Tether (USDT) is a common stablecoin that has a one-to-one exchange rate with the US dollar. The coin can be found on a number of blockchains and has seen increased trading rates and liquidity in recent years.
USDT helps traders to escape the market volatility that most crypto assets experience. The extra costs and delays of converting between crypto and fiat currencies are also avoided by using stablecoins.
In recent years, Tether has also become one of the most common crypto-assets.
Tether
Tether, a stablecoin with the ticker symbol USDT, uses blockchain in the same way as all other digital coins and tokens do. Tether's value is stable, unlike Bitcoin and many other altcoins such as Litecoin and Ethereum, effectively resolving and removing the uncertainty factor of cryptocurrencies. Each Tether is instead backed by fiat reserves. Each token in USDT is backed by a single US dollar.
Tether Limited, the company behind Tether, has issued tokens pegged to other fiat currencies like the Euro and the Japanese yen, which is interesting. However, we can just consider the case of USDT, which is backed by Tether Limited's United States Dollar reserves.
History
Tether was born out of the 'Realcoin' project, which was revealed in July 2014. In October, Tether released the first batch of stablecoin tokens on the Bitcoin blockchain. Realcoin was renamed Tether in November 2014.
Tether's Controversy
Tether has, without a doubt, had its share of controversy. However, it has successfully faced the obstacles in order to remain afloat in the industry.
Tether Limited has maintained that any Tether stablecoin is 100 percent backed by its original currency since the project's inception. Tether Limited had $1 in its reserve for every USDT stablecoin in circulation.
Users may also exchange the Tether stablecoin for fiat currency, according to the company. These statements, however, lacked substantial evidence, causing controversy and debate about the lack of accountability.
Tether Limited announced in November 2017 that it had been hacked and that $31 million in Tether assets had been stolen. A few months later, the company was chastised for failing to demonstrate that substantial Tether stablecoin reserves exist. The firm was also accused of manipulating the price of USDT and Bitcoin.
Tether says that its stablecoins are backed by USD reserves. Since then, the business has stated that it uses conventional currencies, cash equivalents, and other properties. It also claims that every Tether stablecoin is pegged to the US dollar 1:1.
The Pros
Tether is a stablecoin that has a few advantages over other cryptocurrencies including Bitcoin and Litecoin.
1. Tether, unlike Bitcoin and other altcoins, is not volatile. It means that the coin's value does not change in response to demand. In the vast majority of cases, each Tether stablecoin will be worth $1.
2. Tether is a cryptocurrency that can be used on a variety of blockchain networks. Traders may select the network they want to send or receive Tether on.
3. Tether has almost all of the advantages of a cryptocurrency. For example, you can benefit from low transaction fees and increased protection. USDT is also suitable for a broader range of applications. Many traders, for example, use Tether as a go-to alternative to avoid the price instability that is sometimes associated with Bitcoin and other altcoins. Rather than cashing out the funds, a trader can easily convert them to USDT to keep the price stable.
4. You can also use USDT to get access to cryptocurrency exchanges that don't accept cash. Users can purchase the appropriate amount of USDT tokens and conduct the crypto-trading transaction instead of relying on cash. On that note, it's worth noting that Tether has low transaction fees when it comes to cashing it out in fiat currency.
Tether (USDT) is a better option for arbitrage trading because of these benefits.
Tether, in a nutshell, is a cryptocurrency that acts as a bridge between cryptocurrencies and fiat currencies.
The Cons
Tether has some possible problems that you should be aware of.
1. Tether is not a decentralised commodity like Bitcoin or Ethereum. As a result, the coin's growth potential is determined by the parent company, Tether Limited.
2. Because of its centralised existence, the Tether network requires you to give up your privacy in certain circumstances. Selling Tether for fiat money, for example, necessitates a thorough KYC.
3. Experts and veterans in the industry are suspicious of Tether Limited's claim to retain fiat currency reserves.