What is Tether (USDT)?
In the cryptocurrency market, stablecoins are very important to maintain decentralization. The answer to the question of what Tether means is that it is a stablecoin that has safely established the bridge that needs to be built with fiat currencies in the market. Although many stablecoins are pegged to the US dollar, Tether, the most widely used stablecoin, had a market cap of $20 billion at the end of 2020 and managed to quadruple its market value by March 2022. Tether, which ranks first in daily transaction volume, surpassing Bitcoin and Ethereum, is also used for US dollar-based transfers between centralized exchanges. As the first stable coin, Tether, the predecessor of other projects, is favored for its ability to function on multiple blockchains and for being a secure entity that holds reserves in exchange for the current USDT amount.
When was the Tether released?
USDT was founded in 2014 as the first cryptocurrency pegged to the US dollar, which is considered a fiat currency. Tether's name was Realcoin at its creation and was then changed. Although USDT was initially developed for the Bitcoin blockchain, it has been incorporated into other blockchains over time. Most of the Tether supply is currently on the ERC-20 network, the Ethereum blockchain. Besides Ethereum, USDT is also used in blockchains such as Tron, EOS, Solana, and Algorand. Tether, which sparked controversy at its issuance, has gained acceptance because it is pegged to the US dollar.
Who is the founder of Tether?
The founders of Tether are well-known bitcoin investor Brock Pierce, software developer Craig Sellers, and entrepreneur Reeve Collins. Although Tether is a company that offers stable coins in the cryptocurrency ecosystem, it is also argued that there is a need for a US dollar-indexed coin. When Tether was first issued, there were fluctuations in its relationship to the US dollar, and these volatile movements went as high as $ 1.2. Tether has reached billions of dollars in transaction volume over time and has ended this volatility. Today, the USD is traded between values like 1.01 or 0.99 USD.
To which country does the Tether belong?
Tether Limited is the owner of the stablecoin, whose name was changed from RealCoin to Tether in 2014. Tether Limited's offices are located in Switzerland and Hong Kong, and Tether continues its operations with offices in Europe and Hong Kong. The company, which owns USDT, states that it holds one dollar in reserves for every USDT brought to market. In 2018, Tether became a hot topic, accused of providing the missing funds to the Bitfinex exchange in New York, USA. Tether Limited, which operates in the fixed coin space, has various stable coins and USDT. The abbreviation and scope of use of these stable coins are as follows:
- EURT: Euro-indexed coin
- CNHT: Chinese yuan-indexed coin
- XAUT: Gold-indexed coin
What does Tether do?
Since it is pegged one-to-one to the US dollar, Tether can be preferred for dollar-based savings on cryptocurrency exchanges. It is easy to trade as almost all cryptocurrencies have USDT pairs. Since liquidity is high in USDT parities where transaction volume is high, transactions can be made quickly. USDT, a bridge between fiat currencies and the cryptocurrency ecosystem, is preferred due to its dollar-based hedge without volatility. Although USDT is the largest USD-indexed cryptocurrency, several dollar-indexed stablecoins are also in use today. These coins include BUSD, USDC, UST, and PAX.
Advantages and disadvantages of the Tether
Tether, one of the cryptocurrencies with the highest transaction volume, has a range of use with its fixed-coin concept that cannot be achieved with other cryptocurrencies. The advantages of USDT can be listed as follows:
- The one-to-one ratio between USD and USDT meets the needs of investors.
- It has no volatility due to its stable structure.
- It is reliable for investors due to the reserves of Tether Limited.
- It can be called a bridge because it can be used in different blockchains.
- It can be used to transfer dollars between other exchanges with low commissions.
- It can be preferred for fast cryptocurrency trading. Withdrawals and deposits are fast.
- Foreign currency investments can be made by trading local currencies like the Turkish lira.
Tether, which can be considered a digital US dollar, is one of the major players in the cryptocurrency market. Although the Tether value is 1 USD in fixed markets, it can rise to 0.98 or 1.02 when significant events occur on cryptocurrency exchanges and volatile markets. However, with the increase in USDT trading volume, the stablecoin reaches the same level as the dollar. While systems like Swift pay high commissions for US dollar transfers, the commission for USDT transfers is very low.
How is the Tether produced?
Tether is not a mining cryptocurrency like Bitcoin. A Tether cannot be mined and can only be purchased with cryptocurrencies or local fiat currencies like TRY. USDT, whose price is pegged to the dollar, offers a stable chart, so there is no analysis of its non-volatile price. During the decline or rise of the cryptocurrency market, USDT is a cryptocurrency that is preferred by investors who want to switch to cash because trades are quickly settled through accounts on the exchange. USDT, which can be purchased with market or limit orders, can be used to buy bitcoin or altcoins and transfer them to various exchanges.
How to buy Tether?
Tether pairs can be traded on cryptocurrency exchanges to buy Tether, one of the most reliable stablecoins offered by Tether Limited. To buy USDT in Turkish lira, you need to send fiat money from the bank to your wallet on central exchanges and then trade in pairs like USDT/TRY. After buying Tether, you will have a reserve denominated in dollars. You can also have USDT sent to your USDT address from various exchanges. Tether transfers are preferred worldwide due to their low commission and high speed.
How to sell Tether?
Tether, the cryptocurrency with the highest trading volume, is a stablecoin that can be sold quickly due to its high liquidity. USDT can be bought on the market immediately at the current selling level and sold at a certain level with a limited order. In addition to brokering cryptocurrency trading, the USDT cost for holding dollar-indexed cash balances and transferring dollars is always $1 at the current Tether rate. USDT can be sold on central exchanges (CEX) in cryptocurrency pairs such as Tether, BTCUSDT, or ETHUSDT and fiat currency pairs such as Turkish Lira or Euro.
Tether, whose circulation area is increasing daily, is pegged to 1 US dollar, making it easy to calculate its market value using the current supply. As of March 2022, Tether has a market value of $81.6 billion, with a supply of $81.6 billion. In line with the market's needs, Tether Limited prints USDT from time to time. The company states that for every USDT it issues, it adds $1 to its reserve. A Tether can be calculated by market capitalization like any other stablecoin such as UST, calculated in US dollars.
USDT is the most widely used stablecoin on cryptocurrency exchanges, and exchanges hold Tether in cash for trading. However, Tether can also be held in a cold wallet. USDT can be stored in web-based wallets such as TrustWallet or hardware wallets such as Ledger. The network selection must be made correctly when adding or withdrawing USDT from the cold wallet, as the cryptocurrency works on different blockchains. Otherwise, the money may be lost. USDT Solana is used on blockchains like Ethereum, so ensuring the network is correct when sending is crucial. Apart from being cold wallets and encrypted products, there is no recovery of funds if passwords are lost, so cryptocurrency exchanges are safer for USDT investments.