Tether sets fire to 500 million USDT cryptocurrency coins

Tether has announced the destruction of 500 million Tether Coins (USDT).

The cryptocurrency issuer said this week that “Tether has redeemed a significant amount of USDT from the circulating supply of tokens.”

“In accordance with this, Tether will destroy 500 million USDT from the Tether Treasury Wallet and the remaining USDT (approx.

Tether said the coin reserve destruction, not seen often in the cryptocurrency space, is in line with the Tether whitepaper (.PDF).

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The paper claims that each token is backed by one US dollar on a one-to-one basis. The support from Fiat considers the virtual asset to be a “stablecoin”. Tether acts as a reserve for fiat currency, which means the cryptocurrency cannot be fully decentralized.

In order to maintain the 1: 1 ratio, the whitepaper states that Tether will “send fiat withdrawals and revoke the corresponding Tether” if necessary. The steps are described below:

  • The user deposits fiat currency into Tether Limited’s bank account.
  • Tether Ltd generates and credits the user’s Tether account. Holding ropes come into circulation. Amount of fiat currency deposited by the user = number of tethers issued to the user (i.e. $ 10,000 deposited = $ 10,000 tether issued)
  • Users do with tethers. The user can transfer, exchange and store tether coins.
  • The user deposits Tethers with Tether Ltd for redemption in fiat currency.
  • Tether Ltd destroys the Tethers and sends fiat currency to the user’s bank account.

“The main concept is that Tether Ltd is the only party that can circulate (create) or withdraw (destroy) Tethers,” the newspaper said. “This is the main process by which the solvency of the system is maintained.”

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The coin is distributed on the Bitcoin blockchain via the omni-layer protocol and is generally intended to serve as a replacement for US dollars and transfers.

As Coin Desk noted, USDT began to drop below $ 1.00 on October 14th. Bitfinex, which has a management role at Tether, withdrew USDT 630 million on October 22nd in an effort to raise the price.

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The price of USDT currently circulates at just under a dollar, $ 0.99.

Speaking to Coin Desk, Bitfinex communications director Kasper Rasmussen said that Tether does not intentionally reduce the offer, but that USDT is redeemed “if the amount in circulation exceeds the amount required to operate Bitfinex or Tether, for example”.

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