Controversial Crypto Coin Tether Gains Popularity at Gambling Sites, Pot Shops
While Crypto Twitter argues over whether Tether is being used to manipulate digital-asset prices, the controversial token is quietly becoming a popular way to pay for goods and services.
At CoinPayments.net, one of the largest processors of cryptocurrency payments, Tether accounts for as much as 30% of volume. That’s up about 30 times from a year ago, according to the Cayman Islands-based firm, which claims to work with nearly 2.4 million vendors. At B2BinPay, Tether had grown to about 20% of transactions that originate from both customers and merchants. It was less than 10% a year ago, said Ievgen Iugrinov, a product manager at the Moscow-based company.
What made Tether popular with traders and speculators when it burst onto the scene in 2017 is what’s driving its use for transactions now -- the so-called stablecoin’s objective of avoiding price fluctuations by maintaining a one-to-one ratio with the dollar by managing a reserve. Store directory Cryptwerk lists 265 companies that accept Tether for payment directly.
“Merchants used to accept Bitcoin, Ethereum, Ripple and convert it into Tether in order to hedge against the volatility,” said Sean Mackay, operations lead at CoinPayments.net. “Now we are seeing the payments just being done directly in Tether.”
Tether’s use in commerce is coming at the expense of market leaders Bitcoin and Ether, which were initially touted by proponents as revolutionary means of exchange. At CoinPayments.net, Bitcoin’s share of payment volume has fallen to about 60% from as much as 80% last year, while Ether has dropped behind Tether to third place.
The shift is also reflective of the changing dynamics in the cryptocurrency market. The dramatic surge in the price in Bitcoin has made many investors unwilling to spend it, undercutting the original objective of the electronic token and leading to the rise of stablecoins.
Harking back to the controversial practices of Bitcoin’s initial users, Tether is gaining traction among merchants that may have trouble getting credit-card processing services, or are charged high card processing fees: adult and online gambling sites, and vaping and cannabis shops. At Toronto’s Green Earth Robotics Inc., which sells sex dolls, Bitcoin, Ether and Tether are the most popular crypto methods of payment, said co-owner Michael Chrzan.
“Tether, it’s started catching up,” Chrzan said. “Since their community is growing, we believe it will expand in time. When the community is growing, they start using the coin.”
While the mechanics of Tether issuance by its Hong Kong-based parent companies remains unclear, the coin’s market capitalization has ballooned to $4.12 billion from $2 billion a year ago, according to data tracker CoinMarketCap.com.