Bitcoin is attracting a lot of headlines, because the cryptocurrency soared from $1,000 to more than $11,000 this year. But it’s one of many cryptocurrencies, and there also are exchanges for cryptocurrencies. This article is about an exchange for bitcoin and some of the mysteries and confusion surrounding it. The story shows how undeveloped this market is and some of the many reasons people need to be careful about using it.
Some wonder whether tether has helped pump up the price of bitcoin, which recently surpassed $11,000 after beginning the year below $1,000. Charlie Lee, creator of Litecoin, the world’s seventh-largest cryptocurrency, wrote in a Nov. 30 Twitter post, “There’s a fear going on that the recent price rise was helped by printing of USDT (Tether) that is not backed by USD in a bank account.”
Little public information exists about how tether is created, fueling questions, said Barry Leybovich, a product manager at IPC System who creates risk and compliance products for financial institutions interested in blockchain applications. The market believes that each tether is worth $1, even if they’re not actually backed by that money, and trades of tether for bitcoin at Bitfinex are helping drive up the price of bitcoin, he said.