The Tether cryptocurrency is becoming the default exchange for chinese traders in Russia, according to a news report by CoinDesk.com. Read on to know more about the China-Russia Tether Trade.
Tether, a cryptocurrency based on the value of the US Dollar makes up for 80% of the total exchange between Chinese Traders selling to Russian Malls. Russia has not taken an official stance towards this development.
The Chinese Traders are preferring cryptocurrencies as an exchange for international transactions because of a limit on the amount of fiat currency transactions per day. Cryptocurrency became the perfect exchange because it is decentralized and peer-to-peer.
What is Tether?
By leveraging Blockchain technology, Tether allows you to store, send and receive digital tokens pegged to dollars, euros, and yen person-to-person, globally, instantly, and securely for a fraction of the cost of any alternative.
Launched in 2014, Tether is a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner. Tether works to disrupt the conventional financial system via a more modern approach to money. Tether has made headway by giving customers the ability to transact with traditional currencies across the blockchain, without the inherent volatility and complexity typically associated with a digital currency. As the first blockchain-enabled platform to facilitate the digital use of traditional currencies (a familiar, stable accounting unit), Tether has democratised cross-border transactions across the blockchain.
How does it work?
Tethers exist on blockchains using the Omni Protocol and as ERC20 tokens. These transport protocols consist of open source software that interface with blockchains to allow for the issuance and redemption of cryptocurrency tokens, in this case, “tethers.” Tether Platform currencies are 100% backed by Tether’s reserves. Tethers are redeemable and exchangeable pursuant to Tether Limited’s terms of service. The conversion rate is 1 tether USD₮ equals 1 USD.
The Tether Platform is fully reserved when the sum of all tethers in circulation is less than or equal to the value of the reserves maintained by Tether International Limited. Through their Transparency page, anyone can view both of these numbers on a daily basis.
Bitcoin and Tether
Tether was originally created to use the Bitcoin network as its transport protocol—specifically, the Omni Layer—to allow transactions of tokenised traditional currency. Since this original version of Tether uses the Bitcoin blockchain it inherits the inherent stability and security of the longest established blockchain network.
Ethereum and Tether
Tether on the Ethereum blockchain, as an ERC20 token, is a newer transport layer, which now makes tether available in Ethereum smart contracts or decentralised applications on Ethereum. As a standard ERC20 token it can also be sent to any Ethereum address.
Since Tether is currently available using two different transport protocols (Bitcoin and Ethereum), when users send tethers to other addresses, they need to carefully check the destination address to confirm whether it is in the standard Bitcoin or Ethereum format and select the correct transport protocol.
Crypto exchanges in Russia have become dangerous places because of the increase in crypto traffic. No one goes to exchanges without security guards because they are afraid of getting robbed. Privacy in Russia is a joke. If an employee knows the amount of crypto you have, they will sell that information to the highest bidder. If you’re unprotected you will definitely be robbed.
“We see most of the revenue turned into cryptocurrency, which is not reported in any way at the moment,” Polupanov said at the Thomson Reuters event, according to the RBK news agency. “We see simultaneous transfers of that cryptocurrency via email to the homeland of those merchants and producers, and the following exchange of it for the local currency there.”
According to a March 2019 report in the Russian newspaper Novaya Gazeta, cash would be received at places like a hotel called “Druzhba” (“Friendship” in Russian), located next to the shopping mall named “Moscow.” Then this cash would be swapped for crypto and sent to Hong Kong. This outlines the basic workings of the China-Russia Tether Trade.