What’s the World’s Most Widely Used Cryptocurrency? Hint: It’s Not Bitcoin
Which cryptocurrency is the world's most widely used one?
It’s not Bitcoin, the leading cryptocurrency that accounts for about 70 percent of the entire crypto market’s value.
It’s Tether (USDT), the popular stablecoin that surpasses the flagship cryptocurrency in terms of daily and monthly trading volume. The fourth-largest cryptocurrency by market cap is less than 3 percent of BTC’s market value but exceeded Bitcoin’s volume for the first time in April.
Since early August, at about $21 billion per day, 18% higher than of bitcoin, as per CoinMarketCap, Tether is consistently surpassing BTC’s volume.
“If there is no Tether, we lose a massive amount of daily volume — around US$1 billion or more depending on the data source,”
Lex Sokolin, global financial technology co-head at ConsenSys, told Bloomberg.
“Some of the concerning potential patterns of trading in the market may start to fall away.”
A Popular Stablecoin
A USD pegged token that seeks to avoid price fluctuations is the most used stablecoin. Despite the entry of many competitors — such as TUSD, USDC, PAX, GUSD, and DAI — Tether’s maintains its dominance in the market.
In countries like China, where cryptocurrency exchanges are banned, Tether plays an integral role as people buy USDT over-the-counter and then trade it for BTC or other digital assets.
“For many people in Asia, they like the idea that it’s this offshore, opaque thing out of reach of the U.S. government,” said Jeremy Allaire, Circle CEO. “It’s a feature, not a problem.”
Not all exchanges have fiat on-ramp and use Tether as a substitute, as such, many people don’t even know they use Tether, said Thaddeus Dryja, a research scientist at the Massachusetts Institute of Technology.
“I don’t think people actually trust Tether — I think people use Tether without realizing that they are using it, and instead think they have actual dollars in a bank account somewhere,”
A Great Idea in Theory But Risky in Practice
Tether is also the most controversial coin of the market that has been accused of being used to prop BTC’s price up and is being sued by the New York Attorney General for being involved in loaning USDT to investors and illegally trading in New York.
Tether is issued by Bitfienx and was recently revealed that instead of 100% reserves as has been previously said, it is only 74% backed by USD.
This disclosure was part of an ongoing investigation by the NYAG that accused the company of being involved in the loss of $850 million.
“By avoiding government powers, stablecoins place trust instead in the hands of big tech companies, who have mixed accountability,”
said John Griffin, a finance professor at the University of Texas at Austin who said half of BTC’s runup in 2017 was market manipulation using USDT.
“So while the idea is great in theory, in practice it is risky, open to abuse, and plagued by similar problems to traditional fiat currencies,”