What Is Tether (USDT)?

What Is Tether (USDT)
What Is Tether (USDT)

Holding Digital Currencies With The Use Of Tether (USDT)

What Is Tether (USDT)? A lot of people wonder what Tether is. Well, it is said to be a stablecoin that is connected to the US dollar. It means 1 USDT has a value of $1. However, there have been several fluctuations in the past when it comes to its price. Tether is considered useful for people who are willing to hold a digital currency that maintains a consistent value. It is usually supported by an asset. It is very popular for this. However, it is one of the most controversial stablecoins but you need to have detailed information about the same. Therefore, we are going to discuss all the Tether (USDT), like what it is and how it works.

What makes Tether (USDT) unique?

What makes Tether (USDT) unique

There are several stablecoins in public but only a few of them are connected to the US dollar. While it proposed the same thing as other competitors, the prominence of Tether, and one of its main competitors, USD Coin has set it apart. It is pertinent to mention that Tether is having a huge market cap as compared to any other stablecoin. 

Moreover, it comes with a higher daily trading volume. Besides, Tether is having the highest 24-hour trading volume among all the cryptocurrencies as per the daily routine. Therefore, it plays a significant role in the ecosystem of digital tokens.

The utmost advantage of stablecoins is that it maintains an affordable price range under normal situations. Notably, they are not eruptive, and thus, they’re used in a different manner than the cryptocurrencies which are bought as an investment.

Here are some of the common ways how Tether can be used: 

– To send money online to another party across the world.

– To transfer your funds among the crypto exchanges.

– To lend your stablecoins in an order to earn high-interest rates. Notably, some of the lending platforms pay more than 10 percent.

– To store funds on an exchange in an order to trade quickly for other cryptocurrencies.

It is pertinent to mention that Tether’s prominence and high trading volume have made it easier to use as compared to other stablecoins. For instance, if an individual is willing to buy, sell, or trade Tether, it is available on most of the top crypto applications. The trading volume also means that you don’t have to face trouble while using your Tether.

Although USDT is considered Tether’s biggest crypto token, it also has tokens that are connected to the euro, yuan, and even gold.

Where did Tether come from? 

Where did Tether come from

The Tether was founded by Brock Pierce, Reeve Collins, and Craig Sellars in 2014, and the project was indigenously known as Realcoin. However, the name was changed to Tether after the launch. The company — Tether and Tether Limited — has been issuing and managing the reserves.

It is pertinent to mention that Bitfinex was the first crypto exchange that offered Tether trading. It was started in January 2015. While Bitfinex and Tether Limited are considered separate entities, the Paradise Papers in 2017 made a revelation that the Bitfinex officials had established Tether Limited. Later in 2018, it was revealed that both companies were having the same CEO.

How does the Tether work? 

Tether is a crypto token that was issued on a few blockchains with the aim of interchanging 1 USDT for $1. In an order to achieve the same, Tether Limited maintains reserves to undo the issued tokens.

Likewise,  $1,000 was required to be in its reserves for Tether Limited to garner 1,000 USDT, This would ensure that if the buyers would want to have their money back, they may get it. Tether was supposed to work this way theoretically. However, the reality was a bit more complicated because there were some issues with Tether Limited’s trustworthiness related to its reserves. Initially, the company claimed that each USDT was supported by $1. However, it turned out to be a false claim. 

In easy words, Tether Limited claims that all the USDT is supported by its reserves which are combined assets. Therefore, it is not all cash. It is also worth mentioning that there has been no legal guarantee that a USDT token would be redeemed for $1. 

While it has been in the business for years, Tether has set up a variety of partnerships. It is pertinent to mention that one of the most important connections is to the cryptocurrency exchange Bitfinex and the same people are intended to control the exchange and Tether. 

Below are some of the blockchains that support Tether, as of now: 

  • Bitcoin
  • Ethereum
  • TRON
  • EOS
  • Algorand
  • Bitcoin Cash
  • Solana

How to choose a Tether (USDT) wallet? 

How to choose a Tether (USDT) wallet

The type of Tether (USDT) wallet you would choose is most likely dependent on the purpose and storage. It is worth mentioning here that hardware wallets, also known as cold wallets, are said to be one of the most secure options with offline storage and backup. Both the Ledger and Trezor hardware wallets propose resolving storage issues for USDT. Notably, the hardware wallets may include a bit more of a learning curve. However, they are a bit expensive but they may be better in terms of storing larger amounts of USDT for experienced users. 

On the other hand, the software wallets are free, more feasible, available to download as an application, and can also be custodial or non-custodial. With the help of custodial wallets, the private keys are managed by the service provider for you. Likewise, the non-custodial wallets use secure elements on the device to store the private keys. These are considered better for the smaller amounts of Tether (USDT). 

Simultaneously, online wallets, also known as web wallets, are also free and accessible from multiple devices with the help of a web browser. They are also known as hot wallets. However, they may be less secure than hardware or software wallets.

Meanwhile, Kriptomat proposed a secured storage solution that also allows an individual to both store and trade their Tether (USDT) tokens. Storing the USDT with the help of Kriptomat provides you with enterprise-grade security and a user-friendly experience. 

Can you make a passive income with the help of Tether? 

Yes, an individual would be able to make passive income with Tether via crypto lending programs. One of the options is to deposit the Tether with a decentralized lending protocol, including Aave or Compound. These DeFi platforms permit users to lend crypto without even signing up for the account.

There are some crypto exchanges too with their own lending programs that allow you to get interested by lending Tether. These include Celsius and KuCoin. 

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