The United States Dollar has been experiencing depreciation for decades, but the year 2020 started a spiraling chain of events that hammered at the global reserve currency’s exchange rate and purchasing power. The coronavirus pandemic launched into motion a global economic paralysis scenario that saw the depreciation of national currencies around the world as a result of rampant inflation, massive layoffs, business bankruptcies and financial crises. The latter factor had a direct impact on the US Dollar and spurred the development and rise in popularity of the blockchain-based decentralized finance industry.
DeFi gave impetus to the increased adoption of digital currencies as viable and more reliable alternatives as means of payment and value saving to the traditional United States Dollar. Its digital counterpart – the Tether USDT stablecoin quickly gained popularity as a cross-border payment solution capable of retaining value and acting as a fast, convenient and predictable currency capable of withstanding the general tides of volatility prevalent on the cryptocurrency market.
The impact of the digital Dollar on the crypto market cannot be downgraded, as it revolutionized the way salaries were paid, cross-border transactions were made, and value was stored. As national currencies lost value, millions of users of digital space rushed to invest in USDT and store it on the blockchain to preserve the value of their savings. More importantly, by leveraging the capabilities and technical characteristics of the blockchain, USDT fast-tracked the United States Dollar into the digital environment with greater convenience, conversion, transaction processing speed, security, and, most importantly – application within decentralized applications.
The resulting relationship between cryptocurrencies and stablecoins has since been rickety, as user sentiment started deviating towards stable solutions in light of the ongoing “crypto winter”. As Bitcoin and other major cryptocurrencies slid down the price charts, USDT retained its value and managed to attract more users by virtue of remaining relatively stable in terms of exchange rates. This very stability is still playing into the hands of USDT and driving its adoption as the most popular stablecoin on the market that outlasted such failed experiments as algorithmic stablecoins like Luna/Terra.
However, as with most cryptocurrencies, regulation of the digital Dollar around the world remains stringent, with many countries banning any kind of operations with the asset. As USDT is considered a digital currency, it falls under the regulatory scope of the MiCA agreement and the bans set in place on cryptocurrency trading in such countries as India and China. The United States is also frowning at cryptocurrencies in general, considering that the Biden administration is considering the release of its own CBDC in the form of a digital Dollar that will not tolerate competition on the part of USDT.
In current market realities, USDT is still one of the biggest coins on the market in terms of market capitalization, which stands at $65,332,439,895 at the time of writing, with circulating supply at 65,362,681,003 USDT. Total supply is calculated at 73,141,766,321 USDT, while maximum supply is the same – 73,141,766,321 USDT. Such figures give Tether a stable and almost dominant position on the market in the stablecoin camp.
However, USDT is not immune to scams, as malevolent market players are trying to use USDT and USDC to convert their illegal funds into fiat. The holders of USDT, like any other coin, have become the victims of scams throughout 2022.
Among the schemes employed by the hackers are fake applications, as in January of 2022, when a US user downloaded an application that turned out to be a fraud scheme and invested 73,586 USDT.
False addresses were also used, as in November of 2022, when the scammers targeted users who had high volume transactions. The scammers had similar wallet addresses and sent such users small amounts of USDT to appear in the transaction history. The users then copied the scammer’s address instead by mistake to make a transaction and lost their funds.
Smart contract schemes
Smart contract schemes were also detected, as victims were approached via social networks asking to follow a link that would activate a smart contract allowing the scammers to get access to the user’s wallet and steal USDT any time. This is a form of phishing, related to a scheme under which users receive a text message saying they have over 1 million USDT on their account and asked to follow the link to get access. However, when the link was opened, the users were asked to pay 1 USDT as a fee.
How fraud with USDT and USDC affects TRON-based stablecoins?
Fraud with USDT and USDC affects TRON-based stablecoins in two major ways – by deteriorating the trust of users towards Tether and slowing adoption, and by depriving users of their funds. As such, it is vital to verify all Tron network addresses before making any transactions.
The solution provided by Chargebackpros has detected a surge in this number of requests for Tron address verification over the past 8 months, which is up 60% compared to other networks. As a result, the Chargebackpros team has decided to add the ability of verifying TRON-based cryptocurrencies for fraud and credibility. The given measure is an essential that can prevent theft of funds and identify high-risk addresses.