What are Tether and USDT?
When we use the word tether it means that something is tied together or connected. We think it is quite a smart play on the word as Tether is the company creating USDT which is tied or tethered if you’d like, with the value of USD. USDT is an important and popular Stablecoin which is a type of crypto that is backed by assets and price volatility is kept to a minimum, unlike cryptos such as Bitcoin and Ripple.
Tether represents a middle ground between decentralization and also keeping the value of crypto stable to cater for the use of people who do not appreciate the volatility such as trading companies and companies using crypto as a unit of settlement in general. For example, USDT is a crypto which value is backed by the corresponding fiat currency – US Dollar, so USDT is always kept at 1:1 with US Dollar, with the reserves stored in Hong Kong by Tether Limited.
Before the boom of crypto adoption in the retail marketplace such as online stores, USDT were used to purchase other cryptocurrencies like Bitcoin since the value of USDT is easily calculatable and USD is a common unit of settlement in the financial word. For example, if you wanted to invest $10,000 in Bitcoin, you would find it difficult to find an exchange to accept your fiat money and allow you to buy Bitcoin. However, virtually all exchanges accept USDT as deposit and the value is stable, this has given rise to the initial adoption of USDT.
So what are the advantages and why you should use it?
- Stable value and 100% backed by Fiat currency. Since the reserves are backed and stored in Hong Kong, the value of 1 USDT is always ensured at 1 USD.
- Transparency. You might ask, how do I know Tether really back the value of USDT with USD and store the reserves in Hong Kong? Like other cryptocurrencies, Tether is built on blockchain technology, providing USDT with a high level of security and transparency. Tether also publishes a report daily to inform its users of the level of their reserves, showing that the USDT in circulation matches the reserves the keep in Hong Kong.
- High adoption rate. If you are a holder of USDT, you will have no troubles finding an exchange to accept USDT as deposits. In other words, when other people are waiting for their fiat deposit to be wired to the seller’s or exchange’s bank account, you are already trading with USDT since it is by far the most popular crypto pair. To name a few, BTC/USDT, ETH/USDT, XRP/USDT, etc.. In short, it is by far one of the most efficient currency you can use to invest in the crypto space.
- HODL. Let’s say you made some profits trading BTC in 2020 which is almost unavoidable if you are a HODL in 2020, instead of cashing out your gains in your local currency or other cryptocurrencies, USDT will allow your gains to be kept at 1:1 value with USD so you don’t have to worry about the market movements while you plan for your next crypto investment.
Believe it or not, with its huge market cap of $20,393,431,729 USD and daily volume of $70,548,946,843 USD, Tether and USDT are still in the early development stage. We have huge expectations for USDT to play an important role in the crypto revolution.
Do not miss out and CLAIM YOUR FREE WALLET at Bitprive.