Bitspark is a bankless money transfer company that helps you convert cash to cryptocurrency, globally.
Many people in the crypto space have raised serious doubts whether Tether can deliver on its promises behind their stable coin USDT, and some are even arguing that Tether is an outright scam.The issues that many crypto investors have are across problems with the convertibility of USDT, the fact that there is no proof of funds supporting the peg, and the company’s continued inability to have an audit performed to prove everything is in order. The recent firing of their last auditor, likely when they asked for real information, certainly doesn’t help.
In contrast, many are looking at BitShares as a safer and more reliable alternative. Bitshares is a decentralised exchange with its own blockchain. BitUSD is their answer to Tether’s USDT and it’s backed up by their reserve amount of bitshares (BTS), recorded in the Blockchain.BitShares is simply far superior than Tether in every single sense of the word.To illustrate the difference with what is likely the easiest question to answer: would you rather go with a decentralised exchange that has all information publicly available and stored on the Blockchain, or a private centralised exchange where any form of information is stored in a black box?
The answer is simple, but to get a better understanding of the reasons why, let’s take a look at some of the most pressing issues surrounding Tether and what makes BitShares a far better and safer alternative.
Tether is the centralised that created USDT, a cryptocurrency pegged to US dollar value. The USDT coin was created in a bid to support crypto-to- USD trade on other exchanges.When you want to sell your more volatile cryptos and exchange them to USD, a like USDT offers some compelling advantages when compared to exchanging into actual USD.Some of the benefits for traders include faster transaction times (minutes vs. days) and lower transaction costs. For exchanges, it means that they don’t need to hold USD-denominated bank accounts, which at times can be a liability as the established financial services industry moves between supporting and blocking cryptocurrencies.
There is nothing wrong with the concept of stable fiat-pegged cryptos. In fact, it’s a central part of Bitspark’s growth plan and business model in delivering a far better remittance service anywhere in the world, supporting any remittance corridor (more on that later). The problem lies with the company that created USDT and the utter lack of transparency surrounding it. Or worse yet, when we actually do know what’s happening behind the scenes…it’s not reassuring at all.
Tether says that USDT is backed 1:1 by USD in a bank account. To maintain the peg, Tether must keep the equivalent amount of US dollars in their reserves in order for there to be a value correlation of 1:1 at all times. Yet Tether has never provided any evidence of this money existing and no one knows where they bank, or if they even have a bank. The question whether they really have 2 billion USD to back up the 2 billion USDT in circulation in untouched reserves is getting asked more and more, and Tether’s attempts at providing transparency around the issue would be laughable if it wasn’t putting countless of investors’ money at risk.
There is a proof of funds document on Tether's homepage in the form of an internal memo put together by Friedman LLP dated September 28, 2017. But according to experts, this is worded in a way that doesn't prove the existence of the funds. The report redacts the name of the banks where Tether supposedly has its money, and Friedman doesn’t know if Tether can even access the funds. But that’s all in the pas now as Tether has since then announced that the relationship with auditor Friedman LLP has been dissolved.
“Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame. As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success.”Looking at that statement, it becomes clear that the auditor wanted more data, which would indicate that Friedman was willing and able to audit Tether’s books. And rather than provide the additional data that was needed, the relationship was dissolved instead. This in itself is a strong indication that something is very wrong with their transaction history. It’s a problem that won’t go away because any other auditor will likely ask for the same data, to try and make sense of their books.
But firing Friedman allows Tether to further delay the audit, saying they are ‘actively looking’ as they try to find an auditor who is willing to turn a blind eye. ‘Looking for ways to provide transparency’, is not the same as transparency. Investor beware.
As for the spokesperson’s claim that Tether is “the first company in the space to undergo this process”, is not an excuse for anything, even if it’s true. To an auditor, there’s nothing fundamentally strange about auditing balance books in US dollars in a standard bank account.The fact the Tether is in the Blockchain space is irrelevant to an auditor. Blockchain is a ledger technology and any audit firm can understand a ledger.
On November 19, 2017 Tether was hacked, having $30 million USDT taken from its treasury wallet. At the time, Tether made it clear that they would not redeem any of the stolen tokens and that it was in the process of recovering the tokens to prevent them from entering the broader ecosystem. But it now appears something a lot more sinister is at work here.The Bitcoin address used in the heist is a Bitfinex wallet address, which has led the crypto community to seriously suspect long-standing fraud and market manipulation. In this alleged scam, Tether money is ‘printed’ for the primary purpose of buying Bitcoin and then selling it for real USD.
There are two reasons Tether and Bitfinex would do this:
And for the final nail in the coffin, there’s a problem around convertibility. Let’s say that Tether does have the USD funds it needs to back up their currency peg. It won’t really do you any good. Tether says that there is no contractual mechanism to convert these tokens into USD. In other words, even if Tether would have the money, they may not pay you. You’d have to go to an exchange, and trade your USDT for another cryptocurrency.While the Tether USDT trades at close to $1, converting it into actual US dollars is more difficult, especially as more and more exchanges are de-listing USDT. This could even mean that USDT may be completely non-redeemable soon. If all of this has made you eager to sign up and get a dedicated Tether wallet on their homepage, you’re too late as they have currently locked downregistrations for new users.
But what if there was a safer option to hold fiat-pegged cryptos? And what if there was a way to exchange fiat-pegged crypto to fiat cash in hand?It’s time you learnt more about BitShares, and how Bitspark is using fiat-pegged cryptos in a revolutionary remittance service.
BitShares solves all of these problems and concerns, offering a much safer and reliable way to hold pegged cryptos. BitShares builds on the decentralised currency model of Bitcoin, the versatility of [Ethereum](https://www.ethereum.org/, and extends in all directions to the point where the network is an economy in its own right. BitShares is a network, a bank, a currency, an exchange platform and it supplies the next evolutionary step in the world of cryptocurrencies.
Unlike Tether, BitShares is decentralised which means the security of the funds rests in the hands of the users. This avoids the vulnerability a centralised exchange has in terms of hacks.Where a compromised centralised exchange affects all users at once, in a decentralised exchange any attack only impacts a single user. Each user is individually in charge of their own security which makes it a much safer option. This also means that because BitShares is not a company exercising complete control nobody can run away with your money.
Speaking of money, the token used for backing up pegged cryptos is the native BTS token. A pegged crypto like BitUSD is backed up by 200% worth of BTS in collateral, recorded in the decentralised Blockchain. Decentralisation significantly lowers counter-party risk and increases transparency, meaning that there is no need for an auditing firm to validate the existence of thefunds needed for backing a peg. It’s available for everyone to see for themselves on the blockchain.
The Bitspark remittance network relies on fiat-pegged cryptos to transport fiat cash across borders. Essentially, Money Transfer Operators buy and sell cash which lowers or increases their digital balances of the relevant fiat-pegged crypto. Cash goes in at one end, travels in form of crypto, and cash comes out at the destination point.
This design is critical to delivering a transformational remittance service that is accessible to the world’s 2 billion unbanked. During this process, no banks are involved and all you need to plug in to the system is a phone with an internet connection.BitShares provides us with the ability to create multiple fiat-pegged cryptos that we can actually rely on. We can create cryptocurrencies pegged to the value of another asset such as the US Dollar, Chinese Renminbi or even gold. As a group these are called BitAssets and the ability to create multiple is critical to our mission of delivering a far better remittance option that covers every remittance corridor and currency pairing. Unlike Tether, the pegs created on the Bitshares system are real and BitAssets can be converted at any time at an exchange rate set by a trustworthy price feed.But there are lots of other great features of the Bitshares Decentralised Exchange that we think is exciting and that you should know about:
And finally, Zephyr is available for trading on their exchange; a social impact token designed to accelerate the growth of our global remittance network.As BitShares becomes the preferred option in this space, it won’t be long before Tether is exposed for what it is, left to drown wearing a pair of cement shoes.
Bitspark is a bankless money transfer ecosystem that enables businesses and people to cash in and cash out cryptocurrencies across Asia and Africa.