"Forbes" Interview with Tether CTO: Terra's Crash and the Future of Cryptocurrencies
Original source: Forbes
Stablecoin Tether (USDT) CTO Paolo Ardoino spoke to Forbes Argentina about the collapse of algorithmic stablecoin UST, the future of the market and criticism of the industry.
The recent UST debacle has put stablecoins in check, which until recently was considered a"safest cryptocurrency". Because they are tied to the value of traditional currencies (usually the U.S. dollar), they don't have the volatility of bitcoin or ethereum. Therefore, many investors choose them because they are less risky and, as the name says, more stable.
However, the debacle of UST, the algorithmic stablecoin of the TERRA ecosystem, has spooked millions of investors around the world. So much so that the market value of these digital assets fell by about $30 billion in a matter of weeks.
In this case, the most powerful stablecoin is still Tether or USDT. With a market capitalization of over $66 billion, it is the most used stablecoin for transactions globally, according to Coingecko. To that end, Forbes Argentina spoke to Paolo Ardoino, Tether’s CTO, about his thoughts on the current market situation, what to expect in the coming months, and how they as a company are dealing with the criticism they’ve received.
Forbes: What stage of development is Tether in?
Tether invented the stablecoin in 2014. Over the past eight years, Tether has made many breakthroughs, becoming the foundation of the future of payments, asset tokenization, and a more transparent and efficient global economy. The company is focused on ensuring global access to Tether and other currencies backed by stablecoins built on Tether's infrastructure. From cross-border remittances to digital payments, Tether aims to be as ubiquitous a currency as the U.S. dollar in the future of payments and commerce.
Forbes: How does the collapse of UST affect the market and the image of stablecoins?
The debacle of UST provides an opportunity to clarify an important distinction between centralized stablecoins, such as Tether, and other decentralized stablecoins, such as UST. Decentralized algorithmic stablecoins are still in their infancy and are often experimental in nature. This is not to be confused with Tether, which has been the largest stablecoin by market capitalization since its launch, as well as the most traded stablecoin. Not to mention that Tether has survived multiple black swan events in the crypto economy and has never refused a user redemption in its history. In fact, Tether's customers have redeemed billions of dollars in recent weeks, and we are pleased to say that we remain solvent.
Forbes: This situation, combined with the bear market cycle, has given cryptocurrency critics the opportunity to speak negatively about the industry. Why do you think there are so many critics of cryptocurrencies and how do you respond to those criticisms?
The big problem facing the industry is the continued demonization of cryptocurrencies and blockchain technology. They are portrayed as being exploited by criminals or thieves when the opposite is true. They offer more transparency than any other financial institution in history and have higher standards than most banks. You can't hide transactions, and you can't be vague about where the money goes or where it came from. In many ways, this is the best form of money we have. Unfortunately, every time there's a big leap in technology, there's just as much criticism: it's human nature. Friction is predictable when you're challenging the old ways of how things work. Don't forget that there was a time when people didn't believe the Internet existed.
Forbes: What is your analysis of UST and algorithmic stablecoins?
The failure of UST should not be used as an indicator of the success of an algorithmic stablecoin. Anything is possible and we are in a period of rapid innovation, especially in finance. But it all boils down to a question that we at Tether are very familiar with: what is asset-backed finance? It is illogical to back up finances with highly volatile and highly correlated assets. This is what causes the knock-on effect in the market, which is why Tether reserves hold strong, conservative and liquid assets that track the underlying currency, such as US Treasury bills.
Forbes: Tether is not immune to criticism. In fact, people often question which assets guarantee parity with the dollar. How do you respond to this question?
Tether (USDT) has a strong, conservative and liquid portfolio consisting of cash and cash equivalents such as short-term U.S. Treasury bills, money market funds and holdings of commercial paper from issuers rated A-2 and above. These ratings are S&P's short-term credit ratings, if available. If no rating is available, the Moody's or Fitch rating is converted to the S&P equivalent using publicly available industry standard conversion tables. All Tether tokens are pegged 1:1 to the corresponding fiat currency and backed by 100% reserves. Our reserve values are published daily and updated at least once a day. We also provide a breakdown of our reserves, which no one else, not even our competitors do. By taking this step, we are forcing our competitors to be more transparent as well.
Forbes: In Argentina, many people are turning to stablecoins due to the economic environment (inflation, devaluation of the local currency, and difficulty accessing strong currencies such as the US dollar). Do you think a country like Argentina would have a higher rate of cryptocurrency adoption?
Yes of course. In Latin America and many other countries around the world, USDT is very popular, especially in regions like Argentina where the national currency has devalued. These tokens are suitable for all ages and professions. USDT allows Argentines to access a truly global market and frees them from the local black market where very limited liquidity leads to high premiums. This also allows them to hold Tether in a way that cannot be seized by the government, unlike a local bank account. On the other hand, we recently launched a Tether token (MXN₮) pegged to the Mexican peso. I believe this launch will provide a testing ground for new users in the Latin American market and pave the way for future fiat currency launches in the region.
Forbes: What are your expectations for the cryptocurrency market in 2022? What to expect in 2023?
The cryptocurrency market is very exciting right now because there is a lot going on in this space. Right now, we're focusing on projects that bring education to the cryptocurrency space and green energy to Bitcoin mining. We firmly believe that this technology needs to be more accessible and understandable to everyone. We also recently announced a partnership with the city of Lugano, Switzerland, to showcase real-world applications of blockchain technology by actually applying it to local communities in the region. To date, most blockchain projects have focused on foundational work, paying little attention to local communities, offering practical applications of little use in the real world. Through this partnership, we hope to expand the city's blockchain capabilities and promote Lugano as a major European hub for blockchain applications.
Forbes: What's your stance on the regulation of cryptocurrencies?
We welcome more regulation and clarification of cryptocurrencies and the companies operating in the industry. Establishing proper guidance will help foster innovation and ensure the continued development of decentralized technologies.
Forbes: What advice would you give someone who wants to start investing in cryptocurrencies?
As cryptocurrencies become more widely used, a key recommendation is the importance of education. That’s why Tether, together with the city of Lugano, recently announced the launch of the Plan B Summer School, an initiative for university students that enables participants to work with top minds in the industry to develop blockchain prototypes and deepen their knowledge of the blockchain. technical understanding. The move will focus on Bitcoin, Lightning Network, consensus mechanisms, DeFi, and more. We want to contribute our expertise, knowledge and support to the city of Lugano by focusing on educating the young generation through cooperation with local universities and research institutes.
Forbes: Finally, do you think cryptocurrencies will replace "traditional" currencies in the near future? If so, why? If not, do you think the two systems will coexist?
We believe we are only at the beginning of a financial revolution, so there will always be a market for Tether tokens as they provide people with the opportunity to interact with the broader cryptocurrency ecosystem. It is a resource for the unbanked, a tool for an ever-evolving payment system, and a leader in driving widespread adoption for the new financial revolution. The Tether token is the most liquid stablecoin on the market. It was the first stablecoin and has withstood years of volatility. Tether makes the crypto economy more efficient. replacing"traditional currency"Original link
