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What is Tether and Why You Should Consider Investing In It

Find out what is Tether, why it’s different than all the other cryptocurrencies on the market and where to buy USDT from.

Tether is one cryptocurrency token with a distinctive feature, and that's its stability. It's different from other cryptocurrencies because it's a centralized token. For this singular reason, several controversies tail its true nature; after all, all cryptocurrencies are supposed to be decentralized. This brings us to the question, "What is tether?" 

This page is quite detailed in explaining the fundamentals of the Tether USDT token. It analyses what Tether entails, how it was created and how you can use it.

What is Tether? 

Tether is a cryptocurrency backed by the American dollar. It is also known as USDT. This currency holds the reputation of being the first-ever stable cryptocurrency created for trading in the crypto markets. It enjoys stability by being equivalent in value to the US dollars. This implies that 1 US dollar = 1 USDT.

BitFinex created the Tether tokens in 2014. The symbol USDT was adopted as its trading symbol. According to Coinmarketap data, the token has a market capitalization value of over $62 billion. Crypto investors who like to play safe by avoiding the inherent volatilities of other coins and tokens prefer to hold USDT due to its stability. 

Tether can be categorized as a fiat-collateralized stable coin. Thus, Tether cannot be conceived as a medium of investments; rather, it's a medium of storage. 

The basic essence of Tether is stability, whereas this is contrary to the observable fluctuations in the price value of notable cryptocurrencies, including Bitcoin, Ethereum, and other available tokens.

USDT value only changes with the value of the dollar. That means its value is liable to changes in the dollar as influenced by several factors, including inflation, the foreign market pulls and extant economic situations.

There are so many controversies surrounding the use of USDT in the crypto market. Many criticize the crypto token for being regulated by a single company. Notably, to maintain its value with the US dollar, BitFinex regulates its price every now and then.

Another controversy against the token is that no audit reports have been compiled about the token. Despite this, its market cap is growing. This is an indication that more people are engaging USDT for trades and online transactions.

Advantages 

Tether stands out among other cryptocurrencies. It's bound to have certain benefits that those cryptos don't have. Find below some interesting upsides for the Tether cryptocurrency:

  • No market Fear - A slight change in the price value of other cryptocurrencies can amount to huge losses for their holders. Unlike them, Tether is a low-volatility cryptocurrency. Since its value is not susceptible to changes affecting other cryptocurrencies, it poses no market fear to its holder. Investors use Tether to secure their financial positions should the crypto market collapses one day.
  • Transparency - US dollars directly back Tether, and as such, there are not many issues about transparency and accountability. Many people have criticized Bitcoin and other altcoins and tokens for not being transparent owing to their high volatility. This is not the case with the Tether currency.
  • Highly secured - Tether is built on the Bitcoin blockchain network. Thus, transactions performed with the currency are well-protected and shielded from possible compromises. It's safer to have your currency in Tether than in fiat.
  • Speed - All cryptocurrency shares a notable attribute which is speed. The fact that they can be processed in an instant makes them more appealing to their users. USDT is not exempted from this perk. It's pretty fast when used to make payments and experiences no glitch. It's useful for every kind of transaction as it delivers the exact value of the US Dollar.

Disadvantages 

Tether suffers certain downsides, which we briefly consider below:

  • Centralized crypto - A centralized company regulates Tether. This is contrary to the ethos of cryptocurrencies because all cryptocurrencies are unregulated. No single authority has an iota of control over their values and prices; only market forces affect their volatility. But this is not the case with Tether.
  • Low investment potentials - Tether holds the reputation as one of the stable coins with low volatility. This implies that if other cryptocurrency rises in value owing to one reason or another, Tether's value remains unchanged. However, it is affected by whatever affects the US dollars. With this quality, Tether strikes as a fiat currency than a cryptocurrency.
  • Highly controversial - Tether has been the topic of heated controversies in recent times because its regulating company has provided no audit reports since its inception. Many people doubt its credibility owing to this reason. 

How Tether Was Created 

Tether was created on the Bitcoin protocol layer known as Mastercoin (Omni). It's developed into the most popular stable coin in the crypto space. Two principal reasons instigated the creation of Tether. One was the issue of high volatility of cryptocurrency. The second was to solve problems associated with cryptocurrency conversion into fiat currency.

By making its exchange ratio 1:1 with the US dollar, Tether intended to address cryptocurrency volatility. Since its inception, exchanges have used Tether as a replica of fiat currencies in the digital space, thus eliminating all sorts of relationships with the banks. Tether is regulated in line with the 1:1 standard by the Bitfinex based in Hong Kong.

How Tether works 

Stablecoins can be backed by actual fiat currencies like the Euro or luxury assets like gold. In the case of Tether, it is pegged to the United States dollar.

Contrastively, notable cryptocurrencies like Bitcoin and Ethereum are not pegged to any currency. That's why their value can skyrocket or nosedive within seconds.

Most crypto investors and traders prefer to convert their gains to USDT after successful trades because its value remains unchanged. By implication, Tether also helps avoid crypto losses that the inherently volatile nature of cryptocurrencies may cause.

How to get Tether?

If you're interested in acquiring Tether tokens, the only way to go about that is by buying. You can buy Tether tokens from all exchange platforms, including Binance, Cointree and Crypto.com. You can also use USDT for trading after buying it on these platforms.

Moreover, no serious calculation is involved when you want to buy USDT, except you'd be paying with any other currencies apart from the US dollar. If paying with dollars, then it's easy to calculate. Since 1 dollar equals 1 USDT, $100 is equivalent to 1000 USDT.

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How To Use Tether?

Thinking about what is Tether used for? The following answers the question aptly:

  • Trading - Tether is the digital representation of the US fiat currency. To trade, you have to convert your fiat currency into USDT. That's when it becomes valid to be used for crypto transactions and trades.
  • Transactions - USDT can be sent in place of the dollars because it's recognized globally. You can use it in place of the dollar to pay for different online services. Moreover, like Bitcoin, USDT can be withdrawn anywhere. That's why it comes in handy for swift online transactions and anonymous payments.

Some online stores that accept Tether include Travala, Alternative Airlines, Snel.com, STAX, Kiklabb, Time, Paxful, Vertis Aviation and Coins bee.

  • For securing investment positions - Investors who don't like to play the risk game use USDT to hold their positions, thus, maintaining their value in the crypto market.
  • Crypto storage - When gains are made mostly on trades, they are converted to USDT to retain their value. It's a strategy mainly used by crypto holders to secure long-term gains. However, for traders, it can both be profitable or loss-oriented, depending on whatever happens.

When you convert gains in trade to USDT, the value equates to the value of the US dollars. If the value of the cryptocurrency you're trading increases, that's a loss for you because you'll need more USDT to buy the crypto for subsequent trades. 

Whereas, if the value of the cryptocurrency reduces after you've made gains, it's profitable because you can buy more with less USDT.

Start Investing in Tether Today 

Tether USDT is the replica of the US dollar – it's its digital version. While there may be several speculations about the crypto token, you can still get good rewards by investing in the currency. However, for this to be possible, you need to dedicate ample time to understand the dynamics of the crypto market.

Tether USDT can be profitable for you in the short and long run, so start investing in Tether today!

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FAQ

  • Tether is a cryptocurrency backed by the American dollar. It is also known as USDT. This currency holds the reputation of being the first-ever stable cryptocurrency created for trading in the crypto markets.