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USDT premium was caused by USD inflow and not Tether Inflation, claims Chinese Bitcoin Billionaire

Biraajmaan Tamuly



USDT premium is caused by USD inflow and not Tether Inflation, claims Chinese Bitcoin Billionaire
Source: Pixabay

Bitcoin [BTC] recently led a significant bull run which pumped up the price by 15% in valuation. After the hike, the price of USDT was over 7 yuan on over-the-counter platforms, which meant crypto traders based out of China had to pay an additional 3 percent to 5 percent for Tether [USDT] to avoid a ban on crypto trading.

Zhao Dong, Chinese Bitcoin Billionaire, and an early Bitcoin adopter was outraged with the USDT premium and took it up to Weibo [Chinese equivalent of Twitter] to explain that the premium charge was due to USD capital flow, instead of the assumption that Tether was inflating USDT to hike the price.

Zong explained that the biggest exchange that currently existed in the US was Coinbase, which largely traded in dollars. The exchanges in the states which had significant trading volume would use USDT trading since BTC and USDT were able to flow freely between exchanges without any price discrepancy. Hence, the premium in USDT occured only when the Coinbase BTC-USD pair became hyperactive over a short period.

Zong further added that in a situation where the market surges, investors rush to Coinbase because the exchange saves the step of USD to USDT conversion. Since there is a lot of dollars to acquire, Coinbase goes up first and USDT goes up later.

In a short-term like that, the BTC/USD pair surpasses the BTC/USDT, which points towards a scenario where BTC would be worth more in USD than in USDT temporarily; which inflates the premium on USDT.

The increased premium on USDT would be reduced as soon as investors without direct fiat to Bitcoin channel would fomo into Bitcoin with newly converted USDT. In such a situation, BTC/USD would drop and BTC/USDT would improve and cause a “negative premium” in USDT for a temporary period; such as the current situation after the bull run.

Even though Zhao put forward an argument for investors to believe that US dollar inflow was the reason behind the price surge of USDT, many investors did not buy it as USDT was mostly played by Chinese traders.

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Biraajmaan is an engineering graduate who is exploring the ever-changing crypto verse while traversing his passion for cryptocurrency news writing. He is a Chelsea fan and a part-time poet and does not hold any value in cryptocurrencies yet.


Bitcoin [BTC]: Andreas Antonopoulos breaks down life cycle of a transaction on the BTC blockchain

Akash Anand



Bitcoin [BTC]: Andreas Antonopoulos breaks down the life cycle of a transaction on the BTC blockchain
Source: Pixabay

Bitcoin [BTC] and its intricacies have been a concept that many users in the cryptoverse have been trying to understand since its inception. In his latest video, Andreas Antonopoulos, a major Bitcoin bull and the author of Mastering Bitcoin, elucidated on the life cycle of a wallet transaction from start to finish.

Antonopoulos stated that from the point someone sends a transaction from a wallet to its confirmation on the Bitcoin blockchain, the wallet constructs a transaction by accumulating the BTC in the user’s wallet and assigning the addresses. The user’s wallet then transmits the transaction’s information to one of the many nodes it is connected to, from where it can be sent to ‘1, 2 or even 8 other nodes’. He added:

“The transaction is then transmitted to other nodes, which can be mining nodes, e-commerce payment gateways, and many such options. Each of those nodes will receive the transaction from your node and each of those, in turn, will validate every single transaction. When the nodes receive the transactions, they don’t’ know whether it was created by you or was forwarded and hence each of these transactions need to be validated individually.”

Antonopoulos went on to state that if all the nodes are validated, ie. if the payment details are correct and if it is confirmed that no double spend has occurred on the blockchain, then eventually through the process of ‘flood propagation’, the transaction information will be sent to every other node, out of which some may be mining nodes. In his words:

“Once the transaction reaches the mining pool, it maintains a pool of unconfirmed transactions, like a bucket where all this unconfirmed data is stored. This is the pool known as the mempool. Also, know that there isn’t THE mempool rather there is ‘A’ mempool. Information in separate mempools can be in a 99 percent overlap but there will never be a case where it will completely similar.”

According to the author, the mempool also serves the purpose of providing transaction for a miner to add a new block after which ‘the race is on’ for the next block. Miners usually have to construct a block and then solve the Proof of Work on it to eventually make it a confirmed block. Antonopoulos claimed that once the block is made, the information will be sent to the mining equipment to solve the PoW on that particular block and probably after a “billion hashes” the miners will find the block. The Bitcoin bull elucidated on the information transfer back by saying:

“Once the PoW is solved, the mining node will propagate the node back the same way as it received. The nodes validate the block on the way back and once all the nodes confirm its validity, then the user’s wallet will know that there is a confirmation on the transaction. That is the entire life cycle of a transaction.”

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