Tether Wallet: The Good, The Bad, and The Ugly

I like my Cake Wallet, but its purple color is a smidge too dark. Edge works swimmingly— particularly its in-app trades— but the font is 1 pt too small. That rules out Sparrow Wallet too, which has the wrong font altogether. Meta Mask comes in handy, but it doesn’t support Coopcoin (COOP) on Algorand.

I jest of course. What the world does not need is another crypto wallet app.

Well, we just got two more.

Recently, we got Rumble Wallet and Tether Wallet. They’re very similar. Tether was behind the Rumble Wallet so it makes sense. Seems like every week or so someone is publishing a new crypto wallet. What a waste of developers’ time. I don’t see folk putting up their hands for a new crypto wallet. Do crypto companies ever do market research?

We could talk about AI agents and the incredibly tempting scope for fees. Even a 1% slice of that pie would be huge. It makes business-sense. However, I think there’s something darker behind some of these new apps. Be patient, I’ll slip it in slowly during the Good, the Bad, and the Ugly of Tether’s new wallet.

The Good: no unwanted 'fee-coins'.

Woot woot! I don’t need to buy ether (ETH) to get tether gold (XAUT)!

Not being sarcastic. I remember when I first tried to buy USDT, I couldn’t, because I didn’t have any ether (ETH). “But I don’t want ether!” I literally said to my smartphone in frustration.

Things are messy because of tokens. Let me go back a step. Cryptos like bitcoin (BTC) and litecoin (LTC) add on a small fee for every transaction.1 It helps to pay for the electricity needed to run the network. Nice and simple. Then, there are tokens. Not so simple. To send a token, like tether gold (XAUT), you must send a coin, in effect. A token is different from a coin. A token doesn’t exist in its own right. It always piggybacks some coin. The upshot is, if you want to use a token like tether gold (XAUT), you must pay some fees not in tether gold, but in ether (ETH) or sol (SOL) or whatever the underlying network is, leading to noob-scenes like me talking in vain to my smartphone.

As far as I can tell, Tether uses ERC-4337. ERC-4337 solves this problem by plonking in a middleman: The Paymaster. He’ll pay your fees for you. So, when you want to spend USDT on the Ethereum network (USDT-ETH), you just worry about the USDT and the Paymaster handles the ‘real’ transaction on the Ethereum network with the needed ether (ETH).

Long overdue, much better.

All the same, this Paymaster chap— a centralization risk?

The Bad: only one naming protocol

Ardoino and his crew have sent landmines to a format war. They have put their weight behind one naming protocol only.

When you get your Tether Wallet, you get a tether.me address. For example, cutiepie@tether.me. It’s like the 90s, when people got AOL addresses bundled with their AOL Internet, and usernames like ‘cutiepie’ were the norm.

Why is this bad? In a big way, it’s not. I mean: The idea is praiseworthy. Making those daunting, big gobbledeegook crypto numbers user-friendly is one of the single most useful things folk in the business could do. I spent a lot of time coding a web app, OpenAlias Resolver, to make it easy for people to get e-mailesque addresses with the OpenAlias protocol; the closest thing to a neutral, TCP/IP format.

There are a handful of protocols and they are not compatible:

Tether made the choice to go with the last one, LNURL. It made sense for them because LNURL is linked with Bitcoin’s Lightning Network, and Tether has ported its tokens to the Lightning Network.

In the background, LNURL runs on good, old-fashioned HTTPS. It’s the same protocol you use for web-browsing. I like that it uses tried and trusted tech.2

So… why is it ‘the Bad’? Tether has over 500 million users, and it calls this wallet ‘The People’s Wallet’. With that kind of audience, it has a responsibility. It has risked those users stepping on an incompatibility-landmine. One doesn’t win a format war overnight. The honorable thing to do would have been put most of the formats listed above in the background. Over time, the list would be whittled down. Maybe LNURL would win, but that should happen naturally.

The Ugly: private keys backed up to the cloud

two boys wearing 1950s style clothing are in a field and one holds up an (anachronistic) smartphone with a Tether USD icon on it and the other points to a cloud and says 'maybe that one', and they smile

This one gives me a bad feeling.

Sure, Tether didn’t commit commercial suicide by making the backup compulsory. All the same, this feature has been trotted out in far too vague a manner, and there’s no way the majority of Tether Wallet’s users won’t just back up to ‘the cloud’.

Even that term, ‘the cloud’, has sinister connotations in this day and age.

This might be the biggest nim-job3 in the history of crypto. Those private keys sitting on servers somewhere at Tether’s control could be frozen or false-flag hacked. It’s not as if Tether hasn’t frozen funds before.

Maybe, you think I’m being too harsh. The Epstein files are fresh in my mind. Tether’s co-founder Brock Pierce was friendly with Epstein since 2011, and the two talked at length about the way forward for cryptocurrency. I’ve always stuck up for Tether in the past. At this point in time, I’m unsure, and it behooves the company to be as innocent as a choirboy.

Bonus Ugly: A dark trend, centralization

I’m noticing sneaky centralization.

Apps like Tether Wallet are touted as being empowering for the individual, but have a few inbuilt ways of toggling to the left.

I’m beginning to get a ‘Microsoft circa 1998’ vibe from all this. Back then, in a position of great responsibility, Bill Gates chose to wreck his rivals and boost his might, rather than act for the good of his industry, and of humanity overall.

Takeaways

  1. Nano (NANO) is an interesting exception. It charges no fees. (Return)
  2. There is a privacy issue. I don't have time to go into it here. (Return)
  3. nim, to steal, (Archaic, slang) (Return)

Back to the index of blog posts

Tags