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Several analysts mince their words when explaining the disposition of specific digital assets. However, Peter Brandt did not and he recently hit out at Stable coin Tether.
“Circular reasoning — TETHER: The idea that we convert one fiat currency unit (USD, EUR, et al) into another fiat currency unit (tether) to protect the store of wealth of the first fiat currency unit is nothing but a gigantic mind fart.”
Peter Brandt has a goal of helping members understand the process of market speculation + challenges to overcome to be successful.
It just looks like Peter Brandt has something against Tether. For those who do not understand, Stable coins peg their value to traditional commodities like gold or a currency. With Tether the so-called peg is to the USD. While Tether is the biggest stable coin when looked at in terms of market cap, Brandt is not the first to express his doubts about the coin.
The top interest in the cryptocurrency space is to use BTC as a store of wealth and as a method to protect their value against the unruly devaluation of traditional currencies.
Food for thought: How would converting your fiat into a stable coin that is pegged to the fiat that you are converting to would preserve the value? Tether is as such pegged to the fiat currency that will lose value? What sense does it make to convert USD to Tether pegged to USD for people who are motivated to preserve value?
Those who are using Tether use it to convert it in and out of more volatile cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). They use it because it is very slow and expensive to make use of traditional fiat to buy and trade crypto even in top cryptocurrencies without a stable coin like Tether. Thus, Tether works in some way to manage the volatility factor when dealing with entry and exit points in BTC, ETH, and other trades involving cryptocurrencies. Thus, USDT works for those who know how to deal with volatility by making the right entry and exit points at the right time, by making desirable trades possible with USDT, which would not have been possible if traders had to using fiat in the same place.
Tether (USDT) is also used to earn interest using DeFi, which carries more risk than traditional investment systems but pays higher interest rates. They claim to take the middlemen out of financial transactions.
The major issue with Tether is that it does not have sufficient cash reserves to support the peg. In case, everyone would want to redeem their Tether to Fiat back, will they truly be able to facilitate it is an issue.
Stable coins work like banks but without providing the required customer support.
