The cryptocurrency market grows every year, expanded with new digital money. Some of them gain fans and remain popular for longer, others disappear very quickly. Tether (USDT) certainly fits into the first category. It’s functioning since 2014 and is doing quite well. Money such as USDT is called stablecoin. This type of currency has many advantages which gain it such large interest.
What are stablecoins?
Before we dive into more detail about the tether cryptocurrency, you should know what stablecoins are. To put it simply – they are a stable cryptocurrency. What does that mean, exactly? Unlike other cryptocurrencies, stablecoins are directly connected to real assets – mostly fiat currencies which are issued by central banks of various countries. This characteristic makes stablecoins more predictable. Their rate is directly linked to fiat currencies which are in turn controlled by governments or central banks. As the name itself suggests, the main feature of stablecoins is their more stable price than in the case of other cryptocurrencies.
What is the USDT coin?
Let’s go back to the tether crypto. It was the first ever stablecoin – others that followed were simply imitating it. It was created in 2014, but it functioned under a different name then – realcoin. With time, it evolved into tether. The tether coin was created by three founding fathers: Brock Pierce (investor), Reeve Collins (entrepreneur) and Craig Sellers (programmer). Since the very beginning, it had always been directly linked to the american dollar rate – and that’s where the USDT abbreviation comes from.
In the beginning, to issue tether, bitcoin protocol was necessary and Omni Layer was used. With time, it started getting generated on other blockchains (e.g., EOS, TRON, Solana) but it was most commonly found in Ethereum under the name of the ERC-20 token.
How does the USDT tether work?
Tether is a unique cryptocurrency because it’s a stablecoin. This results in a stability unlike any other digital currency. Using specialist terms, tether is tethered/pegged to fiat currencies, which in the case of USDT is the american dollar (USD).
Every 1 USDT is 1 USD. However, this relationship can be hedged in any fiat currency. Still, it must correspond to the american dollar. This currency is considered to be one of the most reliable and stable ones, so the USDT is viewed similarly. This is a huge asset of the cryptocurrency. But you should also consider that the stability of the USDT/USD pairing can be disrupted by some market or political events.
Tether coin advantages
Some of the USDT crypto advantages are:
- a great stability guaranteed by the strong, american currency;
- performing transactions 1:1 in american dollars;
- an easy exchange for other digital coins;
- availability in many blockchains;
- carrying out transactions or transfers without large fees (e.g., a transfer from one USDT account to another is completely free);
- it’s a cryptocurrency which is easy to integrate with many platforms;
- the possibility to send money to any person who is online;
- little risk of trading loss thanks to the USD link.
USDT coin disadvantages
Naturally, USDT also has some disadvantages. However, there aren’t very many of those. Some tether crypto flaws are:
- a lack of anonymity – it’s necessary to confirm your identity before opening your account. All user information is processed by the issuer of the cryptocurrency;
- the centralization of the currency – a reliable issuer is necessary;
- in order to get real fiat money from the USDT currency you have to go through a long and complicated process;
- from the legal point of view, there is no certainty that a 1:1 exchange ratio between USDT and USD would be effectively executed;
- the cryptocurrency has many regulations which make it harder to use.
What can USDT be used for?
USDT has a very wide use. This currency is useful for the realization of many financial and trading operations. USDT is perfect for:
- a quick exchange between other cryptocurrencies and tether (e.g., in situations when the currency is drastically dropping);
- an easy transfer of funds between different cryptocurrency exchanges;
- making a deposit on exchanges which do not accept fiat currencies;
- exchanging local currencies for USDT and trading with them, just like on Forex.
Storing your USDT coin
You should be really careful with storing and transferring your USDT tether. The fact that this digital currency is generated in various blockchains is its asset but also its flaw. You have to make sure that the tether is being sent within the same network, otherwise you might lose your currency.
USDT may be stored on various different digital wallets. You can use both – mobile wallets and Internet ones. Tether also has its own official wallet – tether.to. Another option is using hardware wallets to store tether. A popular choice is the Ledger wallet. However, keep in mind that Ledger only supports ERC-20 USDT.
Is there another tether cryptocurrency?
USDT tether is linked to the american currency. However, tether cryptocurrency can also be linked with other fiat currencies or precious metals. The most popular ones are:
- tether (XAUT) – this type of cryptocurrency is linked with the value of gold;
- tether (EURT) – linked with euros;
- tether (CNHT) – cryptocurrency linked with the chinese currency (yuan).
Tether – the controversial cryptocurrency
Tether is quite a controversial coin in the cryptocurrency world. Why? First of all, USDT crypto is a very centralized currency which is against the whole idea of cryptocurrency. The only legal issuer of tether is the company Tether Ltd. incorporated, registered in the British Virgin Islands. This company is closely linked with Bitfinex, one of the largest cryptocurrency exchanges in the world. It’s also the place where the biggest tether crypto sales were made, for quite some time. Many people considered this to be unfair competition. The link between the two companies remained a secret for quite some time.
The lack of transparency of the tether coin is also controversial. Even though the issuer ensures that every token is secured with one american dollar on a bank account (Proof of Reserve), there has been no independent audit to confirm this. What’s more, the tether cryptocurrency has frequently been accused of manipulating the rates of other digital currencies.
How to buy USDT?
You can easily sell and buy USDT tether on most cryptocurrency exchanges. Some examples are the platforms CryptoCurrency 10, Binance, Bittrex or HitBTC. These are, of course, not the only ones. There are currently about 40 similar exchanges. So, it shouldn’t be a problem for you to fill your digital wallet with USDT or to get rid of your coins.
As a stablecoin, tether made it very easy to trade between cryptocurrencies and fiat currencies. It’s a handy digital coin, easily accessible on many different exchanges and easy to store. The premise behind the tether cryptocurrency was to create a safe and stable blockchain ecosystem. Unfortunately, the controversies around this currency and the lack of issuer transparency make USDT that much less credible.