Buy Tether (USDT)
The cryptocurrency market has become so attractive to everyone on the planet that it has caused widespread excitement worldwide among different walks of life, creeds and occupations. This article will understand what Tether is, how it differs from other cryptocurrencies, and why to buy Tether.
What is Tether?
Tether (USDT) is the most widespread cryptocurrency stablecoin on the market, which is claimed to be backed by US dollars at a 1:1 ratio. This cryptocurrency is present on various blockchains and has increased trading volumes and liquidity over the past few years.
Stablecoins are digital assets designed to mimic the exchange rate of fiat currencies, such as the dollar or euro. They allow traders to transfer stable assets around the world cheaply and quickly.
Cryptocurrencies, such as bitcoin and Ethereum, are known for their volatility relative to fiat currency prices. It is natural, as blockchain technology is still very new and cryptocurrency markets are relatively small. The fact that the value of a cryptocurrency is not tied to an asset is interesting from a free-market perspective but can be a problem when it comes to usability.
In the real world, people use a measure in the form of fiat currency, but the blockchain does not understand what the euro or the dollar is, it has its own metrics - block sizes, the number of transactions, hashrate. Stablecoins were created to bring the blockchain closer to the human world and make it an asset that can be perceived as a unit of value.
In addition to being pegged to fiat currencies, stablecoins can be pegged to precious metals, natural resources, securities, real estate, and other physical assets. Due to this, stablecoins have less volatility.
How do stablecoins work?
There are several types of stablecoins that differ in how their units are tied to fiat currency. The most common types are listed below:
- Fiat-backed Stablecoins;
- Cryptocurrency backed stablecoins;
- Algorithmic stablecoins.
As we have already understood, Tether is a stablecoin that is backed by fiat currency.
So what are fiat backed stablecoins?
The most popular type of stablecoin is directly pegged to fiat currency at a 1:1 ratio. Thus, we also refer to these as fiat-backed stablecoins. A central issuer (or bank) holds a certain amount in reserve currency and issues a proportionate number of tokens.
For example, the issuer may have one million dollars and allocate one dollar to each of a million tokens. It allows users to exchange their cryptocurrencies for tokens with a value equivalent to a dollar at any time.
Obviously, there is a high degree of counterparty risk that cannot be mitigated: the issuer must be trusted after all. The user cannot know with certainty whether the issuer has funds in reserve. At best, the issuing company can try to be as transparent as possible when publishing audit results, but this system is far from zero confidence.
All about USDT (Tether) cryptocurrency
Back to USDT.
USDT is a cryptocurrency asset issued based on the bitcoin blockchain through the Omni Layer, Ethereum (ERC-20), TRON, EOS, Algorand, Solana and OMG Network protocols. Each USDT unit is backed by a US dollar, held in reserve by Tether Limited and can be received via the Tether platform.
Like other stablecoins, many people buy USDT as it is helpful for cryptocurrency trading. Since it allows traders to avoid the market volatility that is common to BTC and other crypto-assets, many in the cryptocurrency market prefer to buy USDT. Using Stablecoin also eliminates the additional costs and delays that occur when converting cryptocurrency to fiat and vice versa.
Tether is an essential part of the cryptocurrency ecosystem. Tether often holds the highest position in daily trading volume on the crypto market, surpassing even bitcoin, as most crypto assets are traded paired with USDT. It can be found on almost every cryptocurrency exchange.
Purpose of creating cryptocurrency USDT
So why would anyone want to invest in Tether? Since this cryptocurrency is the third-largest in the market in terms of capitalization, it means its creation had a specific purpose, which Tether successfully achieved.
USDT and other Tether currencies were created to facilitate local currency transfers, provide users with a stable alternative to Bitcoin and validate exchanges and wallets that are currently unreliable. In addition, USDT provides an alternative to Proof of Solvency methods by introducing a Proof of Reserves Process.
The amount of USDT in circulation is verifiable. Therefore, the volume of USDT in circulation at any given time can be marked as TUSD. The volume of USDT in circulation must always match the volume of USDT held in Tether Limited accounts to receive and send fiat currency to users who buy or sell USDT cryptocurrency directly through the Tether platform.
To confirm that the volume of USD in bank accounts equals or exceeds the volume of USDT in circulation, Tether Limited publishes its bank account balance on the Transparency page. In addition, professional auditors constantly confirm, sign off and publish the account balance and financial transfers.
We get an extremely reliable and transparent system that relies on bitcoin's oldest and most secure blockchain and provides users with a stable asset for national currencies.
How does Tether (USDT) work?
USDT is a cryptocurrency asset that implies the digital reserve of the US dollar. The coin was created using the Omni Layer protocol, but later versions of this stablecoin were released based on Ethereum and Tron chains.
A feature of the Tether cryptocurrency is that the American dollar backs each coin. Therefore, the number of cryptocurrency units issued corresponds to the dollar stock held by Tether Limited. The same company also secures the funds in dollars as long as their cryptocurrency is used on the vastness of the internet.
If you desire to buy Tether, please read as much information about the cryptocurrency and the market as possible.
Description and characteristics of the coin
Tether cryptocurrency, according to the technical documentation, has the following features:
- USDT is instantly issued as soon as the user transfers the dollar equivalent to the company's account;
- As soon as the amount is withdrawn to the user's account, the coins are cancelled;
- USDT is a cryptocurrency that can be stored, used similarly to Bitcoin, Lightcoin or any other cryptocurrency that operates under the same rules;
- Users have the right to store acquired or mined coins in wallets that have Omni Layer support.
Here's what the Tether project document says:
"Each Tether unit issued into circulation is secured at a one-to-one ratio (i.e. one Tether USDT equals one US dollar) by the corresponding unit of fiat currency held on deposit by Hong Kong-based Tether Limited."
Tether's original collateral asset was exclusively USD, but the collateral options have subsequently been expanded to include other real cash equivalents, assets and loan receivables.
Stablecoin (generally) trades at a stable one-to-one exchange rate with the US dollar. However, significant market events can still affect its price.
Another feature of using USDT is that the developers apply an alternative to Proof-of-Solvency, using the Proof-of-Reserves method, which means "proof of reserve".
The booking process is carried out as follows: the requested USDT amount is verified by the Block Explorer using special tools. That dollar amount, which is the counterpart of the coins to be purchased, is immediately confirmed with the bank accounts.
The company periodically audits the funds so that users can see for themselves that their investments are safe and secure.
Advantages of USDT
The main advantages of USDT are as follows:
- Currently, the exchange rate of a given cryptocurrency can fluctuate by no more than 2-3%;
- Each stablecoin is equal in value to one or another currency unit.
Disadvantages of USDT
Some of the fundamental disadvantages of USDT include:
- Since USDT is pegged to the dollar, this cryptocurrency will come under increased scrutiny from government authorities;
- If the dollar is subjected to inflationary processes, the value and reliability of USDT will also be compromised.
Examples of how to use Tether (USDT)
So why invest in Tether in India?
- Quick access to market stability. If the price of bitcoin or other crypto-assets drops significantly, you can quickly exchange your currency for USDT instead of trying to cash it out.
- It's easy to move funds between exchanges. With Tether, you can move your funds between exchanges very quickly. It can also be valuable for arbitrage trading other cryptocurrencies.
- Trading on cryptocurrency-only exchanges. Some exchanges do not provide the ability to deposit and withdraw fiat money but allow trading in USDT. By purchasing Tether in advance, you will be able to trade on these exchanges without worrying about market volatility when placing your central trading funds in BTC (or other cryptocurrencies).
- Forex-style trading. Since USDT is pegged to the US dollar, you can trade forex by exchanging your region's currency into USDT when its value against the US dollar is high. You can then cash out in the local currency when its value falls or exchange it for other assets.
Where to buy Tether?
To buy Tether in India, there is a ranking of the most reliable and well-known cryptocurrency exchanges that support deposits and withdrawals in dollars and euros and the like.
The most reliable exchanges with the highest cash turnover have been Binance, the largest cryptocurrency exchange globally, for several years now. Binance is the most popular crypto exchange, as it has the highest trading volumes and supports transfers from Visa/MasterCard and various payment systems.
How to invest in Tether in India?
The Earn feature
Popular crypto exchanges offer to freeze stablecoins in an account and earn interest for doing so. And the term can be flexible and fixed. The rates are higher than for dollar deposits at banks. As an example, you can consider the offers on OKEx in the year 2021:
- Participating in liquidity mining. Offer: Sushiswap. Tokens (need ₮USD + ETH) are placed in AMM (Automated Market Maker) and made available for SUSHI mining. Profit: 11.75% per year. Coins can be withdrawn at any time.
- P2P Loans. Fixed terms (30-90 days). Rate: 4.01-4.38%. You can also create your loan terms (enter amount, collateral, daily interest rate, term).
- Compound. The user sends the cryptocurrency to the platform for lending, increasing its liquidity. This is charged with intra-system transaction fees (4.58% p.a.) and a bonus in COMP tokens. The term is flexible.
- Savings. An option with a minimum return, but it will yield 2.16%. It has a flexible time frame.
The conditions for passive earnings on cryptocurrency exchanges in digitalized dollars are often worse than in other cryptocurrencies. But profits will not be offset by a sharp drop in the market. So this way of making money is less risky. So we recommend that you start pumping your brains and making money. Good luck!