Starting today, the Gemini exchange will begin offering their newest product, the Gemini Dollar (GUSD). Like Tether, it is an ERC20-token pegged to the value of one US dollar and can be withdrawn from the exchange to your private Ethereum wallet or other exchanges. But unlike Tether, the GUSD can be converted back into dollars directly from the Gemini exchange.
Tether’s Diminishing Relevance
With the hard crash of the market this year, and the almost masochistic bear market that followed, stable value coins (or just stablecoins) like Tether have gotten a lot of attention. For users who believe the market cap of crypto will continue to grow in the long term, and do not want to withdraw their investment to fiat, they provide an ideal compromise, locking your money in to protect you from losses while still being available to trade quickly when you decide to get back in.
None of them are perfect, however. Most are pegged to the US dollar, but to support that structure there must be real dollars somewhere for them to correspond to.
Tether, by far the largest stablecoin (in)famously was subpoenaed last December, with US regulators suspicious the company might not hold enough real dollars set aside to return investors’ money if all Tether tokens were to be cashed in.
Tether has also been under fire for failing to provide a proper third party audit of its reserves, relying instead on a law firm that did not have the power to audit accounts directly, but were dependent on information provided by Tether.
Nevertheless, those who fled to Tether this year certainly have reason to be happy with that decision, since it spared them the slow bleed holders have experienced.
For the vast majority of Tether holders, however, the plan is not to ever convert their tokens directly into dollars, but to trade them to someone else for other cryptocurrencies, once they judge the market to be recovering. And part of the reason for that is that it’s moderately inconvenient to cash out directly, and it can’t be done on most of the exchanges where people are trading it.
This weakness in Tether is exactly what Gemini is trying to leap on with GUSD. It works almost exactly like Tether in every way, in that you can withdraw it to your own wallet, or even move it between exchanges (as and when other exchanges start to list it). But in addition, you can freely convert back and forth between dollars and GUSD on the Gemini exchange, where you can also trade into other cryptocurrencies or withdraw dollars into your bank account.
The Gemini exchange is a far cry from offering the liquidity and number of trading pairs of the real giants like Binance, but the launch of a stablecoin that can be converted to and from without hassle on an exchange with decent volume like Gemini will surely attract traders who are not quite happy with Tether.