What will happen to crypto when USDT collapses?

peerchemist
9 min readJun 11, 2022
For illustration purposes only, Tether Inc. does not have an HQ. Credit: Marija C.

Intro

The cryptocurrency markets are (in)famous for volatility. While the volatility is attractive for traders, it hinders the potential of cryptocurrencies from becoming a settlement unit, thus making them differ drastically from traditional fiat currencies. The cryptocurrency “industry” has responded by introducing a solution to the market — a stablecoin. A token which is a digital representation of fiat.

Stablecoins are kind of like the bank accounts of the crypto world, designed to serve as a store of value investors can turn to in times of market volatility.

Tether is the first truly successful and established stablecoin. It can also be argued that it is the most universally accepted crypto-asset, far outdoing the usual suspects — Bitcoin and Ethereum. Nothing really comes close to the ubiquity of USDT. There is almost no cryptocurrency exchange that does not list Tether among its main market pairs. Tether is not only listed on all exchanges, but it is also the dominant market by volume across the entire crypto scene.

Tether is a blockchain token, available on multiple blockchains, which is redeemable for USD in a 1:1 ratio. At least that’s the claim, and how Tether keeps the peg is beyond the scope of this article. What is important is that cryptocurrency scene accepts USDT at…

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peerchemist

Free thinker. Armchair analyst. Peercoin project Lead.