What is Tether?
Tether was launched in November 2014 by Bitcoin Foundation director Brock Pierce, along with Craig Sellars and Reeve Collins. The purpose was to create a link between cryptocurrency and fiat currencies, offering balance, openness, and minimal transaction charges through blockchain technology.
In the beginning, the platform presented three kinds of Tethers (USDT): USTether, EuroTether, and YenTether. These tokens featured a 1:1 peg with the currency associated. So, 1 USDT is equal to 1$, 1€, or 1¥. Companies can trade cryptocurrency funds faster, avoiding converting fiat currencies through the banking system.
How does it work?
Tether is a type of cryptocurrency called stablecoin that aims to keep valuations stable and not affected by market swings. Unlike the majority of cryptocurrencies that have a limited amount of tokens, Tether hasn’t. New coins can be issued the moment customers buy them by depositing the fiat currency in Tether’s bank account.
Tether was launched on the Bitcoin blockchain via a platform used for creating and trading digital assets of Bitcoin, called Omni Layer protocol. Thanks to Omni, Tether’s ledger is deposited on the Bitcoin blockchain, and the Omni Explorer grants users to view their transactions there. Tether is currently available on other blockchains, like Ethereum, Tron, and EOSIO, which permit the generation of new assets on their blockchains.
How to get started with Tether?
Tether is widely used in the cryptocurrency world, and it is part of most exchange platforms. Usually, people make comparisons between platforms before deciding which one to use. After choosing the platform, the next step is creating an account and depositing an amount of money.
Since there are different types of Tethers, each one of them needs a different type of wallet. If you send the wrong type of Tethers to the wrong kind of wallet, there will be a loss of funds, so transactions need to be made carefully.
- One of Tether’s major advantages is the stability of its course. Even though it has slight fluctuations, it recuperates quickly, keeping the 1:1 peg.
- It’s an easy way to get started in the crypto market, making it possible to exchange fiat funds for USDT and keep it as a backup fund.
- Tether is one of the most popular cryptocurrencies, making it convertible on most exchanges and very easy to buy or sell it.
- Transferring assets is cheaper and faster if you use USDT.
- Anonymity isn’t a part of Tether. When purchasing USDT, you will be asked to provide several documents confirming your identity before opening an account.
- Even though the volatility level has never exceeded 2-3%, it is not zero.
- The lack of transparency when it comes to company information, and the absence of a regular audit, makes Tether not so trusted by analysts.
- It is believed that Tether is behind the manipulation of the cryptocurrency market, influencing the huge rise of Bitcoin at the end of 2017. These kinds of speculation harm its credibility.
The purpose of Tether is to create a link between cryptocurrency and fiat currencies, featuring a 1:1 peg with the currency associated. Tether is part of a type of cryptocurrency called stablecoins, that aims to keep valuations stable and not affected by market swings.
Tether doesn’t have a limited amount of tokens. New coins can be issued the moment customers buy them. Different types of Tethers require different types of wallets. This currency is easy, cheap, and fast to manage, therefore very popular. Downsides include the lack of anonymity for users and the lack of regular audits.