Tether

USDT, short for Tether, is a stablecoin in the cryptocurrency market. It is designed to maintain a stable value by pegging its price to a fiat currency, often the U.S. dollar, at a 1:1 ratio. USDT is issued on various blockchain platforms, including Ethereum and TRON, and operates as a digital representation of real-world money. Its purpose is to provide the benefits of cryptocurrencies, such as fast and borderless transactions, while minimizing the volatility associated with other digital assets, making it a popular choice for traders and investors.

This page will uncover a wealth of information about the subject matter, presenting all there is to know about Tether in simple, clear terms. However, before going full-scale, you can check through the major key points highlighted below to aid your understanding of the stablecoin. With Swapzone, you can easily swap over 1600+ assets to USDT among 15 different instant exchanges, in just a few clicks.

Keypoints On the Question “What is Tether?”

• Tether is both a protocol and a cryptocurrency.
• As a protocol, it is referred to as Tether, meanwhile as a currency it is tether.
• Tether offers several cryptocurrencies all of which are stablecoins. Its most popular coin is USDT. Tether (USDT) is widely used within the crypto market with about 73 billion tokens distributed around the world (as of the time of writing).
• Some other Tether-issued currencies include: Tether gold (AUXT), Tether Euro (EURT), Tether Peso (MXNT) and Tether Yuan (CNHT). Three of these stablecoins are pegged to the value of currencies while one last one is pegged to the value of gold.

Tether is a Stablecoin

All of the currencies issued by Tether belong to the class of crypto coins that is called stablecoins. Stablecoins are cryptocurrencies with less rate of volatility. The prices and value of this class of crypto assets are pegged to less volatile assets like legal tender currencies (US Dollars, Chinese’s Yuan).

How Does Tether Work?

The Tether USDT coin deviates from the typical characteristics of the cryptocurrency ecosystem in two ways. Firstly, unlike many cryptocurrencies, USDT is not mined and is not decentralized. Instead, it operates under a centralized control mechanism where the company behind it, Tether, holds the authority to manage the issuance and circulation of the coin. The supply and demand dynamics of USDT are manually controlled by the company.

Secondly, Tether ensures that each USDT maintains a one-to-one exchange ratio with the US dollar by backing it up with assets held in the company's reserves. When converting USDT to fiat currencies like the US dollar, this backing provides assurance of value.

To maintain transparency and accountability, Tether is obligated to publish quarterly financial attestations that disclose the types of assets held in its reserves. These can include cash, commercial papers, corporate bonds, loans, digital currencies, and other asset classes. Tether operates on an IOU model, offering the promise of immediate conversion of stablecoins into traditional currencies.

A Brief History of Tether

Tether made its debut in 2014 with the introduction of its inaugural digital currency, known as the real coin. The real coin was an innovative dollar-backed cryptocurrency created to facilitate the seamless transfer of fiat currencies on the Bitcoin blockchain. It originated from the vision of iFinex Inc., a renowned company based in Hong Kong. However, in the same year, the real coin underwent a rebranding process and emerged as Tether.

Since its inception, Tether has expanded its reach by integrating with various other blockchains such as Solana, Tron, Ethereum, Avalanche, Polygon, and several others. This strategic expansion allowed Tether to launch multiple currencies across these diverse platforms. As of May 2022, Tether has achieved significant success, with its USDT tokens ranking as the third-largest cryptocurrency in terms of market capitalization. This achievement solidified Tether's position as a leading player within the cryptocurrency market.

How is Tether Backed?

Tether operates within a centralized cryptocurrency system, wherein its value is supported by various assets and resources owned by the company. These assets hold an equivalent value to the Tether currency and are meticulously held in reserve. This reserve serves the crucial purpose of enabling the swift and seamless conversion of Tether into fiat currencies whenever necessary. By maintaining this robust reserve, Tether ensures the stability and liquidity of its currency, providing users with confidence in its immediate usability and reliability.

Tether vs. TerraUSD

One feature that both cryptocurrencies have in common is the level of volatility. They are both stablecoins with values dependent on the value of the USD. This means that in value, Tether and TerraUSD can be equated because one unit of these currencies is always valued at $1. The difference however, is in the mechanism through which these values are maintained.

Tether is a collaterized stablecoin with a system that ensures its continued value through the company’s assets and reserves. Hence, when the value of resources in the reserve is equal to the value of tokens in circulation or even less, then Tether has reached full reserve. TerraUSD on the other hand is an algorithmic stablecoin meaning, it is backed up by programmatic language rather than cash reserves. This maintenance scheme is a more volatile method when compared to Tether's as it has fallen below its price peg several times and was even suspended from the Binance exchange platform.

Tether vs. Bitcoin

Tether and Bitcoin vary on many grounds. However, the most obvious difference is the level of volatility. While Tether is a stablecoin whose value is pegged to the value of a real commodity (gold and USD), Bitcoin is a free ranging coin. It is not anchored on the value of any commodity. Its value is dictated by the interaction of demand and supply.

Another striking difference between both currencies is the level of control and third-party intrusion. Tether maintains a centralized financial model meanwhile, Bitcoin is decentralized. One last difference to touch on is the fact that Tether is strictly a value storage instrument unlike Bitcoin that is designed to make money and serve as an investment with Returns of investment.

Tether vs. DAI

DAI is very similar to Tether. They are both stablecoins however, they find their backing in different ways. While Tether is backed up by assets of equivalent value, DAI is a DAO-backed stablecoin. It maintains a decentralized system which differs from Tether's system. It is operated by a decentralized autonomous organization (DAO).

Tether vs. USDC

Tether and USDC are the two biggest stablecoins in the market (as of the time of writing). They both have 80% combined market share of the total stablecoin market with USDT owning about 50% and USDC about 30%. Generally, USDC is believed to be less volatile with its backup in cash and cash equivalents while USDT is backed up by assets of equivalent value. They both maintain a price peg of 1 coin to 1 USD.

Is Tether a Good Investment?

Tether primarily serves as a means of storing value rather than generating investment returns. Consequently, when evaluating its significance from an investment standpoint, Tether, along with other stablecoins, may not possess a competitive advantage. The Tether currency is not designed to appreciate in value directly, making it less attractive for those seeking substantial investment gains.

However, Tether offers an alternative for individuals looking to navigate the inherent volatility of the cryptocurrency ecosystem while actively participating in it. While the crypto network carries no certainties, Tether provides a relatively stable option compared to many other tokens. While it cannot guarantee results, Tether offers a higher degree of predictability and stability, making it a more reliable choice for those aiming to mitigate risks in the crypto space.

How to Exchange USDT

Exchanging USDT is one of the simplest exchange procedures in the cryptosystem. Being a popular coin, it has an inexhaustive list of crypto exchange platforms that support it. However, as seamless as it is to find the USDT currency and to hold it, a wrong choice of an exchange platform or wallet may ruin the entire seamless process. Hence, it is important to engage in reviews and to research several options before making a choice. One of the safest and most efficient is Swapzone. It is a popular exchange platform with a long list of coins.

The platform is easy to use with simple trading procedures, affordable rates, and thousands of users. To exchange USDT, visit the Swapzone, open an account with all the required information, and follow the instructions outlined. The entire procedure can be completed in a few minutes.

How to Buy USDT?

You can buy Tether on Swapzone, an instant exchange aggregator. Swapzone provides users with the option to choose from 15 different exchanges, allowing them to complete the Tether exchange with the best offers.