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Happy day Community, I hope you are having a great time, so far I have brought you some articles about Blockchain, Bitcoin, Ether, Litecoin, Bitcoin Cash and NFT, I hope you have liked them, this time I will comment on TETHER or USDT, this currency that everyone should know for being immersed in the world as volatile as it is that of cryptocurrencies.
First of all let's clarify that USDT is equal to say Tether, its symbol comes from the union of the dollar (USD) with the letter "T" of Tether, it is a digital currency that has a value very similar to the US dollar, the purpose was to create a stable cryptocurrency, its purpose is to maintain a fixed value with respect to a fiat currency, it could be called digital dollars or cryptomonetized dollars.
Tether initially used OMNILAYER from the Bitcoin network as a transport protocol, but is now available as an ERC20 token from Ethereum. Tether is issued on the Bitcoin, Ethereum, EOS and TRON blockchain, this means that USDT tokens cannot be mined, these are created according to the needs of the ecosystem. Tether tokens are issued by the company Tether Limited.
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Due to its stability it is used for cryptocurrency volatility protection, that is each dollar is linked to 1 Tether, so it can be used as an input and output of fiat money for cryptocurrency trading. For example, the first step to be able to buy cryptocurrencies could be to buy Tether and then exchange it for another cryptocurrency of your choice.
How to buy Tether?
It can be purchased on any cryptocurrency exchange platform, for example Binance.
How was Tether created?
A bit of history.
2014, J.R. Willett, who was its founder, worked on MASTERCOIN, with MASTERCOIN there was the possibility of creating several layers over Bitcoin or Sidechains, in which it was possible to execute other cryptocurrencies. In the development of this cryptocurrency were also Brock Pierce and Craig Sellars, who were members of the MASTERCOIN Foundation, for this same year they launched their cryptocurrency called Realcoin using the OMNI LAYER protocol, using the Bitcoin Blockchain, so you could generate, exchange, send, exchange, make bets and pay dividends with tokens representing any type of asset, all this running on a second layer built on Bitcoin and operated directly by the OMNI protocol.
In the month of November 2014, TETHER CEOReeve Collins announced that the project would be renamed TETHER, also indicating the creation of three additional currencies USTether (USDT), YenTether (YENT) and EuroTether (EURT), presenting the birth of 3 stable currencies.
2015, BITFINEX, decided to add USDT and other stable cryptocurrencies to its platform. But this situation was met with many problems because of the partnership between BITFINEX and the company Tether Holdings Limited.
2017, It was announced that USDT could be used on Litecoin, but the project was abandoned due to low interest in the platform. This year saw the announcement of the launch of the ERC20 token for US dollars and for Euros on Ethereum. Today USDT accounts for approximately 80% of Bitcoin transactions.
Why was USDT created?
To facilitate transactions at a fixed rate with the US dollar, in order to circumvent state intervention and oversight and all the regulations that come with it. Each USDT is backed by $1 which is held in the Tether company's reserve and can be exchanged through its platform.
USDT is a secure cryptocurrency?
Tether runs on open blockchain technology leverages security and transparency while complying with international standards and regulations. Its main value is to convert cash into a digital currency to anchor the value to the domestic currency price, Tether must always be backed in fiat currency.
The transaction register is public and has a Transparency Web, creating a proof of reserves. This system links the blockchain accounting together with the accounting of your bank accounts to carry what we can call Tether Equivalency, this allows to ensure the 1:1 collateralization ratio.
Tether helps combat volatility, especially when there are sharp declines in cryptocurrencies.
It has no limits or boundaries for a transfer and low interest rates.
Keeps exchanges highly liquid and protected against cryptocurrency volatility.
Offers a means of protection to traders within Exchanges, because it can convert the balance to USDT, immediately.
It always maintains the value of a dollar, so it can be effectively used to make payments with cryptocurrencies, which could not be with the other cryptocurrencies due to their high volatility.
The issuance and physical backing, because it is regulated by a single company such as Tether. All the power is in the hands of the issuing company, because it is in charge of safeguarding these physical dollars.
As Tether is a non-decentralized currency, the consensus algorithm does not involve mining it, the only issuer is the company.
It is susceptible to inflation, as it is pegged to the dollar, it is prone to inflation and gradually depreciates.
Tether Limited engages in some shady activities, which is why it has been involved in several scandals regarding the cryptocurrency.
Although the percentage of use is high, its popularity is steadily decreasing, there are other more responsible competitors, among them we have USD Coin (USDC), Gemini Dollar (GUSD) and so many other cryptocurrencies.