The Complete Introductory Guide to Tether
Being one of the largest cryptocurrencies in the world, Tether (USDT) is now gaining immense popularity as the most traded cryptocurrency in the world — and partly due to the surrounding controversy. Still, the fact is, we’re mostly aware of popular coins Bitcoin and Ethereum but don’t know a lot — probably not enough — about Tether.
Here at Finvesting.net, you can always find comprehensive, informative articles about cryptocurrencies. In this article, we’ll teach you everything you need to know about Tether in 2022.
What Is Tether (USDT)?
Unlike Bitcoin, Ethereum, or any other cryptocurrency in the world, the concept of Tether is quite convenient for everyone. Tether is a cryptocurrency that has its value pegged to the US dollar. In other words, Tether is backed with a 1:1 ratio to fiat USD.
To that end, we can say it’s the digital version of the dollar. So, if you have 1 USDT, you have 1 USD — approximately.
Before we dive deeper into how Tether works, it’s crucial to give you an idea of stable coins and why Tether is currently the biggest stablecoin in the world.
Tether As a Stablecoin
Just as the word “stable” indicates, stablecoins are a class of cryptocurrencies that aren’t at risk of considerable fluctuations. Other popular stablecoins include Dai (DAI), USD Coin (USDC), TrueUSD (TUSD), Paxos Standard Token (PAX), Binance USD (BSD) among others.
The fact is, not everyone feels safe holding cryptocurrencies such as Ethereum and Bitcoin due to large swings in their prices.
Being the most traded cryptocurrency, you can never neglect the use of Tether as a stablecoin. Unlike volatile digital assets like Bitcoin and Ethereum, you can easily conduct transactions and send (or receive) your money across borders for a fraction of the cost.
Why was Tether Created — and By Who?
In July 2014, Tether was launched with the name “RealCoin” by co-founders Brock Pierce, Reeve Collins, and Craig Sellars. On 6th October 2014, the first tokens were issued on the Bitcoin blockchain using the Omni Layer Protocol.
Being a centralized currency, Tether is issued and controlled by a single company: Tether Limited. It was designed to serve as a ‘bridge’ between fiat currencies and cryptocurrencies. By design, 1 USDT will be approximately equal to $1.
Going by this narrative, Tether was created to provide the users with a form of stability in the ‘chaotic’ crypto markets. Besides that, Tether has helped build a new financial economy which allows crypto enthusiasts to access real-world currencies like USD and EUR on the blockchain.
The Controversy around Tether Limited
If you’ve previously heard about Tether, then there are strong chances that you may have also seen people denying the importance of this digital currency. But the fact is, with such incredibly amazing services and scope, the arrival of controversies is not strange.
Some critics say that Tether is running the fractional reserve scheme along with Bitfinex by issuing more USDT than they actually need.
Various financial authorities have accused the company of printing digital fiat USDT to dump the crypto markets. Tether Limited, being a global company with a reputation to protect, has given anyone permission to audit its finances.
How Tether Works
Initially, Omni Platform supported Tether just like other digital assets. The progress continued and now Tether tokens are existing on 8+ blockchains including Ethereum, Solana and Tron.
The maintenance of the Tether peg is still done through collateral which simply means for every 1 USDT, there is 1 US dollar or any other asset worth 1 USD.
To keep the value of 1 USDT equal to $1, it must be exchangeable for $1 of fiat currency. As such, it’s the responsibility of Tether as well as exchanges to maintain the reserve of dollars and stabilize the price of USDT.
Currently, you can exchange USDT into USD via exchanges or through Tether Limited, for a significant fee.
Tether vs Bitcoin
As you know, Bitcoin transactions run into several millions of dollars per minute, and this contributes to its volatility. To that end, it’s not the safest option for people who want to hold their money in cryptocurrencies for a long time.
Sudden price fluctuations of Bitcoin can put anyone at a great loss within a short time, so there was a strong need for some calm.
Being the most-favoured stablecoin, Tether has become the most traded cryptocurrency in the world because crypto investors, to an extent, feel safer holding USDT. It’s soft-pegged to the USD to give holders a hedge against volatility.
Best Wallets for Storing USDT
Hardware wallets are widely regarded as the most secure way to keep your crypto safe — Tether or not. They’re offline wallets (or commonly, cold storage), so your funds can only be stolen if someone physically accesses the wallet.
Even at that, the wallet adds an extra layer of security with password authentication. Ledger and Trezor are two popular hardware wallets.
- Ledger has two models, Nano S and Nano X, which both support storing USDT. However, the most adaptable one is the X model that supports smartphones as well.
- Trezor is another hardware wallet that supports Tether. Trezor One and Trezor Model T are both compatible with both desktop and smartphones.
Various software wallets are available as digital wallet solutions to help you safeguard your crypto assets including Tether.
Coinomi and Exodus are examples of software wallets that support Tether.
- Coinomi is a secure multi-currency wallet which allows you to store 1700+ digital assets including Tether. Being a user-friendly wallet, it supports major operating systems like Android, Linux, iOS, and Windows.
- Exodus: If you’re looking for a user-friendly software wallet which supports Tether, then look no further. Exodus is a beautifully designed wallet with an easy to use interface and It’s available for Android, Linux, Windows, iOS, and Mac.
Yes, you can use Tether token (USDT) anywhere in the world, particularly in areas where cryptocurrencies are accepted.
Along with USDT, Tether also supports Euro (EUR) and Chinese Yuan (CNY).