What Is Tether (USDT) Crypto Currency

Bet you’ve heard about Tether (USDT) at least once even if you are a new crypto investor. But do you know how does USDT work? What is it used for? How secure is it? We will tell you all about Tether in this article, just keep reading to find out what is USDT coin!

What Is Tether?

So what is USDT coin? The USDT is the most popular stable coin nowadays. Many investors who are wary of the volatility use it. The coin is pegged to the USD and it helps the coin to remain stable. 

Tether was launched as RealCoin in July 2014 and was rebranded as Tether in November 2014. The aim of the coin is to provide a safe digital asset as it always maintains the same value as its peg. It allows users to avoid unexpected losses (or gains). 

Tether is the most liquid cryptocurrency and among the top three largest cryptos by market capitalization.

How Does Tether (USDT) Work?

The user first deposits fiat currency into Tether’s reserve to buy USDT. Then the corresponding amount of cryptocurrency is being issued. The USDT can be sent, stored or exchanged now. 

When ordinary cryptocurrencies are known to be volatile, Tether almost always stays the same. The parity when a user buys Tether with dollars is 1-to-1. Then, when the user redeems the token back for fiat currency Tether coins are being destroyed and removed from circulation. 

What chain is USDT on? Tether coins are available on various blockchains, including Bitcoin, Ethereum, EOS, Tron, Algorand, and OMG Network.

How does tether stay at $1? Tether has dropped below $1 and risen above it occasionally. But usually it stays the same as long as it is redeemed for $1. 

What is the Tether Cryptocurrency Used For?

Tether is usually used to save funds from the market volatility. Trade your volatile coins for USDT to avoid dramatic price changes.

Beside this, Tether can be exchanged for goods or services – many businesses accept cryptocurrency these days. What makes Tether versatile is its flexibility. Use it anywhere you want to transfer or transact value. Buy things as you do it with your fiat assets – it is easy!

Security Level Of Tether Cryptocurrency (USDT)

Some investors and economists were worried Tether’s issuer doesn’t have enough dollar reserves to justify its dollar peg. However, Tether proved that they are safe after a couple of controversies. 

These days the coin is considered one of the most reliable. You are able to redeem your USDT for fiat anytime you want with no problems. USDT has had no serious depegs since it started trading in 2015.

Tether even provides accounting reports that proves the backing of USDT by the fiat currency. This way Tether has gone a long way to prove that the coin is safe and trustworthy. 

Even being supported by fiat the coin has some risks.The risks are described below:

Centralized Project 

While other cryptocurrencies aim for the full decentralization, USDT is centralized around one company. The company has been exposed as lying about its one-to-one U.S. dollar backing. The same company denies any wrongdoing despite the overwhelming evidence indicating otherwise.

If Tether Fails, It Could Tear Down the Entire Crypto Industry

USDT is the largest stablecoin and the third-largest cryptocurrency in the world. It makes up 85% of Bitcoin’s volume — with it gone, Bitcoin would fall to around $5,000 again.

Unclear Banking Regulations, Regulatory Status and Auditing Practices

Tether switched banking partners and regulatory jurisdiction a lot of time over the course of their existence. This raises the issue of its trustworthiness and legitimacy.

The process by which new USDT is minted and auditing practices operate in a black box with limited transparency.

Final Thoughts

Today we have talked about the tremendously popular yet controversial stablecoin, Tether (USDT). The coin, which is known by many as the most reliable one, for others may seem like a scam project, especially if taking into consideration all the unclear situations taking place not a long ago. Time will show what Tether is all about, and by now all we have to do is to decide for ourselves if the coin is worth trusting.