What is Tether? Learn all about this cryptocurrency

What is Tether?

Tether (USDT) is the best known and most used of all stablecoins. With a market capitalization value of $ 4,124,736,811, it is currently the fourth largest cryptocurrency of all, just behind Bitcoin, Ethereum and Ripple XRP.

Unlike its most famous competitors, the price of a Tether unit varies very little. 1 Tether (USDT) is equivalent to 1 US Dollar (USD), although there may be small variations of that price depending on market fluctuations.

Learn more about the functioning of stable cryptocurrencies, their main types and their advantages and disadvantages by accessing our article: The types of stablecoins.

What makes Tether stable?

Unlike Bitcoin and the other cryptocurrencies (altcoins), Tether is backed by another currency. What kind of currency? The US dollar itself.

The emission and withdrawal of Tether from the market is not carried out through a decentralized algorithmic process, but through the company that owns Tether. In the crypto world jargon, this means that it has a centralized architecture.

In this sense, the control of the currency is in the hands of Tether Limited, which is the creator and owner of the stablecoin system. This company also has a cryptocurrency anchored to the euro, known as EuroTether (EURT).

It is Tether Limited, by the way, that is committed to maintaining the link with the US dollar. According to this logic, each issued USDT corresponds to a USD which the company stores. This guarantees the backing of Tether.

What are the advantages of Tether?

As the value of Tether remains stable, it is much easier to use it as a means of exchange: to use and provide services, to make purchases, etc.

“What do I earn with that? Isn’t it easier to use the traditional dollar?”

The answer is no. Let’s see why.

  • Speed ​​and Cost of Transactions

The first advantage is the very low cost and high speed of transactions, especially for international remittances.

If you wish to make an international remittances with dollars, you must use a bank, a remittance company (such as MoneyGram or Western Union) or a payment platform (such as PayPal or Skrill). However, they are more expensive and slow.

First, because these companies charge very high fees for providing their services, which in some cases can reach up to 10% of the value of the transaction.

In addition, it is also common to lose while converting dollars to your local currency. In general, conversion to your country’s money is mandatory, and you lose even more.

Not to mention the speed of these transactions, which can take from a few hours to a few days to complete.

Tether transactions are realized through blockchain. The transaction cost between virtual wallets is zero, and the speed is way higher.

  • Stability and ease of exchanging for other crypto assets

In the crypto world, exchanging one cryptocurrency for another is a matter of  several minutes. This is very appealing for the users who look for short-term investments and who can take advantage of the ups and downs of the market to obtain good financial profit.

In this sense, stablecoins can be extremely useful. It’s possible to have most of your resources invested in Tether and decide in which currency to invest only when the right time comes. Or, if a general downward trend is observed, it is possible to return to Tether while the market is falling.

In case you are going to realize an exchange between cryptocurrencies, go to Cripto InterCambio! We work with Tether and more than one hundred cryptocurrencies. The transactions are fast, without fees and with totally anonymous.

  • Easy to buy and sell with fiat currencies

Since Tether is the fourth largest cryptocurrency by the market capitalization value, buying or selling it for fiat currencies (dollar, euro, real, pesos, bolivars …) is quite easy. Most large exchanges accept transactions with this cryptocurrency.

Therefore, it is not necessary to exchange it for Bitcoin or Ether before buying or selling it, as it’s common with lesser known cryptocurrencies. This reduces costs and risks for users.

Is Tether reliable?

The company that owns the USDT, Tether Limited, is involved in some controversies. As we have said before, what gives stability to its value is precisely the fact that it’s backed by the US dollar.

However, large American newspapers, such as the New York Times and Bloomberg, recently pointed out that the company had no dollar reserve equivalent to 100% of its currencies.

In response to the accusation, Tether Limited changed their discourse. Previously, they claimed that they owned 1 dollar for every 1 USDT. Currently, the company claims that it has 100% of the value backed by dollars, coins and other types of reserves.

Moreover, many members of the crypto community view Tether with certain skepticism. Being centralized, its system is not very different from that of a traditional bank. Thus, users depend on the transparency and stability of the company.

In addition, there are accusations against the company of an attempted Bitcoin price manipulation. Large amounts of BTCs were purchased with Tether at short intervals of time, which aroused suspicion in the crypto community. However, this accusation has not been proven.

Conclusion: Should I invest in Tether?

We hope to have responded to what Tether is with this article, in addition to having resolved the main doubts about this cryptocurrency.

Despite the criticism and the distrust of the company, the Tether remains one of the most used cryptocurrencies in the world. Up to now, its system has shown no signs of failure and millions of USDTs are traded every day.

This happens mainly due to the great advantages that its system offers over the traditional currencies. The low costs and the high speed of transactions, the ease of buying and selling your coins… all these are huge benefits.

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