I don't really understand, but it makes that currency become centralized
While the fiat on reserve/deposit is 'centralized' - don't worry about that as it will never be used or liquidated. It is just there. Now there are 6 million USDT in circulation and those are traded on the blockchain all day long (about $500,000 / day). Somedays they are going here, somedays they are going there. All on the blockchain.
Fiat In and Fiat Out of the system happens rarely. Only when the system needs more or less units to operate. For now, the volume is quite good. There are enough units in circulation. You can make shitloads of trades between BTC and USDT and never trigger a need to adjust the reserve.
So, it is exactly as if USD were on that blockchain!!! You can now send $10,000 anywhere in the world! It will always be $10,000. No matter the price of bitcoin, the USDT says 1:1 with the real dollar. Cool eh? Send money, don't lose on exchange rate.
Watch out, EURT and JPYT coming soon.
Hedging BTC with USDT would be a good option. What security risks are involved? Are there regular audits of the USD funds?
Audits by independent parties done all the time. AND you can see the real time value on deposit from their 'transparency' page. You can compare that with the blockchain. It is very secure. It is secured by the Bitcoin blockchain. There isn't any other blockchain on this system. The people behind it are some of the most invested in bitcoin success ever. It is all done on the Omni protocol layer. So you can see clearly every transaction detail. A very cool trick.
