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James R. Davis
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Houston, TX
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 Posted - 01/18/2015 : 6:17 PM
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I mentioned what I thought was the real breakthrough relative to bitcoins - the blockchain technology - in another post on this site yesterday.
In that post I suggested that the blockchain technology could be used to provide payment system (money transfer) services for more than simply bitcoins. For example, US Dollars, rather than bitcoins.
Typically, beyond investing or trading, people buy bitcoins in order to transfer value from one place to another, anywhere in the world, within about one hour and with virtually no cost. That has worked extremely well and is extremely safe with no middlemen of any kind involved (like bank tellers, wire transfer agents, brokers, dealers, etc.), each of whom require a payment for their services and, thus, makes the process of funds transfer expensive. (And time consuming - like two or three days in the case of wire transfers.)
I was invited to join a new beta test today. The company, Tether.to, has just begun testing a new capability that utilizes the bitcoin blockchain - the transfer of US Dollars, Euros, and Japanese Yen.
It does it by representing each of those currencies with a token (call it a coin if you will) called a Tether that is tied DIRECTLY to that currency on a one-for-one basis. In other words, 1 USD+ (US Dollar Tether) is worth EXACTLY one US Dollar.
So, there is no market volatility risk while the funds are in transit.
Let me explain that ... To transfer, say, $1,000 from one person to another using bitcoins, the sender must first buy $1,000 worth of bitcoins. Then transfer those bitcoins using the blockchain. Then the recipient must sell the bitcoins for US Dollars to complete the transactions. But what is the result of a drop in bitcoin value during the hour it takes for the transfer to occur? The recipient loses money!
Now enter Tethers. To send $1,000 to someone, the sender needs to buy $1,000 of USD+ Tethers, then transfer them to the recipient who sells them back into US Dollars. And there is NO market volatility risk whatsoever as when the recipient receives his USD+ Tethers, they are and remain ALWAYS valued at $1,000 US Dollars.
It is coming to pass just as expected.
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James R. Davis
Administrator
17396 Posts
[Mentor]
Houston, TX
USA
Honda
GoldWing 1500
|
Posted - 01/21/2015 : 4:51 PM
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I confess that I have not yet figured out their business model.
It's possible that after the beta test they will begin requiring a transaction fee, but as of now the only fee is the bitcoin transaction fee of about $0.02, none of which is retained by Tether.to. |
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Tethers
