- Tether Mints $240,000,000 for “Inventory Replenishment”
In the short span of 48 hours, stablecoin platform Tether has minted over $240,000,000 of currency in two batches.
In theory, one Tether (USDT) is always redeemable for $1, this earning the name “stablecoin.” Stablecoins offer users several benefits as they alleviate the price volatility common with cryptocurrencies.
According to the CTO, the new Tether tokens are part of a routine inventory replenishment. He states that these tokens are to keep up with future demands.
Rise of Stablecoins
Stablecoins are facing increased scrutiny as financial institutions and governments look for blockchain-based financial solutions. As reported by The Crypto Associate, the World Bank’s latest report talks about the potential of stablecoins as the basis for a central bank digital currency (CBDC).
Stablecoins offer numerous advantages over traditional cryptocurrencies by mitigating risk. Stablecoins are considered immune to price volatility as they are always redeemable for a currency, commonly the US Dollar. As a result, institutions can leverage blockchain technology while alleviating risks associated with cryptocurrencies. This opens the potential for CBDC’s to use blockchain technology’s decentralization and transparency.
Furthermore, stablecoins are backed by physical assets and thus alleviate rampant speculation. Prices of cryptocurrencies like Bitcoin move solely on supply and demand and thus can experience high spreads and volatility. Stablecoins, on the other hand, will always hold a constant value.
The increased demand for stablecoins in the last year has given birth to worthy competitors. USDC is Coinbase’s stablecoin. USDC backing audits are available to view in the spirit of transparency. Thus, USDC will always be redeemable for $1, regardless of external events.
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