Tether (USDT) is a stablecoin that particularly designed to act as a bridge between cryptocurrencies and fiat currencies. In fact, it offers stability in price, transparency and minimal transaction fee to its users. It first launched in July 2014 as RealCoin, but then later rebranded to Tether by Tether Ltd. in November 2014. Finally, it started trading in February 2015.
The price of Tether is stable because it’s pegged to U.S dollar, Euro and other cryptocurrencies. Each Tether in circulation is pegged to $1 in reserve. As the company mentioned, there is no guarantee provided for any right of redemption or exchange of Tethers for real money. It mostly used by cryptocurrency traders when the market is volatile or is going bearish.
What is Tether (USDT)?
Tether is a stablecoin cryptocurrency pegged to fiat currencies. It backed one-to-one by reserveing of some kind of traditional currencies under Tether’s control. Its token called USDT is pegged to U.S dollar. It also has another token called EURT, which is pegged to euro. It aimed to make easier transactions, record keeping and other advantages of a blockchain-based digital currency to traditional currencies. In fact, it makes its users to use its tokens as a medium of exchange to buy goods or services without being worry about the market volatility.
Tether (USDT) Advantages
Let’s take a look at Tether from an another point of view. The majority of traders and investors are interested to cryptocurrencies due to their volatile price (fluctuation in price).
In fact, owning Tether is like having a deposit in a bank account with almost 0% interest. In some point of view, it could be riskier from a bank account and other cryptocurrencies due to regulations about it and what we mentioned above about the company announcement.
So, here a question comes up that what is the purpose of having a cryptocurrency, which doesn’t have any pumps or dumps or even in some cases doesn’t have bubbles in price? Or if Tether is riskier in compare to other cryptocurrencies and commodities, why use it at all?
As we mentioned above, it’s extremely useful to investors and traders as an alternative to fiat currencies. Below are some reasons:
The withdrawal process from exchanges often takes time. It usually takes 1 to 4 business days and if the transaction requests after banks business hours such as nights, weekends or holidays, the waiting time may be extended. But traders often need to withdraw or shift founds quickly. So, Tether (USDT) could be a solution in such a cases. It takes around an hour for a transaction to get confirmed.
If a trader wishes to work with foreign exchanges and take advantage of arbitrage trading, transactions fee could be really expensive. Using SWIFT or normal bank wire to transfer the money from an exchange to a foreign bank account includes charging fees. Usually there is a transaction fee plus an extra foreign exchange conversion fee. On the other hand, Tether (USDT) takes much less transaction fee between Tether wallets independent of the amount of transferred.
At first, many believed that Tether or other stablecoins may not be able to survive long enough in the cryptocurrency market, but here it is. At the time of writing Tether is the forth strongest cryptocurrency. Many traders and investors use it as medium of exchange or as an alternative currency to fiat. Although, stablecoins face with challenges through the past years, Tether is surviving and getting more popular by the time.