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The ultimate guide to Tether (USDT)

In May 2020, Tether or USDT defeated XRP as the third-largest crypto in the market. While it slid back to its original place as the fourth most-used crypto, Tether is well on its way to win the race in the cryptocurrency market. Why is this digital asset gaining popularity and why should you care? Read this article and learn about one of the up and coming digital assets in the world!

Cryptocurrencies, despite their cost-effective and seamless nature, also have their own setbacks. One of which is their volatility, which can change any day at any given time. Because of this, cryptocurrencies can experience higher highs and lower lows, that can negatively affect investors, especially if they’re investing in huge amounts of digital assets. A coin’s volatility can be attributed to the young market and the distrust surrounding it. Additionally, unlike fiat money, digital assets are not ‘pegged’ to assets that hold value.

So, where does Tether come in and how can it protect your assets from sudden market fluctuations?

Tether is a ‘stable coin’ developed in 2014. As the term suggests, it is an asset that provides users with the stability that regular cryptocurrencies lack. This is possible because a Tether coin is pegged after $1, meaning that it will always have a 1:1 ratio every time you convert your funds to Tether. What makes this stable coin more reliable and functional is that it can also be used for both fiat and crypto-assets. At the moment, Tether is one of the most utilised stable coins in the world.

To understand Tether on a deeper level, you have to learn how stable coins work and how they function differently from regular cryptocurrencies.

What are stable coins?

Stable coins can be used to back up digital assets to protect them from market volatility. Usually, they are pegged to real-life currencies or other bonds to give them the stability they need to wave out sudden movements in the market.

There are different kinds of stable coins that you can encounter. You can identify them through the type of collaterals they use to keep the stability in check. Here are some of them:

  • Collateralised off-chain – A collateralised off-chain stable coin is one of the most common types you’ll encounter on exchange sites. Usually, these types of coins are pegged after real-life currencies and are audited regularly by licenced auditors. There are two types of collateralised off-chain: fiat collateralised and commodity collateralised.
  • Collateralised on-chain – Collateralised on-chain stable coins are usually pegged after digital assets. In most cases, Ethereum is the reserve currency for this type of stable coin.
  • Non-collateralised – Non-collateralised stable coins are not attached to both fiat and crypto-assets. Usually, this type of coin is secured through the execution of smart contracts and strong algorithms that protect it from market fluctuations.

So, how does Tether work?

Tether (USDT) is a stable coin that provides stability to assets by ‘tethering’ it to fiat currencies. Every 1 USDT is always equivalent to $1. What makes it a more revolutionary technology is that it’s built on Bitcoin’s Omni Layer that ensures transparency and real-time transactions.

If a user wants to send money to a digital asset exchange, their funds will be converted into the same value in Tether coins. Then, the user can utilise this amount and have it converted into other currencies without worrying about sudden price changes.

Where can you buy Tether coins?

Here are some of the places where you can buy Tether coins:

  • Bitmex – Bitmex offers a competitive portfolio of cryptocurrencies including Tether. Bitmex is handled by a team of crypto experts and economists that track the progress of the coins they offer. Currently, Bitmex offers coins such as Bitcoin, Bitcoin Cash, and Ripple.
  • Coinmama – Coinmama is another platform that offers Tether. In addition, they feature other coins such as Bitcoin, Ripple, and Ethereum.

Why you should use Tether

Seamless transactions

Just like other cryptocurrencies, Tether only takes a few seconds to complete a transaction. If you want to send or receive money, this stable coin provides the efficiency you need without having to pay for expensive fees.

Stability

Tether’s best highlight is its ability to stabilize the prices of your digital assets. Because it’s tied to USD, it cannot be affected by sudden price fluctuation. However, you should note that Tether is not entirely invincible to market changes. While it may be affected by fluctuations, the change in value will not be that big.

Low transaction fees

While using Tether doesn’t incur transaction fees, there are external exchanges that implement fees. However, you will only have to pay a cheap service charge if you use the Tether platform to convert USDT to USD and vice versa.

You can ensure that every Tether is backed by USD

Every transaction converted to Tether is backed by fiat currencies that ensure its price stability.

Other stable coins you can try

While USDT is arguably the most trusted stable coin in the market, there are others that can also provide the efficiency and transparency that USDT offers. Here are some of them:

  • TruUSD

Developed by TrustToken, TruUSD is one of the most competitive centralized stable coins in the market. If you’re looking for a coin that offers transparency, TruUSD can give you this service because they constantly update their investment reports for their users.

  • Gemini Dollar / GUSD

Gemini Dollar is the brainchild of Gemini coin, launched by Tyler and Cameron Winklevoss. According to Gemini Dollar’s page, it’s the first-ever regulated stable coin that is pegged to the USD and is recognized by US regulatory officials. This coin was introduced in 2018.

Cryptocurrency is creating big changes in the world. If harnessed properly, digital assets can change the industry that we know today and create more opportunities for both investors and users in the future.

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