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Are Tether and Bitcoin related? How Tether affects Bitcoin?

By January 29, 2021May 10th, 20234 minute read

Tether and Bitcoin have been put through a lot of speculation in recent days, with many people claiming tether as an instrument to manipulate Bitcoin prices (and other cryptocurrencies as well). Tether is the subject of a lot of scrutinies, including an investigation from the New York Attorney General’s office and class action lawsuits. One such lawsuit claims that “control of an exchange and the opportunity to trade with non-existent money can allow a single entity to influence cryptocommodity prices dramatically”. To answer all the speculation surrounding USDT and its relationship with Bitcoin, let’s first cover the basics.

What is USDT?

USDT or Tether is one variety of cryptocurrencies called “stablecoins” whose value is tethered to a physical asset. In Tether’s case, the value of the stable coin will always mirror the value of the USD, bridging the gap between cryptocurrencies and fiat currencies. This is different from other cryptocurrencies as they have no speculative value but serve as a medium of exchange and a store of value. 

Stablecoins like Tether combine fiat currencies’ stability and security while enabling users to easily transfer money in a decentralized manner like other crypto exchanges. This ensures stability, minimal transaction fees, and transparency to the users.

The Tether tokens are collateralized stablecoins, wherein each token is backed by a fiat currency, including the likes of the US dollar, the Euro, the Yen, or even INR. Though backed by several fiat currencies, the value of USDT will always be pegged to one US dollar. For instance, USDT to INR will always mirror the exchange rates of USD to INR.

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 However, there is no guarantee provided by Tether Ltd. for the exchange of Tether for real money. You convert your USDT to INR or any other fiat currencies by using crypto exchange platforms like WazirX. 

USDT and Bitcoin

At first glance, little seems to be in common between USDT and Bitcoin, apart from the fact that both USDT and Bitcoin are cryptocurrencies. However, according to allegations made by many parties (law enforcement and economists alike), Tether has been used to manipulate Bitcoin prices in the past actively. 

In a study titled “Is Bitcoin Really Untethered,” John Griffin calls Tether an unstable coin and accuses Tether Ltd of minting tokens without being backed by Fiat currencies, as it was meant to be. 

To put these allegations into perspective, we need to look at some facts –

  1. Around 60% of Bitcoin Transactions are done using tethers. Tether is one of the most popular ways to buy bitcoin in India and across the world. 
  2. There has been a massive upsurge in the circulation of tethers during the last few years. From an approximate circulation of $4 billion in Tethers in January of 2020, the current value of tethers in circulation is approximately $21 billion.
  3. There is no publicly available audit of cash reserves, despite requests from critics.

The study notes that in the 2017 Bitcoin rally, Tether accounted for 59% of Bitcoin’s price increase and proceeds to claim that it was directly influenced after more Tether was minted and pushed into circulation. He further notes the risk of collapse of Tether due to regulatory scrutiny and the associated risks – “It’s a huge risk for the cryptocurrency space. A lot of people don’t realize how exposed they are because so many transactions occur in tethers. If you removed those tethers, it would lead to a significant crash in cryptocurrency prices. It could cut across multiple exchanges”.

Final Word


However, it is important to keep in mind that these are just allegations and not proven facts. The investigation is ongoing, even delayed, causing a lot of uncertainties in the crypto world. However, Gregory Pepin, deputy CEO of Deltec Bank (Tether Ltd.’s bank) confirmed that “A reserve backs every tether, and their reserve is more than what is in circulation” on the latest episode of the  “Unchained” Podcast

At WazirX, we will continue to monitor the case closely and see if there’s any merit to the claims. As of publishing this article, we don’t find any merit to these allegations and still enable you to use USDT to buy Bitcoin in India. That being said, if you wish to trade your USDT to INR, you can feel free to do so on our platform. USDT, thanks to it being a stablecoin, remains one of the best ways to buy bitcoins in India (as evidenced by the fact that approximately 60% of all Bitcoin purchases are made using Tether). However, at WazirX, you’ll still be able to buy Bitcoins in India with INR. You can check the rates of the different pairings here –

USDT/INR

BTC/INR

BTC/USDT

Frequently Asked Questions

How Does Bitcoin Work?

The blockchain, a distributed digital ledger, is what Bitcoin is based on. As the name suggests, blockchain is a linked database made up of blocks that store information about each transaction, such as the date and time, total amount, buyer and seller, and a unique identifier for each exchange. Entries are linked in chronological order to form a digital blockchain. Entries are linked in chronological order to form a digital blockchain. Blockchain is decentralized, which means any central authority does not control it.

How Many Bitcoins Are There?

There are 18,730,931.25 Bitcoins in circulation as of June 2021. The total number of Bitcoins that would ever be there is just 21 million. On average, 144 blocks are mined every day, with 6.25 Bitcoins per block. The average number of new Bitcoins mined every day is 900, calculated by multiplying 144 by 6.25.

How To Create Bitcoin Account?

Firstly, Go to the WazirX website and sign up. Then, a verification mail will be sent to you. The link sent via verification mail would be available only for a few seconds so make sure you click on the link sent to you as soon as possible, and it will verify your email address successfully. The next step is to set up security, so select the most suitable option for you. After you have set up the security, you will get a choice to either proceed further with or without completing the KYC procedure. After that, you will be directed to the Funds and Transfer page, where you could start depositing Bitcoins to your wallet. You can also deposit INR and then use it to buy Bitcoin for your WazirX Bitcoin wallet.

What Is Meant By Bitcoin?

Bitcoin is a digital currency that was initially released in January 2009. It is based on ideas offered by Satoshi Nakamoto, a mysterious and pseudonymous figure, in a whitepaper. The name of the person or individuals who invented technology has not been revealed. Bitcoin promises lower transaction fees than other online payment systems, and unlike government-issued currencies, it is decentralized.

Can Bitcoin Be Converted To Real Money?

Crypto exchanges, Bitcoin ATMs, Bitcoin Debit Cards, and Peer Peer Transactions are all options for converting Bitcoin to cash. This can be accomplished by using Bitcoin exchanges such as WazirX. A Bitcoin ATM is a real place where you may purchase and sell Bitcoins with cash, unlike standard ATMs that allow you to withdraw money from your bank account. Many websites provide the option of purchasing Bitcoin in return for a prepaid debit card that works similarly to a standard debit card. Through a peer-to-peer marketplace, you may sell Bitcoin for cash faster and more privately.

How Can I Convert Bitcoins To Cash?

Bitcoin may be converted to cash in various ways, including crypto exchanges, Bitcoin ATMs, Bitcoin Debit Cards, and Peer to Peer Transactions. You may do this by using Bitcoin exchanges like WazirX. You may also sell Bitcoin for cash faster and more anonymously through a peer-to-peer marketplace.

How Much Is 1 Bitcoin Worth Today?

Check out the current price of Bitcoin on the WazirX exchange. Bitcoin's value is primarily determined by its supply and demand in the market. Other elements have an impact on its worth. Its intrinsic value can also be calculated by calculating the average marginal cost of producing a Bitcoin at any given time, based on the block reward, electricity price, mining hardware energy efficiency, and mining difficulty.

What Type Of Currency Is Bitcoin?

Bitcoin is a type of digital currency or cryptocurrency. In January 2009, Bitcoin was established. It's based on Satoshi Nakamoto's ideas, which he laid out in a whitepaper. The name of the individual or people who invented the technology remains unknown.

Is Bitcoin A Good Investment For The Future?

Some investors are afraid of the risks or devastation, but others are very eager to pursue the possibility of profit from a Bitcoin investment. A Bitcoin investment is similar to stock investing, except it can be more volatile.

Who Created Bitcoin?

Bitcoin is the first application of the concept of "cryptocurrency," first articulated in 1998 on the cypherpunks mailing list by Wei Dai, who proposed a new form of money that relies on cryptography rather than a central authority to manage its creation and transactions. Satoshi Nakamoto published the initial Bitcoin specification and proof of concept on the cryptography mailing list in 2009. Satoshi exited the project in late 2010, with little information about himself available. Since then, the community has evolved, with numerous people working on Bitcoin. Satoshi's anonymity has sparked unfounded fears, many of which may be traced back to a misunderstanding of Bitcoin's open-source nature.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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