In the cryptocurrency world, volatility is expected. It is an unavoidable consequence of a largely unregulated emerging technology sector, that is so closely tied to the world of finance this. One company, Tether, decided to create a coin, that, according to their website, “is always backed 1-to-1, by traditional currency held in [their] reserves”. Upon the release of Tether, exchanges such as Poloniex and Bittrex, sought to adopt it as a substitute for a dollar. Exchanges decided it would be a simpler way of holding fiat on their exchange.
Fixing the price of Tether to international currencies in theory works if you can’t trade it on exchanges, the problem is, you can, in fact, trade Tether on exchanges, such as Kraken. The result of this, is obviously that the price fluctuates around 5 – 10% from the actual price of the US dollar. In essence, USDT becomes it’s own currency, rather than the fiat it has attempted to emulate. If you’re still looking for a cryptocurrency that is fixed to fiat, bitshares appears to be the only one that currently, has had success in retaining it’s value