What is Tether? USDT Basic Guide

The price volatility of cryptocurrencies is a double-edged sword.

On the one hand, this volatility has investors jittery about its earnings potential.

On the other hand, it reduces the usefulness of cryptocurrencies as a store of value.

So what if there was a way to circumvent its negative effects? Stablecoins such as Tether (USDT) aims to achieve this.

How to achieve? Let’s break it down in detail.

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Detailed explanation of USDT

On farms, animals are usually tethered to a fixture, that is, tied with a rope.

In the tech world, while we don’t use the term very often, our smartphones are often “tethered” to other devices (either via WiFi networks or Bluetooth technology).

What does this have to do with the cryptocurrency Tether? In the cryptocurrency space, the term ” tether ” is used similarly.

Rather than tethering a cow to a nearby bullpen or connecting a phone to WiFi, Tether creates a new bridge between cryptocurrency and fiat.

USDT is considered a new type of cryptocurrency: a stable coin.

A stablecoin is a cryptocurrency that is pegged to reserve assets and has minimal price volatility.

Tether combines fiat and cryptocurrencies to create a new digital asset that has all the advantages of blockchain while avoiding the risks of cryptocurrency volatility – a perfect balance.

Since each token is pegged to the corresponding fiat currency such as USD, EUR or JPY, this cryptocurrency maintains a 1:1 ratio (1 USDT = 1 USD) — the reserve is located in Hong Kong, the holder It is Tether Limited.

Due to this 1:1 ratio, Tether has no supply cap. It also provides people with a cryptocurrency that can act as a medium of exchange and a store of value.

For example, you want to convert 50 USD to USDT. You will get the same amount in USDT.

However, your funds can now be traded, exchanged and redeemed easily as a cryptocurrency.

Let’s take the trader distance again: Let’s say there is an open position in the Bitcoin (BTC) market.

If the market turns bearish, then traders can exchange their BTC for USDT until the bear market (probably) ends to avoid losing money.

This gives traders the opportunity to buy back BTC at a lower price, they can use the same USDT and wait for the price to rise again.

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Why should you consider using Tether?

Whether it is for individual transactions or the entire exchange, Tether will bring benefits.

Before diving into how Tether can help cryptocurrency trading at all levels, let’s take a look at its key features:

It is stable and 100% endorsed.

Since each token is pegged to a specific fiat currency, the value remains stable at all times. Its stable value ensures a 1:1 ratio, that is, 1 USDT will always be equal to 1 USD.

It is also transparent.

If you have some concerns about the security of your fiat reserves, don’t worry! Tether publishes daily reports to ensure that all USDT circulation matches their reserves.

The support of blockchain technology makes it more secure (and more transparent).

Tether is built on open blockchain and other technologies, taking full advantage of the features that make blockchain technology secure and transparent.

How do these characteristics affect each level? Mainly, Tether has advantages on three levels: exchanges, individuals and merchants.

The integration of Tether on the exchange will enable a more comfortable and smooth trading experience.

Converting fiat to cryptocurrency through an exchange is sometimes hindered by many steps.

There is also some waiting time – mainly for confirmation and verification of the conversion. Double hurdles can be a burden for traders, especially for newbies.

To address this, exchanges can offer Tether trading pairs that allow any trader’s assets (via blockchain) to cross borders and networks in the most efficient way.

For individuals, Tether can provide traders with the opportunity to hold for a long time ( Hodl ) without worrying about the wild fluctuations of cryptocurrencies.

Assuming you are in a bearish market situation as described above, you will have the opportunity to save your digital asset from a price crash and keep your funds safe.

Merchants can receive cryptocurrency payments in a comfortable and hassle-free channel.

By not having to worry about price fluctuations, merchants can focus on their business.

Integrating Tether can avoid the risk of chargebacks, price slumps, the hassle of centralized currency systems, and intermittent conversions between fiat currencies.

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Hopeful future of USDT

Tether has the potential to revolutionize the way we see and hold cryptocurrencies — designed to work with existing cryptocurrencies.

USD Tether, also known as USDT, was the first Tether cryptocurrency, but we can believe that more are on the way.

However, the technology is still in its early stages.

Once full integration begins, we’ll actually see the impact it has on how we use our money.

It’s very exciting to see such progress in the cryptocurrency industry, and we can’t wait to see it blossom and bring more opportunities for real-world use to enthusiasts like us.