Bitcoin is Probably Not the World’s Most Used Cryptocurrency
There is no doubt that Bitcoin is huge. When it comes on to global market value, the cryptocurrency makes up about 70% of all traded digital assets. But its strength does not necessarily translate to highest use. At least, not according to data from coinmarketcap.com, which shows Tether having the highest volume for both monthly and daily trades. The volume of Tether coins being traded went higher than Bitcoin back in April 2019 and has been increasing since. To date, Tether is trading 18% higher than Bitcoin on a monthly basis, despite being 30 times smaller in terms of market capitalization.
Daily trading volumes of the top five tokens presently show Tether at $21.7 billion, Bitcoin at $18.2 billion, Ethereum in third place at $8.6 billion, Litecoin at $2.5 billion, and EOS at $1.6 billion.
What is Tether?
According to Investopedia, Tether is a “blockchain-based cryptocurrency,” which is backed by equivalent amounts of traditional fiat currencies such as the US dollar. Its native tokens trade under the USDT symbol and fall under the stablecoin umbrella. Stablecoins are cryptocurrencies that are set up in such a way as to avoid fluctuations in price. In the case of tether, it is a stablecoin that is pegged to the dollar.
Why Tether is widely used?
Tether has remained relatively stable over the years, retaining its value over time. This is probably one of the reasons why Tether is one of the most used cryptocurrencies around the world. Another reason is that it can be easily traded for cash. In some countries where exchanging cryptocurrencies are banned – China, for example – traders can easily get their hands on Tether coins using cash in hand, then use them to trade for other cryptocoins, including Bitcoin.
Asian countries actually make up a large proportion of the Tether trade volumes, which is issued by a private company in Hong Kong. Tether trades also amount to a high proportion on Binance and Huobi, two of the world’s top crypto exchange platforms.
The rise of Tether in the world of cryptocurrencies has been met with much scrutiny since its launch in 2014. That scrutiny hit boiling point this October, when the U.S. District Court for the Southern District of New York, representing several investors, filed a complaint against the companies backing Tether.
The complainants in the lawsuit – which is for a whopping $1.4 trillion – are claiming that Tether’s owners indulged in actions that manipulate prices in the cryptocurrency market. Among their grouses is that Tether was initially launched and promoted as a 1:1 fiat-backed stablecoin, but it was revealed earlier in 2019 that other assets might be used to uphold its value. This revelation came about when a lawyer representing Tether, Stuart Hoegner, admitted through an affidavit that the cryptocurrency was only 74% backed by cash and equivalents.
So, what does this all mean for Tether becoming the most traded cryptocurrency?
If successful, the lawsuit could curtail the use of Tether in the market through stricter regulations. As it stands, it is felt that Tether is not as rigorously monitored or regulated as its competitors, which is believed leaves room for manipulation. Tether is not independently audited or regulated, for instance.
Whether Tether continues its dominance as the most traded cryptocurrency is left to be seen.