If you do end up farming some XCH, or buying some, and you would like to get into trading there is something you should be aware of before you get into it. Something has changed in cryptocurrency trading since the last time I made any trades, and that big change is Tether.
Tether is what is known as a “stablecoin“, and its most common iteration – the USDT – is a stablecoin that the company who operates it claims is backed completely against the United States Dollar. What does “backed” mean in this context? For Tether it means that they hold the price of a USDT token at a 1:1 ratio. In order to do that, they would need to have as many US dollars in liquid format as there are USDT in circulation, so in theory if someone gathered all of them up the Tether corporation could liquidate that investor at full value.
A lot of critics have been coming out and challenging that assertion, claiming that Tether is not properly capitalized and could not survive a run on the currency. This claim is supported by a very suspicious financial disclosure document from the Cayman Islands put out by company recently (shown in full below). One of the claims coming out of this process is that Tether is holding a gigantic amount of Corporate Paper that would make them one of the biggest institutional investors in that market.
Because of these red flags, it is important to keep in mind the potentially fragile state of the Tether “stablecoin” and to think carefully before you leave a lot of money held in USDT. The exchanges make it quite difficult to avoid storing value in USDT because it is very common for an exchange to use Tether as a base coin for all their trades. It serves to give people the illusion they are trading in US Dollars and holding wealth in US Dollars but they are not.
None of this is financial advice, I am not qualified to even give myself financial advice. But I do know risk mitigation and due to the nature of Tether and how it seems poised for a bank run at any given moment I would advise against holding any significant value in that coin. If you do not want to keep money in cryptocurrency, you certainly don’t want to store it in USDT just because it “feels” (deliberately so) like a US Dollar. It is not. Unless you think you can show in Hong Kong with 63 billion USDT and leave with 63 billion dollars. Sounds ridiculous right? Because it is.tether-assurance-mar-2021-2