Many cryptocurrencies built their reputations on the potential for mouth-watering price increases, benefitting early investors.
Others opted to instead peg their value to an established fiat currency, such as the dollar, in order to escape the wild volatility that afflicts the rest of the market.
Tether became a stalwart of the stablecoin scene, not just attracting people looking for an asset to act as a store of value, but also appealing to anyone more interested in the utility of crypto outside of its investment potential.
Let’s talk about why Tether’s dominance isn’t all that desirable, and what alternative route the market should follow to avoid this in the future.
The blip that nearly sank the ship
Until recently, Tether looked like a safe bet which deserved its flagship position as the most popular stablecoin.
With this dominance came adoption in a number of areas. For instance, there are a number of Tether casinos where you can deposit and gamble with this currency.
Tether’s parent company, iFinex, even registered a trademark for its own online gambling service under the name ‘Betfinex’. The application has yet to be approved, but it’s an interesting insight into the ambitions that the people behind this stablecoin hold.
However, the flaw in all this was revealed following the meltdown of LUNA, as well as stablecoin TerraUSD which was harnessed to the fate of this token.
In the aftermath, confidence in all sorts of coins was eroded, and even Tether took a hit, with its value dipping below the $1 mark.
While USDT has since clawed back the ground it lost, this was a wakeup call for many investors, and also those who were attracted by the utility of the coin.
The problem with monopolies
In every case where a monopoly exists, the only people that this benefits are those who are at the help of the dominant force in the market itself.
This is certainly true of Tether in the crypto space, specifically speaking of its role as a stablecoin. There have been warnings in the past that Tether’s failure would be catastrophic, and likely cause a domino effect that took a litany of smaller coins with it.
This nearly came to pass during the aforementioned sinking of LUNA and TerraUSD, and even now there is still a hole in Tether’s capitalization which represents the number of holders who chose to jump ship after getting spooked when it came briefly unpegged.
It’s not just that having an overly dominant, bloated stablecoin is bad for investors and traders, but also that Tether in particular has not been operated and overseen with adequate transparency and honesty over the years.
It all feeds into perpetuating the stereotype of the crypto market being akin to the Wild West, rather than a respectable and resilient niche where there is room for more cautious investment, as well as more than a few moonshots.
The path forwards
Hopefully, the disruption and continued uncertainty that has surrounded the crypto scene for the past few weeks will serve a positive purpose, even if it has also resulted in stress and heartache for many of the more recent converts.
Convincing those behind the likes of Tether to take note of how easily their foundations can crumble, and making them up their game, is only possible at times like this.
Predicting the next steps and what they’ll achieve is difficult, of course, especially as Tether remains a major player. That said, a bit of caution and outside scrutiny could mean the diminishment of its dominance without kicking it to the curb altogether.