Hi! Do you know what money is? We use money to buy things. But did you know there is also special computer money? It is called cryptocurrency. One kind of computer money is called Tether. Some people were worried that Tether might have a big problem. They thought it could be in trouble. But a smart person looked at the numbers and said, “Don’t worry!” This is a story about Tether collapse fears.
What is Tether?
Tether is a special kind of computer money. It is called a “stablecoin.” That means it tries to stay the same value as real money, like the dollar. One Tether should be worth one dollar. This is different from other computer money like Bitcoin, which can go up and down a lot.
Tether has a job. It helps people move money on computers. It is like a helper. Many people use it because it is fast and easy.
Tether Collapse Fears and the Big Argument
One day, a man named Arthur Hayes said something scary. Arthur is a smart man who knows about money and computers. He said, “Tether might not be safe! If the value of Bitcoin and gold goes down, Tether could be in big trouble!”
He said Tether has a lot of Bitcoin and gold. He said if these go down by 30%, it could be bad. This made some people worried. They started to have Tether insolvency concerns.
But another smart man, James Butterfill, who works at a company called CoinShares, looked at the numbers. He said, “It’s okay! Tether has more money than it needs. It is safe!”
James said Tether has about $181 billion in things it owns. But it only needs to pay back about $174 billion. So, it has extra money left over. That extra is about $6.78 billion. That’s a lot of money!
Do you know why this matters? It means Tether is not in danger. It has a safety net.
Tether insolvency concerns were big, but the numbers show Tether is strong.
Tether Bitcoin Holdings and Tether Gold Reserves
Arthur Hayes talked a lot about Tether’s Bitcoin and gold. Let’s learn about that!
Tether has some Bitcoin and some gold. But it doesn’t have a lot. It only has about 12.6% of its money in Bitcoin and gold together. Most of its money is in something called U.S. Treasuries. That is a kind of safe paper from the government. It is very safe.
So, Tether Bitcoin holdings are not the biggest part. Tether gold reserves are also not the biggest part. Most of Tether’s money is in safe things.
The CEO Speaks
The boss of Tether, Paolo Ardoino, also said, “We are fine!” He shared more information. He said Tether owns about $215 billion in total things. It has about $7 billion extra money, plus about $23 billion it saved from making profits. That’s a lot of saved money!
Paolo said Tether makes more than $10 billion every year just from the interest on its safe papers. That’s like having a big money tree! And Tether only has about 150 people who work there. That’s not many people to make so much money.
He also said some other people, like S&P, made a mistake. They didn’t count all the extra money Tether has. Paolo said, “We are proud. We are the first company with too much money, and no bad stuff in our money box.”
He also said that a rule in Europe, called MiCA, might cause a problem. But Tether is strong, so it will be okay.
Other Smart People Join the Talk
Many other smart people who know about money and computers also talked.
Joseph Ayoub, who used to work at a big bank, said Arthur Hayes forgot something important. He said Tether has two kinds of money. One kind is the money it shows to prove it can pay people back. The other kind is money the company owns but doesn’t show in that special list. Joseph said Tether is like a money-making machine. It’s not going to break.
Hunter Horsley, who is a boss at a company called Bitwise, said Tether is better than regular banks. Regular banks only keep a little bit of money ready to pay people. But Tether keeps more than it needs. That’s safer.
Ki Young Ju, who runs a company called CryptoQuant, said maybe Arthur Hayes just wants to sell Tether. If he makes people scared, the price goes down, and he can buy it cheaper later. That’s not very nice.
Izabella Kaminska, who writes about money, said Tether’s plan is smart. It has a thick cushion of extra money. If people get scared and want their dollars back, Tether can even give them gold! That’s like having a superhero power for money.
FAQs
Q: What is Tether?
A: Tether is a kind of computer money that tries to stay the same value as a dollar.
Q: What are Tether collapse fears?
A: Some people were worried that Tether might not have enough money and could get into trouble.
Q: Does Tether have a lot of Bitcoin?
A: Not really. Only about 12.6% of Tether’s money is in Bitcoin and gold. Most of it is in very safe things.
Q: Is Tether safe?
A: Yes! Smart people looked at the numbers and said Tether has more money than it needs. It is safe.
Q: Why did Arthur Hayes say Tether was in trouble?
A: He thought if the value of Bitcoin and gold went down a lot, it could hurt Tether. But he forgot that Tether has a lot of other money too.
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Conclusion
So, what happened? Some people were scared about Tether. They had Tether insolvency concerns. But when smart people looked closely, they said, “It’s okay!” Tether has a big cushion of extra money. Its Tether Bitcoin holdings and Tether gold reserves are not the biggest parts. Most of its money is in safe things.
Tether makes a lot of money from interest. It has a strong boss who shares good information. And many experts agree that Tether is not going to collapse.
So, if you hear someone say Tether collapse fears are real, you can tell them, “Don’t worry! The numbers show Tether is safe!”
Remember, in the world of money and computers, it’s good to look at the real numbers. Sometimes people get scared, but the truth is hidden in the details. And the details say Tether is strong.
If you want to learn more about computer money, you can click here. Or, if you want to read about how the government is thinking about computer money, you can click here. And if you want to know how a new president might change computer money, you can click here.
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