Stablecoin Tether (USDT) has exploded in market cap, to hit a figure of more than $10 billion USD. This has doubled the milestone that it hit just five months ago in March as it reached a market capitalisation of $5 billion USD. Tether announced the news yesterday, and data from market price aggregator CoinGecko backs the figures up.
In March 2020 we hit a big milestone as our market capitalization hit $5 billion. Now only four months later we’ve surpassed a $10 billion market capitalization 🔝
— Tether (@Tether_to) July 22, 2020
A large amount of this growth in the stablecoin’s market cap comes as a result of fiat currencies on exchanges being translated into Tether. Paolo Ardoino, the CTO of Tether and Bitfinex, explained in March:
“There was a big realization that when the 50% drop in Bitcoin and Ethereum price happened, many hedge funds were not able to hedge their position. Because if you keep your funds in fiat, it’s really hard to move those funds quickly enough in order to cover your position.”
Ardiono also offered his take on the news of the milestone, suggesting that it’s one of the most used products in the cryptocurrency industry:
Tether has proven to be an incredibly resilient and innovative company over the course of its existence.$USDt is probably the most used product in the entire #crypto ecosystem, almost any exchange uses it, have listed pairs against it or offers custody.
— Paolo Ardoino (@paoloardoino) July 22, 2020
Are Central Bank Digital Currencies Better Than Tether?
As the first fiat-pegged cryptocurrency, Tether has stood as an innovative idea in the cryptocurrency industry since its inception. Since Tether aims to add a level of stability with a 1:1 ratio pegged to the value of the US dollar, it does not face the same volatility as Bitcoin price and other cryptocurrencies. The method, however, has come with controversy, as there are criticisms and concerns around the centralised nature of the stablecoin.
At present, Tether is the leading cryptocurrency with a value pegged to a national currency. The emergence of Central Bank Digital Currencies (CBDCs) could threaten the dominance of the stablecoin over time. As it stands, CBDCs, which would be government-issued, are still in pilot stages and are likely not going to be overtaking Tether’s dominance in the market soon.