Tether has been one of the most commented cryptos for some time now. Without getting into the matter of why Tether platform has limited access in the US, let us present the Tether basics, as its very existence is obviously very important.
Tether (USDT) is a digital currency meant to be backed by US dollars in 1:1 ratio. The name itself is peculiar. It suggests that something has been “tethered” with. In this context, a crypto which is tethered or chained to the value of a US dollar. Therefore, USDT should have the same value as US$ in real time. Due to this feature, USDT was named a stablecoin. This reflects the fact it is a stable dollar substitute. Subsequently, USDT is not volatile, at least not in the sense some other cryptos are.
This concept of making stable substitute of national currencies have spread beyond borders. Therefore, we now have Tether backed by Japanese Yen, for example.
In general, USDT is very suitable for investors, for example. In case users move it between Tether wallets, there are no transaction costs. Furthermore, some financial experts believe that it is a cozy coin to cash out and cash in when there are difficult situations in the market.
Advantages of Tether
Tether is among 15 most popular currencies. It combines the best out of the two concepts: the digital and the fiat one. Following is a short list of pros for using Tether.
Transparency of Tether
This is a big plus. People who invest like to know exactly how much something will cost them and what they can expect to gain. The fact that USDT is pegged to a US dollar is enough of a guarantee that the digital token cannot fluctuate in value that much. Tether is, therefore, considered a reliable digital coin. Most importantly, the Tether Company provides the information about all USDT coins in the market. This promotes transparency and reliability.
Running on Bockchain
In general, people like familiar things. Tether is powered by bitcoin blockchain. This blockchain has proved itself as secure and very difficult to break. Consequently, Tether is in “safe hands”.
Similarity to Fiat Currency
Tether is a hybrid. Maybe it does not sound right, but it is actually its advantage. The users can exchange the US$ directly for USDT or they can buy USDT by selling their BTC. With other altcoins, the exchange platforms usually have requirements to first purchase either BTC or ETH and then trade it for USDT.
No fear of the market volatility
Because Tether is pegged to US$, its value can change as much as the value of US$ changes. This means, there are no big changes in its value. Above all, the trends can usually be predicted.
What is your opinion on stablecoins?