Published 5 months ago • 4 minute read

What is Tether (USDT)?

Stablecoins are among the most significant innovations in the cryptocurrency ecosystem over the last decade. This new class of cryptocurrencies aims at solving the big problem of price volatility that afflicts the industry. The new cryptocoins are tied to price-stable assets such as gold or the U.S. dollar. Tether (USDT) is a fiat-collateralized stablecoin that has created waves since its launch in 2014.

There’s a lot of mystery surrounding this cryptocurrency. If you are a cryptocurrency user or investor, it’s important to get all the facts right before making any moves.

This post addresses the major questions regarding Tether (USDT) to equip you with the information you need.

What is Tether

What is Tether (USDT)?

This is a digital token built on multiple blockchains, including Bitcoin’s Omni Protocol. It is issued by Tether Limited and is backed by 1:1 by the U.S. Dollar. It has a fixed price measured by fiat currency (U.S. Dollar). This cryptocurrency brings the best of both worlds in the form of open blockchain technology and fiat currency.

How Do Stablecoins work?

It’s important to delve into how stablecoins work to understand the idea behind Tether USDT. These are digital tokens that seek to overcome the challenge of volatility in cryptocurrency through the backing of price-stable assets like fiat currency, gold, and others. When other cryptocurrencies experience price volatility, stabelcoins such as Tether enjoy stability because they are pegged to underlying assets or fiat currency.

For this concept idea to work, there’s a need for a third party to hold fiat currency or commodity collateral equivalent to the stablecoins in circulation.  Tether Limited is the custodian for Tether USDT and is supposed to hold a real-world reserve equal in value to the digital tokens available. The company guarantees the issuance as well redemption of the stablecoin tokens.

How can you use Tether Digital Token?

With Tether you can now store, send and receive digital tokens pegged to the USD dollar. It offers a faster, cheaper, and secure way to make global online transactions. It is also a popular store of value for investors who wish to buy cryptocurrency more easily.

In essence, Tether provides liquidity and a hedge against market volatility. While cryptocurrencies such as Ethereum and bitcoin are being used in financial transactions, they have proven unreliable due to high volatility in their prices.

What Tether USDT brings to the table is a revolutionary concept to this market. It makes it possible to finally get value for value conversion of ordinary currencies such as the USD into cryptocurrency. With this stablecoin, it becomes possible to trade seamlessly using cryptocurrency.

If you want to leverage these digital coins, you should invest when the market is bearish. Converting your fiat currency to Tether and vice versa is fast and easy. It enables you to protect your assets by buying the equivalent of digital tokens.

How is it Possible for Tether to Remain At $1?

This is the most common question by investors who want Tether (USDT) explained. This digital coin can remain at one dollar because Tether Limited holds the equivalent of fiat. The company is the trusted custodian of the assets.

How can you Buy Tether?

One of the easiest ways to buy Tether is from a reliable crypto asset exchange. The digital tokens are available on most exchanges and once you create a digital wallet, it’s easy to use fiat currency to make a purchase.

Why has there been controversy around Tether USDT?

Some controversy surrounding Tether USDT emerged in 2018. There was an issue about auditing the reserves held by Tether Limited and the company’s relationship with another crypto firm called Bitfinex.  Despite these concerns, the stablecoin has continued increasing in market capitalization.

Final Thoughts

Looking for the best way to join the cryptocurrency world? Investing in Tether USDT is a great way to venture into this market. The stablecoin makes crypto transactions easier to understand and protects investors against price fluctuations. With the insight from these questions and answers, you can now make the next move.

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