TETHER (USDT)

DEFINITION

Tether is a blockchain-based cryptocurrency whose cryptocoins in circulation are backed by an equivalent amount of traditional fiat currencies, like the dollar, the euro or the Japanese yen, which are held in a designated bank account. Tether tokens, the native tokens of the Tether network, trade under the USDT symbol.

HISTORY

The idea of building new cryptocurrencies on top of the Bitcoin protocol started with a white paper by J.R. Willett published in January 2012.

Tether was launched in November 2014, after it was rebranded from the original project Realcoin.The project was initially founded by Bitcoin Foundation director Brock Pierce, alongside software engineer Craig Sellars, and entrepreneur Reeve Collins. The RealCoin startup laid the foundation for Tether’s operation before the name change came about.

The premise of the cryptocurrency was simple, to provide a utility token that represented certain fiat currencies at a 1:1 ratio, with the benefits of cross-border payments facilitated by blockchain technology.

The cryptocurrency was built and operated using an OmniLayer platform, a software layer built on the Bitcoin protocol. Thus, every time new Tether tokens were issued, these could be tracked on the platform, allowing the wider cryptocurrency community to keep tabs on how many new Tethers were released.

PURPOSE OF TETHER

The primary purpose of Tether is to provide liquidity and a hedge against market volatility. The tokens are pegged to a fiat, which means there should be no loss of value or volatility as with other tokens. This also makes the stablecoin less risky than typical cryptocurrencies.

BENEFIT

1.Transit Cryptocurrency

Tether facilitates the transfer of real cash into digital cash. Considering the secured payments offered through the use of blockchain. It’s also faster to convert to cryptocurrencies than regular fiat. Tether also holds the ace when it comes to buying cheap cryptocurrencies when the market dips.

2. Acceptance

A good number of platforms working with cryptocurrencies enhanced their platforms after they adopted Tether. Platforms that initially lacked the wherewithal to use the U.S. dollar, use Tether instead, allowing them to open up to new markets.

FEATURES

  • Stability. Because Tethers are backed by a store of real-world currency, it claims that users can have the benefits of digital, blockchain-based transactions without being subject to the volatility of most cryptocurrencies.
  • Transparency. Tether claims that its fiat reserve account is regularly audited to verify that its reserve accounts can actually back up the value of Tethers in circulation. The balance is updated regularly and is publicly accessible at all times. Additionally, all Tether transactions are recorded on the public blockchain.
  • Minimal transaction fees. There are no transaction fees when sending money between two Tether accounts or any two blockchain-based wallets capable of storing Tether. However, converting Tethers back into fiat currency may require paying some service or transaction fees to the parent company.

ADVANTAGES AND DISADVANTAGES OF TETHER

Advantages

  • Stability. Forex and stocks trading is usually carried out from a stable coin that generally is a very stable currency such as the Euro, Dollar or Yen. As a result, it is possible to pinpoint changes in the value of the asset that is being traded. Trading from a coin that is volatile might make the TA harder to apply. Due to this, USDT and it’s stability can be a very good solution to trade according to your strategy.
  • They preserve their value during downtrends. When the bear market hit in 2018, holding any kind of unstable coin might have lost you some serious value. However, USDT stayed safe from the slaughter since it is backed by real dollars.

Disadvantages

  • Fewer pairs to trade with. USDT cannot be directly exchanged for most of the coins. It usually allows you to trade with 18 to 24 different pairs, which in exchanges with more than 150 coins might fall short.
  • Owned by a company. Some traders don’t really trust USDT since it isn’t decentralized and is owned by a company that promises a real dollar per USDT. They wonder if Tether actually has enough resources to comply with their promises. Moreover, if you’re an idealist trader, and you fundamentally believe in decentralization, then USDT might stand against your values. 

MARKET CAP

Image source : CoinMarketCap

HISTORICAL DATA FOR THETER

Source : CoinMarketCap

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