More than ten years after the first cryptocurrency was created, over a hundred kinds of digital coins have sprung up. Today, the crypto space is flooded with digital assets of different kinds. From store-of-value cryptocurrencies to utility tokens, there are plenty of coins with varied purposes to choose from.
One of the relatively newest kinds of digital assets is the stablecoin with its most popular type being Tether or USDT. Shrouded in mystery and intrigue, Tether USDT is the first of its kind. It serves as the bridge between the trusted old system and the new revolutionary one. To learn more about how USDT specifically does this, continue reading below. Find the answers to all your Tether related questions here at BTC Post.
Setting the stage for Tether
The present financial system is riddled with problems that cost customers and companies millions of dollars. Not only is money wasted but so is time and effort. Aside from that, there is also the matter of security and privacy. Data kept in centralized servers are vulnerable to cyber-attacks and identity theft which leave the consumer on the losing end.
Fortunately, cryptocurrencies emerged in 2009 to provide solutions to these problems experienced all over the world. In the beginning, there was only Bitcoin, the world’s first digital currency. With its decentralized nature, Bitcoin took control from central institutions and distributed them back to the people. Additionally, it introduced blockchain technology to the public which ensures that every transaction cannot be tampered.
However, as revolutionary as Bitcoin is, it’s not perfect and still comes with its own set of problems. The most pervasive being Bitcoin’s volatility. Since it’s a novel asset independent from traditional markets, its price relies entirely on the community that uses it. If more people buy, its price rises, but if people sell, its price will drop.
Because of this, Bitcoin’s price can change by the minute which makes it unsuitable for everyday transactions. If you use it to make a purchase, its price can change by the time the merchant receives it.
To solve the problem of volatility, the private company Tether introduced USDT to the crypto space, the world’s first digital currency that does not have a fluctuating price.
What is Tether USDT
Tether USDT is a stablecoin whose price is pegged to the US dollar. It was launched in 2014 with the purpose of having a stable price, unlike Bitcoin. With the problem of volatility out of the question, it can then be used in completing transactions without the worry of fluctuating prices.
It’s the largest stablecoin in terms of market capitalization with over $18 billion worth in circulation. When ranked with other cryptocurrencies, it sits at the fourth spot of the biggest market capitalization list right after Ripple XRP.
Stablecoins aim to be the bridge between fiat currencies and cryptocurrencies. By pegging its value to fiat currencies and by utilizing blockchain technology, it maintains its price, tightens security and ensures that it is impossible to tamper with. All in all, stablecoins allow faster settlement time and fewer regulatory hurdles with the stability of fiat currencies.
Its most unique characteristic is its stability. For every 1 USDT, there is US$1 pegged to it in Tether’s reserves. This ensures that no matter the demand, Tether’s price will always be $1. It can be anchored to other national currencies such as the Euro and the offshore Chinese yuan.
- 100% backed by reserves
As mentioned earlier, to maintain its value, every USDT is 100% backed by Tether’s reserves. Within this reserve, you’ll find traditional currencies, cash equivalents and other assets and receivables made by the company to other parties. This ensures that the 1:1 ratio of USDT to USD remains the same.
Though USDT is created by a private company, their records are published daily and are available for public viewing. This is one way of merging the old and new financial systems and taking their best characteristics to get the best of both worlds.
Advantages of using Tether USDT
Crypto is still not commonly used as a medium of exchange since mainstream adoption is still a work in progress. While Tether’s stable price makes it advantageous for completing day to day transactions, not a lot of merchants are accepting it as a means of payment.
Even though USDT is still not widely used in stores, it’s more commonly used by traders in cryptocurrency exchanges. Traders make use of its stability by trading volatile cryptocurrencies for stablecoins to lower its risk against fiat currencies.
For example, if Bitcoin’s price against the dollar drops, you can trade your BTC to USDT and retain its value. When you’re ready to get back in the trading game, you can trade the USDT back to BTC.
With stablecoins, moving crypto funds is faster than ever. Transferring US dollars through traditional methods takes painstaking effort and a chunk of money. But if you convert your fiat to USDT, it liquidates your funds in the crypto space and makes it more fluid for transactions.
Issues with Tether USDT
Tether offers an ambitious idea that people are slowly accepting but sceptics are questioning its position as a cryptocurrency. Can it still be considered a cryptocurrency if it’s created by a private company? Though their records are available for public viewing, Tether’s reserve is still controlled by the company that created it. Because of this hiccup, some crypto enthusiasts are sceptical about its utility and believe it contradicts the ethos of cryptocurrency in the first place.
Where you can buy Tether USDT
Tether USDT is one of the most popular and widely used digital assets today. With the increase in demand, a significant number of crypto exchanges are now offering Tether USDT in their roster. Some of the most trusted crypto exchange sites that offer USDT include Binance, StormGain, KuCoin and Bitmex.
Tether USDT: Best of both worlds
The possibilities are endless for an ambitious project such as Tether. With its promise of stability and security in the crypto world, it’s exciting to find out where Tether will lead today’s financial system.
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