If you are investing in cryptocurrencies, you’ve probably come across Tether (USDT). It is the third-largest digital coin in circulation as per the market value. So, what should you know about the USDT? Read on for more information.
What does USDT (Tether) mean?
Tether is more like standard fiat currencies like the Euro and the US dollar. In short, it is a stablecoin that is equivalent to the digital dollar. You can exchange one USDT for one dollar by using a BTC to USDT convert service.
The USDT concept regulates the crypto’s value (one USDT is equivalent to 1 dollar on the tether ecosystem). This stablecoin brings stability within the volatile crypto ecosystem.
Tether has been in existence since 2014, following the collaboration between Craig Sellars, Brock Pierce, and Reeve Collins. The launch of this token saw Tether become the first stablecoin that traders can exchange for fiat currencies like the yen, US dollar, and Euro.
It also bridges the gap between cryptocurrencies and fiat coins by offering stability and transparency in Transactions. Though you cannot exchange Tether for real money, its role in enhancing cryptocurrency liquidity cannot be underestimated.
Understanding how Tether works
Tether operates on multiple blockchains such as Ethereum, Algorand, and Tron. For instance, you can recognize the USDT on Ethereum blockchain as an ERC20 coin. USDT tokens have the US dollar’s endorsement under the 1:1 ratio. This requirement keeps its circulation in demand -you will receive 1 USD for every one tether token you wish to exchange.
Traders should find the best crypto platforms to facilitate any successful transactions. For instance, you cannot transfer tether coins to other platforms if you are using Ethereum. Since trading crypto involves buying and selling, you’d want an exchange network that doesn’t limit your functionality by excluding other exchange chains.
Using Tether
It’s almost impossible to trade cryptocurrencies without the USDT. This is because of the stability that comes with facilitating transactions. Investors can transfer funds to other assets, thanks to this stablecoin. Some of the ways you can use Tether include:
- Trading
Processing cryptos on traditional finance systems like banks can be challenging and time-consuming. You will also part with transaction fees for a complete exchange. The best way to counter this is by converting cash and trade it to USDT. You can then trade more funds using Tether stablecoin. Most crypto investors exchange crypto for USDT instead of cash as it facilitates effortless trading.
- Loans
Many crypto lending institutions allow traders to borrow cryptos by charging interest. Tether is the only option that facilitates such transactions. This way, investors don’t have to worry about potential risks arising from crypto’s volatile nature.
- Global payments
It’s quite common for entities to accept crypto payments. Global payments can only get better when using the USDT stablecoin -it’s cheap and quick.
Though there have been controversies against USDT coins, the benefits outweigh Tether’s shortcomings. Plus, its l stability is a guarantee that it is Tether is here to stay.
Source: Plato Data intelligence
