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This is Why Tether is Becoming so Popular

by Syed Shoeb
, This is Why Tether is Becoming so Popular

Tether is one of the most controversial cryptocurrencies in the industry. With accusations of impropriety, it has been blamed for market manipulation while its business moves and accounting practices have stirred up many concerns. Critics argue that Tether lacks transparency and does not have the financial backing that it claims. Despite these critical issues, how does Tether continue to gain popularity in the crypto community? We’ll explore this question in this article.

The response from the US Senate Committee to the announcement of the Facebook-promoted Libra stablecoin is a testament to the threat posed to centralized stablecoins like Tether. Libra is not particularly different from Tether. Facebook’s influence and network appear to be the only factors making it a target. These recent responses highlight that it is only the relatively small size of Tether that is guarding it against a full-on conflict with regulators. Until then, it is a safe bet.

Here are a few factors that contribute to Tether’s popularity:

Resilience of Tether

Tether has stayed relevant despite countless issues and the clear advantages that its competitors show. They have still however dominated the stablecoin market. The most recent data from Stablecoins War, a stablecoin data aggregation site, shows that Tether accounts for 97.5% of all stablecoin volume and 81.1% of the entire stablecoin market cap. Tether’s only real competitors are TUSD, USDC, and PAX.

Network Effects

Tether has taken complete advantage of the Network effect, which refers to the growing value of anything that is used by an increasing number of people. Tether was launched in 2014 and its usage began exploding in 2017. The project enjoyed the historic bull run and the total lack of competition, becoming the single choice of all traders who wanted price stability. By the time Tether’s competition came around, in 2018, it had already captured a large share of market capitalization and the growing network effect has resulted in improving liquidity and reduced volatility, in turn making it more desirable for traders.

Multi Blockchain coin

Tether is augmenting its existing momentum by using other blockchains aside from Bitcoin. Until recently, almost all of Tether operated on top of the Omni Layer. By transitioning toward blockchain agnosticism, Tether cemented its superiority and prevented Bitcoin congestion from hindering its success.

Impact on liquidity and volatility

Tether’s lead and network effect have increased its liquidity. Institutional traders depend on high liquidity to go in and out of positions without experiencing slippage. Tether continues to be the most attractive stablecoin for larger players, who do not require regulatory compliance.

Tether is a business with several major deficiencies regarding transparency, trust, legality, and centralization. Despite this, Tether’s longer history and resulting network effects have helped it establish supremacy among stablecoins.

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