Share on facebook
Share on linkedin
Share on twitter
Share on pinterest
Share on email

Tether is a blockchain-based cryptocurrency that is backed by the United States dollar in a 1:1 ratio. Tether was developed by BitFinex, and its native token, USDT, is the fourth most popular alternative coin (Altcoin) on the market at a market capitalisation of over $69 billion.

Tether was launched in 2014, and it is designed to facilitate the use of paper money digitally. Tether disrupts the traditional financial system by employing a more modernised approach towards money.

With Tether, users can transact with paper money throughout the entire blockchain without the risk of high volatility or complexity, which is often associated with cryptocurrencies.

Tether was the first platform that allowed for the digital use of conventional currencies, and it has additionally democratised cross-border transactions by using blockchain technology innovatively.

Component Tether
Technology Omni and Liquid Protocol, PoW, PoS, Proof of Reserve, etc.
Reliability Reliable
Market Value $69 Billion+
Open-Source – Yes/No? No, Tether is not open source, but it was built on top of open blockchain technology
Consensus Method Embedded Proof-of-Work and Proof-of-Stake
DApp relation Through Ethereum's blockchain as USDT is an ERC-20 token it can interact with DApps.
Founders Brock Pierce, Reeve Collins, Craig Sellars
Founding Date 2014

 

Tether is a fiat-collateralised stablecoin that is pegged against the US Dollar in a 1:1 ratio. Tether has a market capitalisation of over $69 billion, and it uses the following technologies:

  • Technology Stack and Processes
  • Proof of Reserves
  • Embedded Proof-of-Stake and Proof-of-Work (Omni)

 

How does Tether Work?

Tether's USDT tokens exist as digital tokens which were developed on the Bitcoin (Omni and Liquid Protocol) as well as on Tron, EOS, Ethereum, Algorand, SLP, and OMG blockchains.

There are different protocols based on these blockchains, which are open-source that interface with other blockchains, allowing for different tokens such as USDT to be issued and redeemed.

All Tether Platform currencies are backed 100% by reserves, and the tokens can be redeemed and exchanged according to the terms of service of Tether.

The conversion rate when users exchange or redeem USDT for fiat is 1 Tether USD₮ token (USD₮) for 1 USD.

The Tether platform is reserved when the overall sum of USDT is in circulation, and it is less than, or equal to, the value of Tether's reserves. These numbers and balances are published daily on Tether's page.

On Ethereum, USDT is an ERC-20 token which is a more updated transport layer. This makes Tether available in Ethereum smart contracts in addition to Decentralised Applications (DApps) that are built and launched on Ethereum.

In addition to this, Tether can also be sent to any given Ethereum address as well.

In terms of transaction speed, it typically takes between 3 to 4 hours for confirmations, depending on the blockchain that the transaction is carried out. Tether transactions can take the following times:

  • Tron can process 2,000 transactions per second.
  • EOS can process 4,000 transactions per second.
  • Algorand can process over 1,000 transactions per second.
  • OMG can process 14 transactions per second.
  • Ethereum can process 13 transactions per second.
  • Bitcoin can handle 4.6 transactions per second.

 

The advantages that Tether has, and its popularity, relates to the following:

  • Tether is a stablecoin that can be redeemed for USD in a 1:1 ratio and can be used as a substitute for dollars.
  • Tether can easily be transferred between different exchanges and people. It offers a perfect way to transfer funds without intervention from banks.
  • Tether can easily be bought and sold, and it is immune to volatile market conditions, unlike other cryptocurrencies that fluctuate drastically and rapidly.
  • Tether can be used for purchases, money transfers, and as a store of value to earn interest.
  • Tether exists on the Bitcoin Blockchain and can be used as Bitcoin.
  • Tether has inherited the properties of the Omni Layer, which includes a decentralised exchange, wallet encryption, and more.

 

What are the Tether-based Projects?

Tether is not a blockchain on which projects can be built.

 

For what is Tether used?

  1. To purchase other cryptocurrencies
  2. To transfer funds
  3. As an investment to earn interest

 

  1. To purchase other cryptocurrencies.

Some payment methods can take up to several days to complete because of tedious, drawn-out transaction processes from banks and other financial institutions to a cryptocurrency exchange trading platform.

However, Tether can be used to make instantaneous purchases.

 

      2. Money can be sent between different exchanges or crypto wallets easily at lower transaction fees than banks would normally have charged.

 

      3. Investment to earn interest.

Some cryptocurrency exchanges allow users to become a lender, where the user can lend their cryptocurrency to borrowers and earn interest back on their coins for providing such a service.

The benefit of doing this relates to the fact that the value of Tether does not fluctuate like other cryptocurrencies. While lending other cryptocurrencies could lead to losses if the price of that specific crypto drops, with Tether, this risk is eliminated.

 

Is understanding Tether hard?

No, understanding Tether is not hard.

There are more than 13,000 alternative coins on the market today, with more emerging daily. Amongst these assets, people can freely choose which currency they deem fit as a store of value, which is better as a transactional medium, or as a short- or long-term investment.

Some of the inherent advantages of cryptocurrencies involve lower transaction costs, border-less payments, trustless ownership as well as exchange, real-time transparency, and more.

The initial idea behind an asset-pegged cryptocurrency was popularised by the Bitcoin community, and this idea gave life to other projects such as BitAssets, Ripple, Omni, NuShares, and many others.

The goal behind a successful digital asset is that the requirement for trust is eliminated, and with Tether, it involves a digital currency that is issued on the Bitcoin Blockchain in the Omni Layer protocol so that USDT tokens can exist as a cryptocurrency token.

In addition, every USDT is issued into circulation pegged to the US dollar, and they are subsequently convertible and redeemable for the same unit in US Dollars.

Understanding Tether is important because it is the most prominent Stablecoin pegged to the US Dollar, which provides it with an array of benefits and advantages over other cryptocurrencies.

 

What is Tether's Technology?

  1. Omni and Liquid Protocol
  2. Technology Stack
  3. Flow of Funds
  4. Proof of Reserves

 

      1. Omni and Liquid Protocol

Tether was built on the Bitcoin Blockchain Omni Layer, with the ledger stored on Liquid, which is a Bitcoin Sidechain, with all Tether transactions that can be viewed on the Omni Explorer.

Omni is a platform that is designed for the creation and trading of custom digital assets in addition to various digital currencies. Omni features a software layer that is built on the Bitcoin Blockchain.

Transactions that are carried out on Omni are considered Bitcoin transactions which enable next-gen features. Omni allows developers to create tokens that represent different customised currencies and assets.

Omni is powerful and extremely simple, helping it become the leading Bitcoin-based protocol in the world.

The Liquid protocol is a sidechain-based settlement network that is reserved to be used by exchanges and traders. The liquid is more confidential than Bitcoin and ensures for anonymous issuance of digital assets.

With Liquid, there are rapid transfers that are settled within two minutes, which allows traders to transfer funds rapidly across exchanges and cryptocurrency wallets without extended confirmation times.

Anyone can issue a digital asset or currency on Liquid, including security tokens as well as stablecoins. Every asset can also be traded on the network, allowing traders to take full advantage of the speed, privacy, and security of Liquid.

The main function of Liquid is to accommodate and migrate a B2B exchange in addition to institutional-based transfers of Bitcoin, subsequently reducing the transaction costs and speeds with which transfers are made.

A sidechain can simply be defined as a separate blockchain built on top of a “parent” chain, allowing for assets from the parent blockchain to be used on the sidechain in a frictionless manner.

 

      2. Technology Stack

Every Tether that is issued is backed in a 1:1 ratio with the equivalent amount of fiat currency which is held in reserve by Tether Limited. Tether Limited is the custodian of the backed assets, and this means that the company acts as a reliable, trusted third-party which is held accountable for the asset.

The risk is also mitigated through the simple implementation of measures that reduce the complexity of carrying out audits on fiat and cryptocurrency reserves.

Tether has a Technology Stack that consists of three distinctive layers, namely:

  • The Bitcoin Blockchain is the first layer
  • The Omni Embedded Consensus System is the Second Layer
  • The Tether Limited: Issuer, Custodian, Wallet Layer is the third

 

The Bitcoin Blockchain Layer features the Tether transactional ledger. This ledger is embedded in the Bitcoin Blockchain as a meta-data using the Omni consensus system.

The Second Layer or the Omni Layer protocol can be used to do the following:

  • Create and destroy digital tokens that are represented by meta-data, which is embedded on the blockchain of Bitcoin, for example, USDT.
  • Track and report the circulating supply of Tether through Omnichest.info in addition to the Omnicore API.
  • Enable different users to transact as well as store a wide range of different assets in an environment that is peer-to-peer, pseudo-anonymous, and secured through cryptography. 
  • In addition, this also means that users can benefit from an open-source environment that is browser-based and make use of the Omni wallet to store, send, and receive tokens such as USDT.
  • Benefit from a multi-signature and offline cold storage system where tokens are completely safe.

 

The Third Layer refers to Tether Limited and, on this layer, the business entity must:

  • Report Proof of Reserves in addition to any other audit results
  • Maintain custody over fiat reserves against which Tether is pegged
  • Send withdrawals in USD and destroy the corresponding Tether
  • Accept fiat deposits and issue the corresponding Tether tokens
  • Initiate and manage integrations with the Bitcoin blockchain in addition to different exchanges, wallets, and merchants.
  • Operate Tether., which is a web-based wallet allowing its users to store, receive, send, and convert their USDT.

 

      3. Flow of Funds

Tether has a lifecycle that consists of five distinctive steps, namely the following:

  • Step 1 – A fiat deposit is received into the corresponding bank account of Tether Limited.
  • Step 2 – Tether Limited generates and credits the user's account with a corresponding amount of USDT. For instance, if the user deposits $100, they will subsequently receive 100 USDT.
  • Step 3 – The user transacts with their USDT, which includes transfers, exchange, and storage of USDT through an affiliated peer-to-peer, open-source, pseudo-anonymous Bitcoin, Ethereum, or another platform.
  • Step 4 – The user deposits USDT with Tether Limited to convert their cryptocurrency back to fiat.
  • Step 5 – The amount of USDT that the user wishes to convert is destroyed, and they receive an equivalent in fiat currency. For instance, if the user deposited 1500 USDT to be converted, they will receive 1500 USD, and the 1500 USDT is destroyed.

 

      4. Proof of Reserves

Exchanges and different wallets are inherently known for being unreliable, and insolvency is something that frequently occurs in the ecosystem of Bitcoin, whether it is through hacks, fraud, corruption, or any other form.

Cryptocurrency users are always urged to ensure that they select their exchange and wallet program carefully and that they are diligent when they use exchanges.

However, it is not always possible to eliminate all the risks that lurk in the Cryptocurrency space. Counterparty risk is an inherent risk involved with exchanges and wallets, and these participants do not always conduct thorough or frequent wallets.

Even if they are compliant with this, it does not mean that the custodian, albeit the wallet or exchange, will remain solvent. Tether uses a Proof of Reserves configuration that simplifies the process, which is involved with proving that the USDT in circulation is always backed up by an equivalent in fiat currency.

Every USDT in circulation represents a unit of US dollar, which is held in Tether Limited's reserves in a 1:1 ratio, which translates to an effective system that is fully reserved.

Tether lives on the Bitcoin Blockchain but has since also moved to Ethereum, Tron, EOS, and others. This means that the provability and accounting of Tether can be given at any time.

In addition to accounting for USDT, the number of US Dollars that are held in Tether Limited's reserve is also proven. Tether Limited publishes a bank balance daily and is subject to frequent audits by professionals.

In terms of its evolution, Tether has seen the following developments through the years:

  • Tether's history begins with a whitepaper that was published by J.R. Willett. In the paper, Willett discussed the possibility associated with building cryptocurrencies on the protocol of Bitcoin.
  • Willett proceeded to implement the idea in Mastercoin, a cryptocurrency with an associated Foundation, which later became known as the Omni Foundation, to promote the implementation of this second layer.
  • Tether's technological foundation is based on Mastercoin, with one of the original founders of the Mastercoin Foundation becoming the co-founder of Tether.
  • Realcoin was the precursor of Tether, and it was announced in 2014. In October 2014, the first coins were released onto the Bitcoin Blockchain through the Omni Layer Protocol.
  • The project was renamed Tether in November 2014, and when the project entered private beta, the company announced that it would support three currencies, namely USTether (USDT) for the United States, EuroTether for Euros, and YenTether for the Japanese yen.
  • In 2015, Bitfinex listed Tether on its platformed and welcomed trading of the stablecoin. Where trading volume is concerned, Bitfinex is one of the top-rated, largest exchanges.
  • Initially, Tether processed US dollar transactions using Taiwanese banks, which sent money to Wells Fargo so that funds could move outside of Taiwan.
  • In 2017, Tether announced that international transfers were blocked, followed by a lawsuit from Bitfinex and Tether against Wells Fargo, which was withdrawn a week later.
  • Today, Tether issues tokens on Bitcoin through the Omni and Liquid Protocols, Ethereum, Tron, EOS, Algorand, SLP, and OMG.
  • There are currently five distinctive Tether Tokens, namely the United States tether on the Bitcoin Blockchain, Euro Tether on the Omni Layer, United States Tether on Ethereum as an ERC-20 token, Euro Tether as an ERC-20 token, and a United States Tether as a TRC-20 token on TRON in 2020.

 

In terms of its potential, Tether is expected to continue being used as a bridge for fiat currencies into the digital world, with digital currencies seeing widespread adoption.

However, other projects are emerging, with other stablecoins that are gaining popularity as the development of technology evolves rapidly.

 

What is Tether’s price?

Tether was launched in 2014, and its price history over the past five years is as follows: 

  2017 2018 2019 2020 2021 To date
USDT Price High $1.0779 $1.0342 $1.024 $1.0536 $1.0115
USDT Price Low $0.9136 $0.9712 $0.9857 $0.9742 $0.9991
Market Cap $1.40B $2.84B $4.18B $20.94B $69B

Is Tether Open-source?

Yes, Tether is based on open-source blockchains such as Bitcoin, Tron, EOS, Ethereum, Algorand, and others.

Open-source means that software is collaboratively produced and that it can be shared freely. In addition to this, it also means that it is transparently published and that it is developed to be a community instead of being the property of a single entity or a group.

An open-source project is developed without a single chokepoint in the process, and that there is not a single company or one individual that can make, own, sell, or distribute it.

Tether was built on top of other open-source blockchain technologies, and it adheres to strict security protocols as well as other global government laws as well as regulations.

Tether is transparent, and all USDT tokens are pegged at 1:1 with a fiat currency, namely US Dollars. In addition, 100% of all tokens are back by reserves.

The company publishes daily records of bank balances in addition to the overall value of reserves. Tether tokens can be safely stored, sent, and received over the blockchain, and they can be converted to cash.

 

What is the best Tether wallet?

A Tether wallet is a piece of software where users store the necessary data to access their Tether (USDT) funds. This data consists of a private key, which is like a password. The data also includes a public wallet address, commonly known as a public key, which acts as an account number would.

In terms of the types of Tether wallets, users can distinguish between the following:

  • Cold Wallets – which are offline wallets that store funds in an application that is not connected to the internet.
  • Hot Wallets, which are online applications that require an internet connection.
  • Physical wallets are unique pieces of hardware like USB devices that keep crypto funds offline.
  • Web wallets are web browser ad-on wallets.
  • Desktop wallets – which are applications that allow users to manage their finds on macOS, Microsoft Windows, or Linux.
  • Paper wallets which is a piece of paper with a code or QR code on them. To access the assets, the user enters the key or scan the code to access their account.

 

The functions and importance of a Tether wallet are the same as owning and using a physical wallet where fiat currencies are stored. Tether wallets can be used to store, transfer, receive and manage Tether in one central place.

When crypto coins are stored in a wallet, it does not mean that the actual coins are there, but the wallet instead generates a private key, also known as a hexadecimal code, that is used alongside another hexadecimal code, or a public key, which is linked to a certain amount of currency.

The best wallets for storing, sending, and receiving Tether are:

  1. CryptoWallet.com
  2. Tether Wallet
  3. MyEtherWallet
  4. Omni Wallet
  5. Binance Wallet

 

      1. CryptoWallet.com

CryptoWallet is a multi-currency software solution for storing different tokens and currencies, including Tether, Ethereum, Bitcoin, and Ripple. CryptoWallet does not only serve as secure storage for coins but also allows users to trade different cryptocurrencies and fiat currencies such as USD, EUR, and GBP from within the application.

There is 24/7 customer support offered and robust security that includes two-factor authentication (2FA) and more. CryptoWallet labels itself as one of the best custodial wallets on the market, and private keys are kept with the provider.

In addition to its array of services, CryptoWallet also offers the option of a debit card that users can use as a conventional bank card to spend Tether and other coins. Users can also pay their bills in crypto from the app and make bank transfers from their CryptoWallet to other users and merchants.

 

      2. Tether Wallet

Tether's native wallet is a mobile application that was designed for the storage, sending, and receiving of USDT funds. The wallet is free to download and use, and it supports USDT-Omni and USDT-ERC-20 coins.

Tether Wallet is user-friendly that is a straightforward solution for beginners. The app also comes with a wide range of different security options, including 2FA, Biometrics, and more.

 

      3. MyEtherWallet

This is an open-source wallet that can be used for both Tether and Ethereum coins. The wallet is compatible with mobile devices and can be downloaded onto desktop computers. 

In addition to this, MyEtherWallet is compatible with hardware wallets such as Trezor and Ledger. The desktop version of the wallet is completely secure if the funds are stored on a hardware wallet instead of a remote server.

 

      4. Omni Wallet

Omni Wallet is a popular and non-custodial option that can be used to store Tether on the official Omni protocol. It is a web-based wallet that can be used free of charge, and it is a user-friendly and secure option.

With Omni Wallet, users can control their keys as the keys are not stored on Omni's servers at all. However, it should be noted that the wallet is only compatible with Bitcoin and Tether, and there is no exchange option available within the wallet like with other Tether-compatible wallets.

 

      5. Binance Wallet

 Binance is one of the largest cryptocurrency exchange trading platforms in the market, featuring a native and proprietary wallet that users can utilise for storing their Tether funds. 

Binance allows for users to store, send, and receive USDT-Omni and USDT-ERC-20 tokens, and the wallet is free to use. There is also a built-in exchange included, and it allows users to freely trade and exchange USDT for fiat and other currencies.

The Binance wallet is also secure and has robust security features, including 2FA and other measures.

 

What is Tether’s Burn rate?

Tether does not burn coins in the same way that other blockchain projects burn coins. The only time that Tether coins are burnt is when users convert their USDT tokens for fiat currencies.

When this happens, Tether Limited destroys the amount of Tether that the user deposits for withdrawal and deposits an equivalent amount of fiat in return.

For instance, if the user wants to convert 200 USDT, Tether funds their account with 200 USD and the 200 USDT is subsequently burnt and removed from circulation, which means that Tether's circulation decreases when users convert their Tether to fiat.

Coin burns can simply be defined as the process where coins are sent to a public address where they cannot be spent because the private keys of these addresses are unobtainable.

Coins are burnt for various reasons, including:

  • To create new coins
  • To reward token holders
  • To destroy any coins that were not sold after an Initial Coin Offering (ICO) or a token sale.

 

What can you do with Tether?

The tether can be used as digital currency in the following ways:

  • Cryptocurrency exchange trading platforms that accept fiat currency withdrawals and deposits can offer the use of USDT.
  • Individuals can transact using Tether.
  • Merchants can offer Tether as a medium of exchange and alternative payment to fiat currency.
  • It can also be used to earn interest when users lend their Tether through certain exchange trading platforms that offer this option. Tether is especially popular because its price does not fluctuate as other cryptocurrencies, and lenders are not subject to volatile conditions.

 

What are the criticisms against Tether?

  • Bitstamp experienced an attack in 2015, and it was later discovered that there was a close connection between this hack and the hack on Tether experienced in 2017.
  • In 2017, Tether was unable to meet all withdrawal requests made, even though the company claims that it holds all USD in reserve so that any withdrawals by clients can be met without fail.
  • In November 2017, Tether experienced theft of $31 million worth in USDT tokens. This attack was closely linked to the hack that occurred on Bitstamp in 2015. After the attack, Tether suspended all trading, and new software was rolled out to implement an emergency hard fork. This rendered all tokens that were stolen as heist untradeable.
  • In December 2017, Tether re-enabled all cryptocurrency wallet services, and it also started processing any pending trades at the time.
  • Early in 2018, Tether reported that it ended a relationship with its auditor without any additional reasoning provided.
  • In 2018, Tether was under investigation for manipulating the price of Bitcoin. The United States Commodity Futures Trading Commission sent subpoenas to both Bitfinex and Tether, which shifted the price of Bitcoin upwards, causing a bull run of up to $20,000 at the time.
  • Tether has also not substantiated its claim of full-backing through promised audits on the currency reserves that the company keeps.
  • In 2019, the New York Attorney General filed a lawsuit against Bitfinex for using Tether reserves to hide a significant loss of $850 million. Tether Limited and Bitfinex ended up paying a fine of $18.5 million, and neither company admitted to wrongdoing.
  • There is a significant amount of controversy that surrounds Tether because there are many issues, and Tether Limited does not have the best reputation.
  • In March 2021, Tether Limited released official information on its reserves, and it was discovered that only 2.9% of all USDT in circulation is backed by cash reserves.
  • There was a hack on a personal wallet in February where 300,900 USDT was stolen when hackers found a user's private key saved in an Evernote application using a VPS, resulting in Tether freezing the funds, and it ended up in the government's possession until the court case can be resolved.
  • The earliest controversy was in October when a former banker with Tether claimed that company executives had invested reserve funds. When a further investigation was carried out, evidence was found that Tether had made billions of dollars in short-term loans to prominent Chinese and other crypto companies that it had secured through Bitcoin. Tether is unable to confirm that it holds the $69 billion that it needs to back up the coins that are currently in circulation.

 

What is the biggest competitor of Tether?

The biggest competitor of Tether is USDC.

USDC is a stablecoin that is pegged against the United States dollar in a 1:1 ratio, like USDT.

USDC was launched in a partnership between Coinbase and Centre in 2018, with the coin listed on Coinbase at launch, from where it has been integrated into several prominent exchanges.

In August 2020, USDC introduced the gasless send feature, providing users with the option of paying their gas fees on Ethereum using USDC.

USDC is an ERC-20 token built on the Ethereum blockchain, and it is also supported by several other blockchains, including Stellar, Tron, Solana, and Algorand.

USDC is an open-source project which is verifiable and completely transparent with not as much controversy and criticism as Tether.

USDC's transparency is ensured through frequent audits to ensure that all the USDC which is in circulation is backed by USD, which is held in reserves. One issue that USDC faces is that it is a centralised stablecoin.

However, because of this, it has fuelled the adoption of USDC by many institutions such as Visa. Both USDC is pegged to the United States dollar, and they feature on the Ethereum blockchain and several others.

USDT is used as a medium of exchange and for trading purposes, with USDC also being used for trading. USDT, however, has a larger trading volume and a higher market capitalisation, which means that there are more USDT in circulation today.

USDT supports transfers across more blockchains than USDC, and therefore more traders prefer to use USDT, despite the criticisms and controversies of which Tether forms a part.

USDC is often considered as a safer and more trustworthy stablecoin because Centre Consortium complies with regulation, and it has the backing of cash transparently. 

However, both USDC and USDT are widely used across many different exchanges where investment and trading are concerned.

Other differences between these stablecoins are:

  • Market capitalisation – 
  • Demand and popularity – 
  • Blockchain compatibility – USDT can be used on Bitcoin through the Omni and Liquid Protocols, Ethereum, Tron, EOS, Algorand, SLP, and OMG. USDC can be used on Stellar, Tron, Solana, and Algorand.
  • Technology – USDT uses Omni and Liquid Protocol, Technology Stacks and Proof of Reserve, with future to integrate smart contracts, multi-sig, and proof of solvency. 
  • USDC was initially launched on the Ethereum blockchain as an ERC-20 token, but it has since merged to be compatible with other blockchains. This provides USDC with the ability to interact with decentralised applications (DApps) and Decentralised Finance (DeFi) protocols, including Aave, Celsius Network, Compound, and many others.

 

Is Tether better than Bitcoin?

No, Tether is not better than Bitcoin.

Tether was built on the Bitcoin blockchain, and it is completely different to Bitcoin because it is a stablecoin that is pegged in a 1:1 ratio with US Dollars.

Tether is currently the strongest and most popular stablecoin in the market, but it is not as volatile as Bitcoin or other alternative coins such as Ethereum. 

While Tether is not better than Bitcoin in terms of market cap and popularity, Tether has outpaced Bitcoin in the past. Tether is more stable than Bitcoin, but Bitcoin is still the best store of value and a popular option as a medium for exchange.

 

Can Tether and Bitcoin Coexist?

Yes, Tether and Bitcoin coexist.

Tether was built on the Omni layer of Bitcoin's blockchain, and it operates across several blockchains. Tether is the best stablecoin on the market right now despite many criticisms and controversies.

 

How does Tether make revenue?

Tether makes money from certain fees that are charged on transactions as follows:

  • A 30-day transaction of 100,000 USD and more has a fee of $1,000 or 0.1% on withdrawals, while deposits of 100,000 USD and more attract a 0.1% fee.

 

There is also a verification fee of 150 SUD in USDT charged, which is a non-refundable amount that is considered as part of Redemption. This ensures that only serious users apply for an account through Tether.

This fee helps Tether offset certain costs which are incurred with verification processes. 

 

How long does it take to mine Tether?

The tether cannot be mined.

Only blockchain projects that have a Proof-of-Work (PoW) consensus mechanism, like Bitcoin, Litecoin, Dogecoin, Ethereum, and others, can be mined to allow for coins to enter the circulating supply.

For these blockchains, miners must verify transactions before they are added to the blockchain. Mining is a crucial function that ensures that the blockchain becomes more secure with every transaction.

Tether or USDT is created in the following way:

  • A user will deposit a certain amount of USD into the bank account of Tether Limited.
  • Tether Limited generates USDT proportional to the deposit, and the Tether enters the circulation, increasing the market cap of Tether.
  • The user can then transact with their tether, whether they transfer, exchange, or store their USDT through peer-to-peer, open-source, pseudo-anonymous, or Bitcoin-based platforms.

 

Does Tether have Smart Contracts?

No, Tether itself does not host smart contracts.

A smart contract can simply be defined as a program that runs on a certain platform and ecosystem. Smart contracts are not controlled by the user. They are deployed to the network and subsequently run as they were programmed.

Smart contracts can define certain rules, like any typical contract, and these rules are automatically enforced through the code. Smart contracts cannot be deleted, and the interactions with them are irreversible.

In terms of necessity, smart contracts are important because they help to solve the issue associated with mistrust between different parties as well as business partners.

Smart contracts have several advantages for many industries, and they can reduce unnecessary costs as well as time expenditure while simultaneously enhancing transparency.

Smart Contracts have a wide range of uses across industries and sectors, including:

  • Insurance
  • Supply Chain Management
  • Protection of Copyright content
  • Digital Identity
  • Financial Data Recording
  • Mortgage contracts

 

While Tether cannot launch or create smart contracts, this does not mean that Tether is not compatible with such contracts. Tether is a USD-pegged stable coin that operates on blockchains such as Ethereum and Tron as an associated ERC or TRC token, respectively.

On Tron, Tether can issue, hold, and transfer value through smart contracts in a free, transparent manner, with instant delivery. With TRC-20, there is complete interoperability with Tron-based protocols in addition to various DApps created on the blockchain.

On the Ethereum blockchain, Tether is an ERC-20 token included in a new transport layer, which means that Tether can interact with smart contracts or DApps on Ethereum.

According to the Tether Whitepaper, future innovations include smart contracts in addition to multi-sig.

 

Can Tether reach $100?

No, Tether is a stablecoin that is pegged to the US dollar in a 1:1 ratio, which means that the value of 1 USDT will theoretically never surpass $1. This is what it means to be a stablecoin, and Tether will remain pegged against the US dollar.

However, in a price prediction analysis, it is expected that the price of USDT will be $1.2 by December, where it will remain until 2023.

 

Can Tether be used as currency?

Yes, Tether is used as a digital currency.

It is a stablecoin that is tied to the US dollar in a 1:1 ratio, meaning that Tether is not subject to the same significant volatility that other coins are.

Tether is often used to purchase other cryptocurrencies, make purchases, and earn interest when users lend their cryptocurrencies to other users on some exchanges.

 

Can Tether be tracked?

Yes, Tether can be traced.

Tether uses the blockchains of other cryptocurrencies such as Ethereum, Tron, Bitcoin, Algorand, and others to store transactional data. 

The blockchain is a public record that features all transactions from all addresses in the network. However, like an account number, an address is merely a number, and it does not reveal the identity behind that address.

 

Can Tether be hacked?

Yes, Tether has already experienced a successful hacking in 2017.

In November 2017, Tether reported that $31 million USDT tokens were stolen. It was later found that the Bitcoin distributed ledger showed that the Tether hack and the one that occurred on Bitstamp in 2015 were closely related.

When the hack occurred, Tether suspended all trading of USDT and announced the roll-out of new software. The purpose of the new software was to implement an emergency hard fork.

This rendered the tokens that had been stolen unusable, and as of December 2017, Tether allowed for cryptocurrency services to resume, and it also promptly processed pending trades that had been frozen following the hack.

While there have not been any further hacking attempts, there is a lot of controversies that surround Tether and its reliability and trustworthiness.

 

Can Tether make you rich?

No, Tether will not make you rich.

While Tether is a safer option than other cryptocurrencies, its market capitalisation will only ever go up if more people buy USDT, converting their USD or EUR into Tether.

The value of Tether does not rise like other cryptocurrencies, and it will therefore not appreciate according to the principles of supply and demand, much like other cryptocurrencies.

One USDT is equal to a USD in reserve, and this will never change. However, investors can earn profits when they buy USDT and lend their coins on platforms for lending, allowing them to earn a decent return on interest from the loans.

 

Is it worth buying Tether?

Yes, it is worth buying Tether to avoid volatile market conditions while benefiting from transacting in a widely accepted digital currency.

Tether is less risky because its price is pegged to that of the US Dollar, which means that its price will not rapidly and drastically increase or decrease, which is why investors use it.

In terms of price stability, Tether is one of the most stable coins because it is pegged against the US Dollar in a 1:1 ratio, which means that its price will never fall significantly below $1 or rise much higher than $1.

 

Is Tether a good investment?

Yes, Tether is a good investment.

The cryptocurrency market is one of the most volatile financial markets in the world, with traders risking their investment because of rapid, drastic price fluctuations.

Stablecoins like Tether offers an entry barrier into the cryptocurrency world with significantly fewer risks involved. Tether comes from the power of science combined with academia, and it is a cryptocurrency that is not phased with market fluctuations.

Tether is an extremely popular cryptocurrency for transactions, especially where users struggle to exchange money into USD through conventional banking entities.

Banks are always reluctant to work with and accept cryptocurrencies, but stablecoins like Tether have experienced more widespread acceptance, making it a viable option to use.

Banks are also reluctant to work with cryptocurrency exchange trading platforms because of the risks involved surrounding the fact that cryptocurrency is unregulated. However, Tether and other stablecoins reduce these risks significantly, and they tend to offer cost-effective and fast transaction solutions.

By using Tether as a medium for exchange, users can avoid costly banking fees. The tether can also be bought and held for later conversion into foreign currency.

The tether can also be used to earn interest when investors lend their USDT to exchanges where they can earn interest on the loans.

Tether is the most valuable cryptocurrency in the market, offering investors additional flexibility. Tether serves as a replacement for USD and EUR on popular exchanges, and it is gaining popularity as an investment because of the following:

  1. Exit Strategies
  2. It reduces Friction
  3. Offers Remittance
  4. Accountability
  5. Transit Cryptocurrency
  6. Acceptance and adoption

 

       1. Exit Strategies

One of the largest concerns that investors and traders alike have in the cryptocurrency market relates to the high volatility. When there is overwhelmingly bearish market sentiment, investors have limited options that they can consider.

In a bearish market, investors can consider selling their holding to convert it back into cash to try and cut their losses. However, this is a time-consuming process, and it can also translate to extremely high transaction fees to complete.

Alternatively, investors may be forced to ride the bearish sentiment and face the losses that they incur. With Tether, there is a third option, by allowing investors the option to convert their holding to Tether and to avoid both high fees and further volatility that may clear their account.

 

      2. It reduces Friction

Tether is based on a blockchain, and this means that converting to Tether from Bitcoin or Ethereum is easy and frictionless. This conversion has introduced an improved way for investors to bypass volatility, allowing them to remain in the cryptocurrency market for a longer time.

 

      3. Offers Remittance

Tether, like many other cryptocurrencies, has the potential to change the world in terms of transaction systems. USDT is truly borderless and does not require intervention from conventional parties such as a bank, featuring instant transactions that are cost-effective.

 

      4. Accounting

One of the many advantages that Tether has that other cryptos do not possess relates to accountability. Since Bitcoin was launched in 2009, there has been increased confusion surrounding how it could be used as a payment method where accounting is concerned.

Businesses who use cryptocurrencies when they pay for goods and services are often stuck with the process involved with calculating the value of their payments against the US dollar, as is the issue with many cryptocurrencies of which the price fluctuates.

However, with stablecoins, this problem is solved because these digital currencies are pegged at a 1:1 ratio with fiat currencies such as the US Dollar.

 

      5. Transit Cryptocurrency

Tether is inherently known for facilitating the transfer of paper money into digital currency. This is a crucial task in many regions around the world, especially in developing and underdeveloped nations where it is difficult to convert cryptocurrency into real cash, with it being illegal in some regions.

For these regions, because of the stability of Tether and its widespread use, it becomes a smart, frictionless, and reliable option.

 

      6. Acceptance and adoption

Tether provides many major exchanges with increased liquidity, and the token also allows these exchanges to avoid having to deal with fiat currency directly.

This is done by allowing users to use USDT to buy other currencies from such exchanges, subsequently reducing the amount of paperwork that users must complete, such as Anti-Money Laundering (AML) and “Know Your Customer” (KYC) processes which can be long, time-consuming, and tedious to complete.

 

Is Tether Legit?

Tether is legitimate.

According to “isthiscoinascam”, Tether has a project safety score of 6.46/10 with a “Good” overall rating. Tether rating has the following metrics:

  • Development – 0/10
  • Sentiment – 7.2/10
  • Community – 6.8/10
  • Awareness – 3/10
  • Credibility – 8/10
  • Volume – 10/10

 

Is Tether’s Supply limited?

No, Tether does not have a limited/unlimited supply.

The supply of Tether fluctuates based on how many people buy USDT. When USDT is bought, it is minted by the company and adds to the overall supply of USDT.

When users wish to convert their USDT to either EUR or USD, they deposit their USDT, and they receive the equivalent and proportional amount of USD or EUR. The USDT is then destroyed and removed from circulation.

As of October 27, Tether has a circulating supply of 69,759,109,914 USDT.

In terms of other cryptocurrencies, the following cryptos also have limited supplies:

  • Bitcoin (BTC) – 21,000,000 BTC
  • Cardano (ADA) – 45,000,000,000 ADA
  • Binance Coin (BNB) – 168,137,036 BNB

 

Does Tether have a fixed supply?

No, Tether does not have a fixed supply.

  • Fixed or maximum supply can be defined as the total number of coins that can ever be in circulation.
  • Total Supply refers to the number of coins that have been mined, including the missing coins that are no longer in circulation or that have been lost.
  • As the name suggests, the circulating supply of a coin refers to the number of coins that are circulating the market.

 

The supply of Tether will differ as users buy/sell USDT coins. When users buy USDT, the market cap will increase and decrease when users sell their coins or convert them back into fiat currency.

 

Is Tether the best Altcoin?

Tether is a good altcoin, but it is not the best altcoin.

Tether is a good altcoin in terms of:

  • Trackability – While all transactions are recorded on a public ledger, the addresses that can be traced do not provide any information about the individual user.
  • Security – Tether is based on several blockchains, which provides it with equal amounts of security proportional to the blockchains on which it functions.
  • Transaction Speed – The transaction speed of Tether will depend on the blockchain that is used when buying/selling/transacting.
  • Technology – Tether is based on the Omni Layer and uses the Liquid Protocol. There are several transaction layers, and Tether also uses a proof of reserve. Tether is also busy employing smart contracts, proof of solvency, and multi-signature technology.
  • Price Change – Tether has shown price stability because it is pegged to the US Dollar in a 1:1 ratio, which means that Tether is not susceptible to market conditions, and the price will not rapidly or drastically change.

 

However, Tether is not a good option in terms of the following:

  • Hacking – Tether experienced a hacking attempt in 2017 during which $31 million USDT tokens were stolen. This event was also closely linked to the attack on Bitstamp in 2015, discovered through the Bitcoin blockchain ledger.
  • Investment Potential – Tether is not a store of value such as Bitcoin and other cryptocurrencies where investors can make a return on investment as the price of the asset appreciates. Tether will remain pegged against the USD in 1:1 ratio, which means that it will not appreciate. However, investors can earn a profit when they buy Tether and provide loans over exchange platforms that provide this service, allowing them to earn interest from the loan.
  • Controversies and criticism – Tether has faced a significant amount of criticism over the years because of reported fraud, corruption, and the fact that Bitfinex manipulated the price of Bitcoin in 2017. In addition, Tether limited also covered a loss of $850 million by Bitfinex, in which both parties had to pay the penalty. These are only a few of the overall criticisms that Tether has faced. However, despite this, Tether is still an extremely prominent altcoin and stablecoin.

 

What are the differences between Tether and Bitcoin?

Bitcoin was launched in 2009 with the idea of it becoming a medium of exchange. Bitcoin is the king of cryptocurrencies with a market capitalisation of over $1 trillion, and it is the most popular, secure, and most valuable digital asset in the cryptocurrency market.

Bitcoin has seen widespread adoption, and as of October 2021, more than 15,000 businesses around the world accept Bitcoin, including prominent companies such as Microsoft, AT&T, and many more.

Bitcoin is known for its high volatility, with prices well over $60,000 per coin. Bitcoin has also seen significant fluctuations in recent years, making millionaires of some early investors.

Despite its volatility, Bitcoin is expected to have unprecedented appreciation and growth as the supply diminishes and investors and analysts are keeping a close eye on the price, which is expected to reach $100,000 in future.

While Bitcoin is highly volatile, Tether is its complete opposite. Tether is a stablecoin that is pegged to the US Dollar in a 1:1 ratio. Tether is completely unaffected by the market, and it has little to no volatility rate.

Instead, the value of Tether is set to remain stable against the US Dollar, providing it with a significant number of advantages over other cryptocurrencies.

This makes Tether one of the most stable cryptocurrencies, providing investors with a safe haven asset when the market becomes extremely volatile.

It also provides for a perfect cross-border medium of exchange that can bridge the gap between underdeveloped and developing countries that have issues converting cryptocurrencies into fiat currencies.

  Bitcoin Tether
Price change 20/21 +$400% +0.03%
Market Cap $1 Trillion+ $69 Billion+
Past Hacks None 2017 – also closely linked with the hack on Bitstamp in 2015
Popularity Very High Very High
Altcoin Rank #1 – Original Crypto #4

 

What is the difference between Tether and Ethereum?

While Bitcoin is considered the gold of the cryptocurrency space where its investment potential is concerned, Ethereum is close on its heels.

Ethereum is the best alternative coin in the market in terms of market capitalisation, apart from being the first altcoin that emerged after Bitcoin.

Ethereum has extraordinary features and advanced and innovative capabilities. Ethereum was the first programmable blockchain ever created, and it was the first that introduced smart contracts to the world, allowing for the trustless self-execution of contracts once conditions have been met, cancelling out the need for a facilitator for the contract.

With continuous advancements and additional facilities to Ethereum's existing infrastructure, the development team behind the altcoin giant are making it even more adaptable and interesting for users, making it the number one platform that developers use to create, launch, and run a wide range of smart contracts and DApps.

By the end of 2022, Ethereum plans to move away from its Proof-of-Work consensus mechanism to an eco-friendlier Proof-of-Stake that addresses environmental stability, scalability, and issues with volatility.

This new revision will ensure that Ethereum does away with the need for miners to secure the network and validate transactions. In addition to Bitcoin seeing widespread adoption, Ethereum is seeing the same acceptance on a smaller scale, with more merchants welcoming payments in ETH, the native token of Ethereum.

In comparison, Tether was the first stablecoin ever created, and it hopes to provide investors with a less volatile option. Tether is the fourth largest cryptocurrency with a market capitalisation of over $69 billion, and every USDT token is backed by a US Dollar that is kept in reserve.

Tether's price is pegged in a 1:1 ratio with the dollar, which means that its value is far less than both Bitcoin and Ethereum, but Tether is especially popular because of its stability.

Tether experienced a profitable year in 2020/2021, and according to analysts, Tether outperformed the growth of some of the top cryptocurrencies in the market.

Like Ethereum, Tether is a digital currency that can be traded, and it can be used for daily purchases from participating retailers that allow for payments in USDT.

Tether has seen acceptance from many major exchanges, allowing users to seamlessly buy and sell cryptocurrencies using USDT on exchanges where fiat currency is not accepted.

However, unlike Ethereum and Bitcoin, there is a lot of criticism against Tether's trustworthiness, past hacks, and alleged fraud. Despite this, Tether is still one of the top altcoins combatting both Ethereum and Bitcoin for that number one spot as king of the crypto.

  Ethereum Tether
Price change 20/21 +880% +0.03%
Market Cap $480 Billion+ $69 Billion+
Past Hacks None 2017 – also closely linked with the hack on Bitstamp in 2015
Popularity Very High Very High
Altcoin Rank #2 #4

 

What is the difference between Tether and dForce Network?

Dforce Network is a Decentralised Finance (DeFi) platform that is both integrated and interoperable, popular for its use that spreads across transaction services, and more.

dForce is a network that supports the building and the integration of open finance in addition to an innovative monetary protocol matrix that will consist of different asset protocols such as USDx, Goldx, dToken, and many others.

USDx is one of the first decentralised stablecoins that is backed by fiat and which uses a systematic interest. Users who hold USDx can earn interest when they deposit the token into a corresponding USR contract, with the option of withdrawing their funds at any given time.

dForce also incorporates other useful services, including a lending platform and trading services as an aggregator and automatic market maker (AMM). dForce is deployed on Ethereum and the Binance Smart Chain.

dForce already has strategic partnerships with top security companies such as SECBIT, PeckShield, and several others, ensuring that there are smart contract audits carried out on all the native protocols of dForce, which instils trust in the project.

The dForce Token, or DF, is a token that can be used for governance of the network, allowing holders to make decisions on developments on the platforms.

dForce differs from Tether in terms of the purpose of the project, its use cases, and its popularity, with dForce, ranked #816 on the list of altcoins currency in the market.

dForce also has a market capitalisation of over $21 million compared to Tether's, over $69 billion. 

  dForce Tether
Price change 20/21 +130% +0.03%
Market Cap $21 Million+ $69 Billion+
Past Hacks None 2017 – also closely linked with the hack on Bitstamp in 2015
Popularity Medium Very High
Altcoin Rank #816 #4

 

What is the difference between Tether and NFTs?

Nonfungible tokens (NFTs) are digital assets that each have a unique value, with no two NFTs holding the same characteristics or value as another. Tether, on the other hand, is fungible, which means that one Tether has the same value and characteristics as another Tether.

Tether is used as a cryptocurrency with a 1:1 peg against the USD, where every USDT means that there is 1 USD in reserve. Tether currently has a market cap of over $69 billion, while the NFT market is expected to rise to over $1 billion by the end of 2021.

NFTs consist of any digital collectables such as art, games, video clips, and many other tokens that often sell for millions at auctions.

 

What is the difference between Tether and TokenPay?

TokenPay was launched in 2017, and it is a peer-to-peer transaction system that uses its native token (TPAY) as the base model of the overall exchange.

The platform offers transactions between one wallet to another within two seconds on either a public or a private network that is not traceable.

At the time that it was launched, TokenPay was already based on a proprietary blockchain, offering advanced privacy as an option to those who wanted to carry out completely private and anonymous transactions swiftly.

TokenPay uses cryptographic technology combined with robust security measures as well as user-privacy features to ensure that no transactions can be traced.

The TokenPay blockchain also features multi-signature transactions in addition to ring signatures, dark-key stealth addresses, and more. The platform also facilitates the exchange of other cryptocurrencies such as Bitcoin, Ethereum, and other prominent cryptocurrencies.

In contrast, Tether is completely transparent because all transactions are recorded on a Bitcoin-based ledger on the Omni layer, with the Omni explorer that can be used to view all transactions.

In addition, Tether is not a platform but a stablecoin that is pegged to the United States dollar in a 1:1 ratio. Where TokenPay can be used to perform completely private transactions, Tether is a currency that can guard users against volatility risks in the cryptocurrency market, offering a stable price and a safe haven.

  TokenPay Tether
Price change 20/21 +80% +0.03%
Market Cap $1.6 Million+ $69 Billion+
Past Hacks None 2017 – also closely linked with the hack on Bitstamp in 2015
Popularity Low Very High
Altcoin Rank #1656 #4

 

What is the difference between Tether and Cardano?

One of the inherent differences between Tether and Cardano is that Tether is a stablecoin that is pegged against the value of the dollar in a 1:1 ratio.

Cardano, on the other hand, is a powerful and popular open-source platform where smart contracts can be run, and different Decentralised Applications (DApps) can be created and launched, using ADA coins, the native token for Cardano, to cover transaction fees.

Cardano is the top smart contract platform after Ethereum, and it is in constant competition with Tether in terms of market capitalisation, with the two competing for the place as #4 on the alternative coin list.

Cardano employs a Proof-of-Stake consensus mechanism to secure its network, allowing users to stake their ADA coins. Cardano is reliable, safe, and transparent, and it is one of the first projects created that has a peer-reviewed system.

Cardano uses Ouroboros for block generation, and validation and the main purpose of Cardano are to improve the scalability, security, governance, and interoperability of the overall financial industry through different blockchain technology applications.

Tether, on the other hand, is better as a stablecoin to serve as a defence against the volatility in the cryptocurrency market, ensuring that users can easily convert their fiat into crypto so that they can exchange and trade other cryptocurrencies.

  Cardano Tether
Price change 20/21 +2,100% +0.03%
Market Cap $65 Billion+ $69 Billion+
Past Hacks None 2017 – also closely linked with the hack on Bitstamp in 2015
Popularity Very High Very High
Altcoin Rank #5 #4

 

What is a Stablecoin?

A stablecoin can simply be defined as a cryptocurrency that offers increased price stability by pegging its market value to another source, such as gold or the US dollar.

Stablecoins serve as a bridge between the cryptocurrency world and paper or fiat currencies. By using the flexibility that digital currencies offer in combination with the stability of traditional assets, users can benefit from security, instant transaction settlements, and more.

Stablecoins can be divided into three main categories, namely:

  1. Fiat-collateralised Stablecoins
  2. Crypto-collateralised Stablecoins
  3. Non-Collateralised Stablecoins
  4. Commodity-collateralised stablecoins
  5. Algorithmic Stablecoins

 

      1. Fiat-collateralised Stablecoins

This is the most prominent and simples version of stablecoins. The production and the liquidation of the stablecoin are carried out by the custodian who offers the coin.

The system relates to the principle that for every mined coin, there is a fiat currency in reserve. The price of fiat-collateralised stablecoins will remain stable if the issuer ensures that the coin can be bought for $1 or less, and the user can exchange their coin for $1 and vice versa.

However, the largest problem with these types of stablecoin is that everything depends on the honesty and the integrity of the issuer. Therefore, the issuer must be well-regulated, overseen, and frequently audited to ensure that they remain compliant.

Fiat-collateralised stablecoins include the following:

  • Tether (USDT)
  • TrustToken
  • PAX Circle
  • USDC
  • TUSD Gemini, and others.

 

      2. Crypto-collateralised Stablecoins

This version of stablecoins uses other digital assets as collateral. However, these collaterals do not view themselves as stable to start with, which means that these stablecoins must use a set of protocols to ensure that the Stablecoin's value does not go higher/lower than $1.

For example, a deposit of $300 worth of Ethereum must receive $150 stablecoins in return, which means that the Stablecoins are 200% collateralised. This also means that if the price on Ethereum drops, the stablecoins will keep a stable price because there is an adequate amount of Ethereum that backs the value of the stablecoin.

Some examples of crypto-collateralised stablecoins include:

  • Havven
  • MakerDAO

 

      3. Non-Collateralised Stablecoins

Stablecoins that are not collateralised use the Seigniorage Shares system, which means that they heavily rely on an algorithm.

The algorithm that these cons use is mechanically generated, which means that the supply volume can be automatically adjusted so that the price of the stablecoin is maintained proportional to its pegged asset.

Non-collateralised stablecoins tend to use smart contracts to sell tokens if the price falls lower than the peg or increase the supply if it appreciates. Either way, the token will remain stable per its peg.

The asset to which the stablecoin is pegged can either be a fiat currency or an asset such as gold. Another advantage of a non-collateralised stablecoin is that because it uses an algorithm to maintain its peg, there is no need for a custodian and collateral is not needed to back the value of the token, such as the case with other stablecoins.

Examples of such coins include Basis and Carbon, amongst several others.

 

      4. Commodity-collateralised stablecoins

Stablecoins that peg their value to commodities can use any physical assets, including metals, oil, real estate, and other commodities. One of the most popular choices for a commodity-collateralised stablecoin is gold.

Examples of such a stablecoin are Paxos Gold (PAXG) and Tether Gold (XAUT). These are two of the most liquid and popular stablecoins that are pegged against a commodity.

While stablecoins are inherently known to remain quite stable, stablecoins pegged to commodities can fluctuate in price, and they can potentially lose value as the price of their pegged commodity fluctuates.

Stablecoins, which are pegged to commodities, facilitate investments in assets that would not be obtainable on a local level. Many regions may have difficulty obtaining a gold bar, and finding a safe place to store it is not only rare but dangerous.

For this reason, it is not realistic to hold physical assets such as gold, oil, or silver. This is where commodity-collateralised stablecoins afford utility to these regions who wish to exchange tokens for cash or for them to own the underlying asset without taking physical delivery of it.

Investors who hold PAXG can sell their assets for cash, or they could take possession of the underlying old. However, the London Good Delivery gold bars can range from between 370 to 430 per ounce.

Every PAXG token, therefore, represents 1 ounce, which means that the minimum that must be held is 430 PAXG for the token to be redeemed for cash.

Once converted to cash, the token holder can take physical possession of their commodity from vaults that are located across the United Kingdom.

XAUT tokens work in a similar way where token holders can redeem their tokens in exchange for the physical commodity when they complete the required verification process. In addition, they must also hold 430 XAUT, which will subsequently reflect on the London Bullion Market Association's minimum standard of 430 oz.

When token holders have redeemed their XAUT, they can take delivery of the commodity within Switzerland. However, it should be noted that the redemption of gold-backed stablecoins for physical gold is universal across several prominent exchange trading platforms.

However, other stablecoins that are pegged against any other commodities other than gold do not have the same utility, such as real estate, oil, and others.

Stablecoins have a fixed value, and this means that the value will not frequently fluctuate, as opposed to other cryptocurrencies. However, a very important consideration is the decisive factor involved with stablecoins maintaining the value of the currency.

Tether is a central stablecoin that needs a custodian that will regulate the currency and subsequently reserve a certain amount of collateral. Therefore, Tether Limited is tasked with keeping US dollars in a bank account proportional to the number of USDT that is in circulation, thus maintaining the order of the overall system.

This is how fluctuations in the price are prevented. However, other stablecoins such as DAI can achieve this balance without a custodian. Stablecoins such as DAI uses smart contracts that run on Ethereum's programmable blockchain to keep the collateral in check and to subsequently maintain overall order.

 

Is Tether considered a Stablecoin?

Yes, Tether is a Stablecoin. 

Tether was the first-ever stablecoin that was developed, and it is the fourth largest alternative coin according to market capitalisation. Tether is a fiat-collateralised stablecoin that is pegged in a 1:1 ratio to the US Dollar and the Euro.

The value of Tether does not rise much higher than $1, and it also does not fall below this either. Tether Limited is the custodian for USDT and must ensure that for every USDT, there is a $1 in reserve. 

There is over 69 billion USDT in circulation, and the market capitalisation of Tether is subsequently over $69 billion, representing a US dollar in reserve for each Tether.

Because of its unique design, Tether is not a good store of value but serves as the perfect medium for exchange where users can convert their fiat currency to USDT, allowing them to buy cryptocurrencies, transfer value, and earn interest when they lend their USDT to lending platforms.

 

On which platforms can you buy Tether?

Cryptotrading exchange platforms are listed below.

  1. Binance
  2. Kraken
  3. Coinmama
  4. Huobi

 

      1. Binance

Binance is a popular cryptocurrency exchange that has been in operation since 2017. Binance offers trading and exchange in more than 150 different cryptocurrencies.

The trading platforms offered are fast, innovative, robust, and extremely flexible, available across the web, mobile devices, and desktop computers. In addition to comprehensive trading and exchange services, Binance is also well-known for its comprehensive trading academy and analysis capabilities.

 

      2. Kraken

Kraken is a United States-based Exchange that has been in operation since 2011. Kraken is reputable and offers the purchase and sale of a wide range of cryptocurrencies.

Kraken has transparent and competitive fees with trusted and flexible funding methods. Kraken also offers educational materials and sophisticated mobile trading apps, and dedicated 24/7 customer support.

 

      3. Coinmama

Established in 2013 and based in Slovakia, Coinmama is a well-regulated cryptocurrency exchange trading platform where traders can exchange a wide range of cryptocurrencies, including Tether, Bitcoin, Litecoin, Bitcoin Cash, and many others.

 

      4. Huobi

Huobi is another reputable cryptocurrency exchange trading platform that has been in operation since 2013 and is headquartered in Singapore. In addition to providing a wide range of different digital assets and currencies, Huobi also offers the advantage of leveraged trading, giving traders a competitive edge in a fast-paced market.

 

Is it easier to buy Tether in comparison with other cryptocurrencies?

No, it is not easier to buy Tether than it is buying other cryptocurrencies.

Many mainstream cryptocurrencies such as Litecoin, Bitcoin, Ethereum, Dash, XRP, and several others are listed on popular, major exchange trading platforms.

It is, however, easier to buy cryptocurrencies using Tether than it is using fiat currencies because not all exchange trading platforms accept fiat deposits.

Traders who want to buy cryptocurrencies from such exchanges typically convert their fiat currencies to USDT and proceed to buy their chosen cryptocurrencies.