What is Tether (USDT) and should one use it?

Tether cryptocurrency is the most demanded stablecoin today. Based on the blockchain, the Tether platform transfers fiat money to electronic money, exchanging traditional dollars for USDT digital coins and pegging them to the exchange rate of national currencies.

Bitcoin showed promise to become a fast, convenient and secure means of payment. By the end of 2017, it became clear that in the form in which cryptocurrency is now, it is impossible to implement this. Probably, for this, the Bitfinex exchange, together with the company issuing the “tokenized” dollar, the stablecoin Tether, known as USDT, took advantage of it.

Stablecoins are cryptocurrencies with a fixed rate or resistance to significant fluctuations. This class of digital assets is characterized by low exchange rate volatility or its complete absence. Thus, in addition to the function of exchange, stablecoins act as an effective unit of account and a store of value.

Tether is a cryptocurrency that uses the blockchains of various cryptocurrency platforms for financial transactions and is pegged to fiat currencies, in particular the US dollar. The company Tether Limited issues tokens, assuring that each of them is backed by a real reserve on the accounts, and this way one million tokens in circulation is strictly equal to one million units of fiat currency on the company’s accounts.

Tether is still a dark horse for most users. Surely, you have seen this token on popular exchanges and heard something about it. The main activities of the cryptocurrency industry take place around the top coins. The rate of Bitcoin or other popular currencies is formed due to the mass hype and major market players.

Currencies such as Tether (USDT) are more likely to play the role of an intermediary and are used to ride out a period of particularly high volatility in other cryptocurrencies.

Tether was originally built on top of the open-source Omni Layer protocol, which interacts with the blockchain and enables the issuance and redemption of bitcoin-based cryptocurrency tokens. Users can transfer issued tokens, buy any other cryptocurrency for them, or simply store them in any wallet that supports Omni Layer. It should be noted that tokens are issued only in the amount, the equivalent of which was received on the company’s account. Accordingly, the token disappears from circulation in exactly the same way. Tether uses an alternative to Proof of Solvency and Proof of Reserves. The process is quite simple and common. The amount of tokens is verified on the bitcoin blockchain using publicly available tools, and the corresponding amount of dollar reserves are confirmed by bank accounts and periodic audits. The company regularly publishes the amount of funds on a separate website, and Taiwanese and American accounting firms often conduct appropriate checks. Further Tether (USDT) began to create stablecoins on other blockchains, such as Ethereum, TRX, EOS and some others, but Tether found the greatest popularity among users on the Ethereum blockchain, where the ERC20 protocol token gained the largest capitalization among other stablecoins.

Low exchange rate volatility is achieved by pegging stablecoins to various assets that back them. Stablecoins can be backed by fiat currency, digital currency, or a basket of cryptocurrencies, or they can be unbacked. Tether belongs to the first category and is backed by the US dollar. It is important to understand that the Tether is not an electronic copy of the traditional dollar. It was created to facilitate the transfer of national currencies by providing a stable and more reliable alternative to bitcoin. Tether is positioned as digital cash for the digital age. It differs in that it is understandable to the majority since it allows you to focus on the dollar known to everyone, you do not need to make calculations and payments in other units, it is decentralized, stable, accessible and open to individuals and legal entities on the same terms. In addition, Tether USDT is cryptographically protected from any hacker attacks. At the same time, despite the fact that the original idea of the USDT token is its fixed value in relation to USD (1:1), its rate still fluctuates, usually within 2 cents to both sides. In April 2017, due to allegations of Ponzi schemes, Taiwanese banks closed the company’s accounts and the coin rate fell to $0.91 cents per 1 USDT. To date, the Tether cryptocurrency has firmly established itself in the TOP on CoinGecko.

As Tether cryptocurrency mining is not provided, the only option is to acquire and earn it. Now Tether is traded on almost all major platforms. The list of partners where you can buy or sell USDT tokens is on the official website of the project.