Cryptocurrency has been making the headlines these days with financial institutions and companies adding Bitcoin to their balance sheets. When we look at the present-day market, the less volatile assets among the cryptocurrency such as stablecoins are paving new ways to attract investors. Of this stablecoin, the most popular and well-recognized stable coin is Tether (USDT). For those who are keen on knowing in detail, this article is for you!
What is Tether?
So, it is a blockchain-based cryptocurrency that is backed by the U.S dollar. And there are actual dollars that are kept in reserves at financial institutions that serve as collateral. Tether is a stable coin unlike other cryptocurrency counterparts such as Bitcoin and Ethereum. And this is attracting investors more!
What Do You Mean by a Stablecoin?
Stablecoin in the crypto market avoids volatility allowing it to be a store of value rather than a risky investment. These kinds of coins also provide liquidity in a highly volatile crypto market. The most commonly known stablecoins are the USD-backed cryptocurrencies such as Tether, Gemini Dollar, and USD Coin. And some of the stablecoins are also backed by fiat currencies such as the euro, and others are backed by gold and silver commodities.
What is its History?
In 2014, Tether started its journey as a Realcoin and this is also the first token that was distributed in 2015 on the Bitcoin platform. It is one of the earliest cryptocurrencies which were highly successful. The token not only was revolutionary but also had a roster of reputable founders such as Bitcoin Foundation director, Brock Pierce.
Controversies Surrounding the Token
- It made it to the list on the Bitfinex exchange, but when the researchers dug up, they found that two companies had the same management.
- The stablecoin was also into a controversy of being artificially pumped into the crypto market to create liquidity that was the driving force behind Bitcoin’s bull run-up to the US$20,000.
- In 2017, it was stolen, forcing the creation of a hard fork.
- There was also a controversy on Tether being backed by USD. An audit of its dollar reserves that was supposed to happen in 2017 had never happened. This audit was supposed to ensure its reserves were maintained, but the cryptocurrency parted ways with the auditors instead.
- In 2019, when New York Attorney general Letitia James discovered that the parent company of Tether was hiding a US$850 million loss by dipping into currency reserves. And in 2021, it has settled with James, agreeing to pay about US $85 million and cease trading operations with New Yorkers. After this, the stablecoin did not admit the fault and claims it simply wants to move away from the matter.
Investing in Tether- Yes, or No?
The stablecoins like Tether have made things much easier to swap any cryptocurrencies for it as converting a cryptocurrency to crash takes a lot of time and transaction fees. The advantages are many in this aspect such as it creates liquidity for exchange platforms, adds flexibility and stability to investor’s portfolios, and also creates no-cost exit strategies for the investors.
Another added advantage is that it can be sent anywhere across the globe with lower fees and quickly than transferring at traditional banks and financial institutions. As most people do not always rely on Bitcoin or Ethereum for making purchases due to their volatility, Tether becomes perfect to make buying easier.
For all these good reasons many are wanting to invest in Tether. But as there is not necessarily a long-term investment that will grow investors’ money by itself, this is due to it being pegged to the U.S dollar, but at the same time, there are also leading platforms, wallets, and exchanges that can pay you high-interest rates to store USDT on their platform.
Things to Know Before Investing
Tether’s price is usually stable at US $1. This means it is not like investing in typical crypto. Let’s see what things to consider before buying.
Stablecoin Tied to the U.S Dollar
Tether is a stablecoin that is tied with the U.S. dollar. It is intended to have an equal value with 1 being worth about US$1. As it is meant to mirror the dollar, it is not a cryptocurrency that you buy and hold in hopes of prices going up.
As it takes days to transfer money from a bank account to the crypto exchange, you can buy Tether and use it to make the purchase. It is a good option when it comes to money transfers. You can use it to make transactions between your own exchange account or to others. It also doesn’t charge fees for Tether wallets. With some of the cryptocurrencies. You can earn interest as well as lose at times but when you take this crypto, it can neither give profits at the same time loses too as it is a stablecoin.
How to Buy Tether (USDT)?
Buying it is very process, for this, you just need to create a digital wallet that supports USDT.
One can hold USDT in any of the hot wallets or exchanges that offer the coin such as Binance, OKEx, Bittrex, Kraken, ZB.com, and Poloniex. While on the other side, the main crypto wallets for semi-hot storage include Omni wallet and Holy Transaction.
The share of USDT trades is shared among Binance and OKEx, With Huobi, HitBTC, and Bitfinex bringing up the rear. You can also find crypto to crypto trading pairs at other exchanges like Change.io, ZB.com, Poloniex, and Bittrex.
How to Buy Via Binance?
The registration to Binance is simple and it is done once you carry out an email verification along with the 2-factor authentication. After you select funds and deposits in Binance, you can bring your crypto to Binance for exchanges to USDT.
After you find your appointed pairs, you can acquire your USDT and put it into cold/ semi-cold wallets for holding or for that matter use as normal dollars on a blockchain. This is the most familiar method several traders use.
How to Import Funds and Buy USDT?
Once you have the crypto balance on Binance, you can proceed to exchange in an advanced manner and select the USDT. After selecting that, you can click on the appropriate pair that matches the crypto you have deposited and open it in order to buy USDT. Then you can now buy as much USDT as you can on the dashboard below the graph by selecting the quantity matching it with the available crypto balance you have for appointed Crypto.
For exchanges at present, crypto traders are struggling to identify payment avenues for converting fiat to crypto.
Starting from finding the right exchange which accepts fiat and provides the crypto that you are searching for. To engage in long security protocols for wire transfers to clear, many newbie traders simply end the middle of the process.
Did you know that exchanges should also have to integrate with banks that may or may not require APIs, making the transfers expensive? The risk of handling fiat is taken care of by Tether Limited, which can simply also provide the tethers.
Tethers can aid merchants to concentrate on their core business and not on payments. Transfer of USD/fiat can now be made possible without the hassle of centralized money movement systems, intermittent conversion, and chargeback risks across fiats.
If the Launchpad for the Tethers is the Omni Layer Protocol that is laid on the bitcoin platform, which has not tried to address the scalability problems of the bitcoin blockchain, then questions surround the problems that affect bitcoin and whether they also manifest in USDT.
It is generated after fiat is deposited somewhere. Are you now wondering how Tether is a cryptocurrency when it is permanently tied to a fiat value? Proof of Reserves is a distant call from decentralization, the main drive that makes cryptocurrency a choice for financial libertarians.
If we are talking about a currency that is running on major exchanges and carrying fiat value. Then Tether is a highly attractive compromise that promises a piece of both conflicting worlds. It is now easier to offload gains to a fiat simulator crypto and be assured of the stability of fiat in a blockchain setting, which is refreshing.
As much as the Tether is created to work with the world’s cryptos as underlying assets, the USDT is the world’s first Tether, and the technology is simply in its earliest stages. And it is also possible to now download crypto to crypto that retains fiat properties. The most relevant purchase of a USDT is as an exit of crypto loot from trading to USDT for consolidation and security of accumulated value.
It is easy to bring Eth or Bitcoin from any wallet to Binance and purchase USDT which can be stored on an Omni or Holy Transaction Wallet, or any other Omni compatible wallet, as Tether runs on the OLP which is layered on top of the bitcoin protocol. Cryptos are always volatile assets.