The volatile nature of cryptocurrencies makes them one of the riskiest assets for investors. If you take a look at most of the cryptocurrencies today, they are incredibly volatile. As a matter of fact, many critics of cryptocurrencies use this argument against the adoption of cryptocurrencies. The Tether blockchain has emerged as one of the most promising solutions for the volatility of cryptocurrencies.
It is basically a stablecoin, a unique class of digital assets that have defined the crypto landscape. Many people are interested in learning more about Tether stablecoin and its capabilities. The following post helps you find out what is Tether alongside figuring out the ways in which it plays a vital role in the modern crypto landscape.
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Definition of Tether
The first highlight in any discussion on Tether crypto would focus on its definition. As mentioned already, Tether, also denoted as USDT, is basically a stablecoin. Now, you must know that stablecoins are a unique class of cryptocurrencies that maintain a stable valuation through different market mechanisms. Many investors use Tether USDT as a vital tool for hedging against the volatility associated with their investments in cryptocurrencies. Most important of all, the Tether stablecoin allows investors to maintain value within the crypto market without any prominent hassles.
Another significant highlight of stablecoins is the backing of assets. Stablecoins ensure stable value as they are pegged against reserves of gold or fiat currencies. In the case of Tether, you will find a fiat-collateralized stablecoin. Therefore, you can notice that Tether has the backing of fiat currencies such as the US Dollar, the Australian Dollar, or the Canadian Dollar. The answer to “What is Tether” also reflects profoundly on how it works on reducing the gap between blockchain assets and fiat currencies. At the same time, the stablecoin also ensures stability and transparency alongside low transaction fees for Tether USDT users.
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Background of Tether
Any discussion on Tether blockchain would be incomplete without an overview of its history. Three developers, Reeve Collins, Craig Sellars, and Brock Pierce, used the Omni protocol for creating Tether in October 2014. The blockchain platform helps users in creating and trading different smart contract-based assets and cryptocurrencies on the Bitcoin blockchain.
Initially named Realcoin, Tether has had a relatively controversial history starting with its launch. Tether started trading on the Bitfinex exchange for the first time in 2015, and trading volumes increased rapidly till 2017. However, US banks blocked Tether USDT international transfers in April 2017 on the grounds of many accusations.
For the most part of it, concerns regarding transparency and whether Tether actually had currency reserves dominated the history of Tether. Furthermore, the temporary suspension of Tether withdrawals in 2017 also resulted in radical volatility for USDT, an uncommon phenomenon for a stablecoin. Recently, Bitfinex and Tether agreed on paying the penalty in the amount of $18.5 million, thereby causing further speculations about the liquidity and stability of USDT.
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Working of Tether
The volatility in Tether price following the controversial phase in its history creates doubts about its working. However, the Tether network is no different from other blockchain networks as it features a native token, Tether USDT. The USDT stablecoin focuses on offering a relatively stable value in comparison to the dramatic price fluctuations evident in other cryptocurrencies. The working of the Tether network depends on pegging every Tether coin against assets worth one US dollar.
Initially, every Tether coin was issued on the Bitcoin blockchain through the Omni Layer protocol. However, Tether has grown substantially and supports three other stablecoins such as EURT, XAUT, and CNHT. After issuing a single unit of USDT, you can use it just like any other cryptocurrency or token on the respective chain.
As of now, Tether blockchain supports Bitcoin, Tron, Ethereum, Algorand, OMG Network, and EOS blockchain networks. With the stability from pegging against a traditional fiat currency, USDT can easily serve as a store of value. At the same time, it can also work as a practical instrument for exchange rather than a medium of speculation.
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What Is So Special about Tether?
Many beginners often wonder about the special traits of Tether, which make it a special stablecoin. First of all, Tether crypto stablecoin has been around for quite some time. Since many users have accepted and used USDT, it has considerably better legitimacy in comparison to other projects. Even today, many vendors and protocols in the blockchain ecosystem utilize Tether stablecoin as a valid means of exchange and payment method. In addition, people wondering about “Is Tether crypto a good investment?” should also notice that stablecoin has significantly large reserves. As a result, it is less likely to suffer from unprecedented market risks like the Black Swan events.
Furthermore, Tether also offers the desired functionalities of other cryptocurrencies, such as cryptographic security and peer-to-peer trading. Therefore, Tether can easily tap into the interests of crypto users and traders. Above everything else, the Tether blockchain offers the benefit of liquidity alongside safeguards from market volatility. All of these factors combined together have resulted in the popularity of Tether stablecoin over the years.
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Benefits of Tether
One of the major highlights in a discussion about Tether stablecoin would obviously point to its advantages. Interestingly, you can discover distinct advantages for individual users, merchants, and exchanges with Tether. Here is an outline of the benefits of Tether in the three different categories.
Advantages for Individuals
The Tether crypto tokens can open up the functionalities of blockchain-based tokens for individual crypto users without exposing them to volatility. Tether can offer the following benefits to individuals.
- Any time availability
- Better speed of transfers
- Lower volatility
- Reduced transaction fees
- Versatile fiat currency alternatives
Advantages for Merchants
Merchants can use the Tether price as a focal point for offering a stable and liquid payment system to customers. Here are some of the important benefits of Tether for merchants seeking ways to adopt crypto in their businesses.
- Large-scale liquidity
- Reliable stability in highly volatile markets
- Easy integration of Tether tokens
- Innovative support for multiple blockchain protocols
- Smart option in comparison to fiat gateways
Advantages for Exchanges
Tether USDT offers promising advantages in powering up the crypto ecosystem by serving as the most actively traded asset. Exchanges can capitalize on the following benefits of Tether coin.
- Unequaled liquidity due to high trading volumes
- Multiple blockchain support
- Efficient functionality with faster transactions and reduced fees
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How Can I Use Tether?
Now that you know all about the Tether blockchain, you might be interested in learning about using it. You can purchase Tether coin from any of the popular exchanges or exchange it for different products and services by certain vendors. You can also use Tether and exchange it for a different cryptocurrency.
Some people use Tether for purchasing NFTs or lending purposes alongside participating in ICOs. The flexibility and stable value of Tether provide the best answer for “Is Tether crypto a good investment?” alongside the comprehensive benefits of USDT. However, you must be careful in the selection of a wallet for using Tether.
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Which Wallet Should I Use for Tether?
The Tether wallet you choose for using the stablecoin will play a huge role in determining its security. Generally, you must choose the wallet for Tether according to the purpose for which you want to use it. In addition, the amount of Tether you want to store in the wallet also determines the suitable wallet.
Hardware wallets such as Ledger or Trezor can offer a secure option by enabling offline storage and backup for Tether. However, you may need technical know-how for using hardware wallets alongside encountering the problem of cost. Therefore, hardware wallets are suitable for experienced users who want to store large amounts of Tether stablecoin.
Software wallets can provide a flexible and free option for storing Tether USDT, albeit with security concerns. Therefore, they are suitable for novice users who store smaller amounts of Tether. You can also depend on online wallets for a better scope of accessibility through multiple devices by using only a web browser. However, online wallets can work as a suitable Tether wallet only for more experienced traders who need frequent storage for smaller amounts of Tether.
You should also have the flexibility of using a Tether blockchain explorer for using the wallet IDs to review all transaction details. As a result, you can have a better and more transparent overview of what goes on with your Tether holdings.
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The introduction of the Tether blockchain delivers a massive boost to the domain of crypto. It offers stability while ensuring the desired liquidity for traders who are apprehensive of crypto instruments. As one of the most popular stablecoins, the Tether coin or USDT provides a wide range of benefits to individual traders, merchants, and exchanges.
Backed against fiat currencies and expanding support for different blockchain networks, Tether has grown at a staggering rate. Most important of all, the acceptance of Tether over the years, albeit with a few controversial setbacks, has driven its popularity. Learn more about Tether in detail for exploring its true potential right now.
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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!