WHAT IS USTD COIN ? STABLE COIN ? | COMODO TALK #3 - YouTube

hi everybody and welcome to komodo talks episode  number three my name is alexa and my name is tim  

and today's subject is usdt usdt is founded  by tether and i want to start with tether

tether is a cryptocurrency that uses the bitcoin  blockchain um to conduct financial transactions  

and um basically it is packed to a u.s dollar  rate exchange rate um and yes it's back to  

such as such currency as usd us dollar um japanese  yen and also euro the concept behind uh the teva  

coin is to make it a stable coin so what does a  stable coin mean in a nutshell that means that the  

volatility or the value of the coin does not go up  or down like other traditional coins like bitcoin  

and ethereum bitcoin and ethereum are really  volatile um at the moment yeah last week um  

bitcoin had an all-time high and i've got  the statistics here if you could just wait  

for me one second the founders of the startup they  just wanted to create such a token that would be  

rigidly packed to the dollar exchange rate  and tether is basically like an avatar  

of of the us dollar oh yeah so as an avatar you  mean it's kind of like um in a cryptocurrency  

environment yeah yeah yes yeah and it would  allow transactions like any transactions selling  

exchanging buying something but it would be  equivalent to usd yeah and that's the whole point  

is to keep it stable so that essentially if you've  invested in other cryptos and you want to say that  

remove or withdraw your reward but you don't  necessarily know whether you want to put it into  

fiat currency traditional paper-based currency  whether you want to keep it in a digitalized form  

i think the idea is you put your money into  this usdt it stays within a digitalized form  

at a stable value and then you can use it again  to buy or sell other cryptocurrencies yeah so it  

stays in that sort of digitalized realm if you  will yeah and at the same time if you need to  

withdraw your money uh in fiat money your earrings  yeah you you basically you can just contact tether  

and uh exchange your usdt to usd yeah without  losing value because the value rates yes yes  

doesn't it there was a there was  a point i want i wanted to say  

to give you an idea of the sort of volatility  of other coins so bitcoin last week experienced  

an all-time record high so bitcoin's the most  prominent uh cryptocurrency that we know of  

and it went above eight thousand dollars for the  first time and this was last week um but now it's  

dropped down below fifty nine thousand dollars  so that's a reduction of what nine thousand  

dollars in a week so that's like an expression  of the volatility which means the uh sort of the  

not insecurity but the the rate at which a  cryptocurrency's value can go up and down  

bitcoin's really volatile and so are other alt  coins or alternative coins but usdt stays the same  

yeah and nowadays the capitalization of tether  

is around 62 or even 63 billion dollars and  it occupies the third line um in the list  

of cryptocurrency yeah the third largest  cryptocurrency in the world yeah yeah yeah in 70  

of all transactions with cryptocurrency the uh  one of the currencies would be usdt wow in 70  

of transactions really one of the currencies  would be usdt so this is a really prominent  

prominent coin with a lot of value right loads of  value um oh and i think we should note that usdt  

is not not only the one stable coin there are  some others for example usdc from circle true usd  

gemini dollar binance usd etc but the growth  rate of tethers capitalization is impressive  

and i know other countries have a similar  sort of stable coin don't they like  

great britain has a stable coin of its own  so it's a concept that is trending and has  

yeah that has a lot of utility it has a lot  of great use the three common usages of usdt  

are trading so cash to usdt and then you can  purchase other cryptos which what we've already  

said lending so you can lend assets um and the  lenders aren't worried about the losses because  

there is no volatile volatility with this coin  the value of the coin does not go up and down  

and also cross-border payments so you can pay you  can do payments internationally within minutes  

using usdt yeah it's more fast super fast that's  why it was founded to make it easier to make it  

faster a point i really want to make though here  and i put this in bold in my notes is do not  

expect value increase if you're investing  in usdt because that is kind of against the  

point isn't it yeah because it's stable because  it's stable yeah because it's a stable yeah and  

the whole point is to basically keep your assets  or your value in that digitalized form so then  

you can either pluck from it withdraw or  you can use it to purchase other cryptos  

that's the whole point of the usdt so  please if you're going to invest in usdt  

do not be disappointed when you do not see a value  increase yeah against the nature of that coin  

yeah because the purpose is different the purpose  of the coin yeah yeah it's its nature is totally  

different to other traditional coins like  bitcoin you know if you're investing in bitcoin  

the concept essentially is to try and make profits  isn't it usdt is just a safety to put your money  

keep it there in a digitalized form we can use  it and maybe to exchange to other currencies yeah  

yeah to exchange just to make it easier just to  understand the value yeah in in dollars yeah yeah  

and and it's just a good so it's a baseline isn't  it it's kind of like a base yeah if that's how you  

think if you want to think about it um so i've got  some other so i've got some stats here as well to  

again just to reiterate that sort of volatility uh  btc uh btc sorry which is bitcoin fell by uh 6.9  

to 61 000 recently ether fell by seven point  eight six percent to four thousand three hundred  

and twenty and these are this is dollars us  dollars by the way uh teva staying put at one  

dollar doing its job really well that is the whole  point and tether doesn't have its own blockchain  

do you know about it like it's connected  to the bitcoin blockchain yeah but it also  

works with other other currencies yeah with  other ledgers basically yeah so it's like a  

buy ledger system so we've been waxing lyrical  about the benefits of usdt being a stable coin and  

you can keep your coin in digitalized form often  pulling it out into traditional fiat form yeah  

but there are drawbacks to usdt and i think  we're gonna investigate a few of them right now  

so one of them is when we're looking about the  um the sort of insurance of usdt teva states that  

usdt is kept in reserves but that's quite a sort  of ambiguous and um unspecified concept um because  

for example on the website it says it keeps in  the form of cash cash equivalents short-term  

deposits and other securities so it has a cash  equivalent it has a cash equivalent and apparently  

it's around about 75 of their reserves are tied up  in cash or cash equivalents and that's go that's  

according to the forbes website forbes.com and  most of this is in actually in commercial paper  

now what are what is commercial paper commercial  paper is literally unsecured promissory notes  

what our promissory notes they're essentially  professional promises so they are not fully  

clad or ironclad professional contracts that are  signed their professional promises basically um  

saying uh like a promise that i owe you  my company owes you some money essentially  

okay so there is a little bit of or a  little lack of sort of security in terms of  

the backing by cash or cash equivalents the  reserves are also tied up in other assets this is  

around about 9.96 and what are these specifically  so we're talking about things like corporate bonds  

which is essentially um proportionate uh  proportionate debt essentially that the company  

sells to other people we'll give you a portion  of our debt and in a few years time we'll pay  

a little bit more money to recoup that debt so  it's essentially offloading debt will give you  

this bond say this bond is for traditional  uh for ease this bond is worth say  

uh 10 us dollars okay give this bond to you  you pay us ten dollars but in five years  

time you're gonna buy that back for say 15 so you  whoever you lend the bond or you sell the bond to  

they do make a profit in the end but essentially  it's a way of like controlling your your assets  

improving your situation financially and the  other aspect where um usdt keep their reserves  

is from receivables from secured loans and this  is 12.5 percent of their reserves um this is quite  

controversial not necessarily secure so these  are loans made to third parties but who are  

they they're not specified on the website it's  not completely transparent and that brings up  

a range of different questions so although there  are massive amounts of benefits to usdt it it does  

have some drawbacks that we want to bring to your  attention some risks yeah there are some risks but  

again that's the nature of the beast with all  aspects of finance traditional fiat currencies  

smart uh smart technologies cryptocurrencies  there's always going to be risk when you're  

talking about currency there's always an  inherent risk and you cannot bypass that 100  

it's all about being informed from from  respectable well-established sources and  

making up your own informed decisions basically  but now it's convenient and fast to use tether and  

to trade yeah so probably it will stay in the  cryptosphere for some time or even even stay  

for forever for long for sure i mean but it's in  an it's an ingenious coin isn't it it is it's so  

useful it's so practical because it it literally  assists you as a trader in whatever you want to  

achieve yeah it's kind of representative of the us  dollar in the crypto sphere yeah yeah it's really  

worthwhile and and as we've said it's uh what was  it the top top number three in the top leading  

cryptos yeah in the marketplace it occupies the  third line in the list of cryptocurrencies yeah  

yeah and and that's relevant that's contemporary  standings right now fantastic well if it's number  

three then it cannot be it cannot be that negative  i think and it has to be pretty positive thank you  

for watching us today guys and our next episode  will be about btc which is bitcoin so don't miss  

it and please like our video subscribe our  youtube channel and share our video to your  

friends because it is useful and interesting  see you on the next episode take care bye