Bitcoin Global News (BGN)
June 13, 2018 -- ADVFN Crypto NewsWire -- By now, news about the
Tether cryptocurrency has reached across the Blockchain industry
and into the traditional world of finance, more than once. Despite
everything, it appears that the saga is far from over.
Today, a study was released by the
University of Texas-Austin, which reported some significant
findings related to widespread speculation on whether Tether is
actually a legitimate cryptocurrency, or not.
Before delving into what this study
discovered, it is important to make clear, that of course, these
researchers cannot, in good faith, imply with complete certainty
that they have uncovered Tether’s true usage. As with any serious
academic research, all findings are related to implied facts from
hard data and therefore, correlation rather than
Secondly, it is important to
quickly make sure that everyone is, in fact, clear on what Tether
is. On the most basic level, it is based on the Blockchain, like
any other cryptocurrency, but what differentiates it is the fact
that it is secured by reserves of US
The controversial part of this that
has often been questioned by the media as well as industry insiders
is that Tether has never undergone a professional, outside audit to
prove their cash reserves. One was attempted, but it failed with
little explanation as to why.
Furthermore, when Bitcoin falls
below a certain level, some have claimed that Tether is “printed,” which is synonymous
with releasing more cryptocurrency coins into the market, to push
Bitcoin and others back up to a certain price level.
Through two hypotheses, which amounted to assuming that Tether is
supply-driven or demand-driven, John M. Griffin and Amin Shams
aimed to discover exactly what Tether’s relationship with the
Crypto-exchange, Bitfinex, is, as well as what Tether’s influence
on the overall Crypto-market is.
In short, through using several
complex algorithms to simplify the analysis of the Tether and
Bitcoin blockchains, Griffin and Shams ended up going through more
than 200 gigabytes of data from over ten different sources,
including Blockchain.info, Coin Desk, and CoinAPI, as well as
Coinmarketcap.com, which are some of the most well-known and
well-respected sources from real-time market data.
In the end, what they found through
their analysis seemed to strongly support the idea that Bitfinex
provides the cash reserves for Tether. In connection with this
idea, they also found that it is likely that each time Bitcoin’s
price falls below a certain level, Bitfinex props it back up by
sending cash to Tether, with which it purchases Bitcoin.
In other words, as a Coin Desk
report on the subject states, when there’s a large bear run, it is
suggested that Bitfinex and Tether work together to manipulate the
market to stabilize it.
To add to these somewhat disturbing
findings, the study might have suggested that Poloniex and Bittrex
were also likely involved in market price manipulation to some
degree, though it should be made clear that this was a secondary
observation that was made by Coin Desk.
What all of this means is that
first, their results showed strong support for the idea that Tether
is sent out to investors as a sort of scam to keep cryptocurrency
prices up. Even so, they conceded that there does seem to be some
sort of investor demand for Tether as well, which could indicate
more natural price movement.
In the end, it is essential to
remember that this paper has been out for less than twenty four
hours. It will be truly interesting to see how Tether and the
exchanges that were suggested to be involved respond to this and
also, where government entities go from here, since the study
suggested that their results support “external capital market
surveillance and monitoring.” Does this mean that every Crypto firm
will soon find the SEC knocking on their door with pointed
requests? Only time will tell.
By: BGN Editorial Staff