks at a low level, which may reduce their effectiveness in regulated digital legal currency warehouses. This is what these institutions should do in the digital age,” he said.
We may wish to boldly imagine that the USDT will be a big mine in the future. If Libra is available, the USDT price will plummet in a short time. What's more, if Tether doesn't have enough reserves, once the USDT collapses, all the trading currencies based on the USDT offer may be hit hard!
As for mainstream currencies such as Bitcoin, it will fall in the short term. However, Libra's influence has been positive for a long time. Many people have changed USDT to bitcoin to hedge, and Bitcoin will eventually return to its value investment track.
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