What is Tether (USDT)?
A tether (USDT) is a form of stablecoin offered by Tether Limited. Tether Limited is the company in charge of the liquidity of Tether, which ensures that USDT is always worth $1.
This ensures that the company is always paid its tether fee. Those that hold USDT can never lose their money, as the USD will always be worth what it is worth in USDT.
The only reason that Tether would have to charge any sort of fee is if USDT had reached an unachievable negative value, such as if all USDT were lost. It has not. To support this, and to keep USD on the exchange,
Tether Inc. issues certificates of debt, which represent the dollars in circulation. These certificates are commonly known as “Bills of Exchange” (B.O.E.) and they are also a part of the support of Tether. In exchange for the B.O.E.
- Symbol: USDT
- Rank #4
- Market Cap: $69.43 billion
- Developers: Brock Pierce, Reeve Collins and Craig Sellars
What are the benefits of Tether (USDT)?
Tether’s claim to fame lies in its rapid adoption and ever-growing user base. It’s extremely popular with most cryptocurrency exchanges and has over 120 million registered users on its platform.
It’s also the first, and so far only stablecoin in the marketplace. It has been the most widely traded stablecoin on Bitfinex. Moreover, it also has a strict, transparent user-led governance structure in place to ensure the security of its token holders.
So, what are the negative effects of Tether? The tether ecosystem has suffered a number of problems over the past year. Firstly, it appears that the Tether token is not backed by third-party reserves, as was the case with another stablecoin, Tether Gold.
How does Tether work?
The Tether team released two simple white papers: One is a contract that allows the creation of Tethers in an amount of USDT that is equal in value to the total amount of USDT issued, and the other is a zero-coupon bond which sets up Tether’s value to be equivalent to $1.00 in the fiat system.
The contract establishes that the total value of Tether is equal to USD. This ensures that all Tethers that are sent to the market will be sent to the value determined in USD.
A Tether token is an asset that can be converted into US dollars using the Tether platform. Tethers are created by increasing the supply of Tether to keep Tethers around the USD equivalent.
How does Tether (USDT) use Blockchain technology?
Tether uses Blockchain technology to maintain the USD tether coin and also to enable users to transfer USDT peer-to-peer via mobile wallet apps.
The USD tether coins are sold to investors to increase demand and to keep the price stable. Tether has a market cap of more than $3 billion and is the third-largest cryptocurrency behind Bitcoin and Ethereum.
Back in November 2017, a New York court ruled that the crypto is not a true cryptocurrency, because it’s not backed by assets such as gold or silver, but just a pledge by a company to pay the holders of USDT tokens.
Tether is not directly backed by the U.S. dollar, but it’s required to have $31.4 million in reserves as well as an assurance that the assets are readily available and sufficient to cover all USDT transactions.
Tether (USDT) advantages and disadvantages
A Tether token gives users the stable price of the USD as money stored in reserves. However, holders can only convert the token to USD at a fixed rate, called the stable rate.
The key concept is that Tethers do not have any intrinsic value. The history of Tether shows that the price of the cryptocurrency has not been fluctuating enough to contribute to the financial stability of the world.
Hence, as it is not a stablecoin and is not used by the general public, it does not have any use in any economic activity, but only speculators.
Tether USDT is a product that is introduced by Tether, a Hong Kong-based company, whose founding team has close ties to the Chinese government.
It has been considered a cryptocurrency for global markets. However, since November 2017, its price, along with other cryptocurrencies, has plunged dramatically due to the Chinese government’s clampdown on cryptocurrencies and the lack of transparency in its operations.
However, many cryptocurrency investors are still holding USDT as a “safe” bet in the cryptocurrency markets. The chances of USDT returning to its former price and acceptance are still high in the short term. In the long-term, USDT and other cryptocurrencies could not survive on their own as mainstream cryptocurrencies in the crypto markets.
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