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Market volatility is nothing new, but it has reached its height in recent years. This has led to a lot of hype and buzz around stablecoins, which are designed to maintain their value regardless of market trends. The USDT Tether token is one of the most popular stablecoins on the market, and many traders have turned to it to mitigate the effects of market volatility. However, there is some controversy surrounding USDT Tether, as some have claimed it’s being used to manipulate the crypto market. Despite this, it is still among the most widely used stablecoins. Let’s deep dive into the USD Tether token — a modern take on the age-old concept.
USDT Overview
USDT, also known as Tether, is a cryptocurrency whose value is pegged to the US dollar — a stablecoin. A stablecoin is a type of cryptocurrency that seeks to peg its value to another asset, such as the US dollar or gold. USDT was launched in 2014 by Tether Limited. USDT is backed by Tether’s reserves, which are held in various bank accounts. USDT is used to buy other cryptocurrencies as well as to provide liquidity for exchanges.
However, USDT also was at the center of controversy several times due to concerns about its reserves and transparency.
In November 2017, around $31 million worth of USDT tokens were stolen from Tether. The same year, Tether failed to comply with all withdrawal requests. While Tether representatives repeatedly said that they would provide an audit report proving that the amount of Tethers in circulation is backed one-to-one by US dollars, they are still yet to do this.
Two years later, in 2019, USDT creators said the coin is backed not only by cash but also by loans from related organizations. At the end of April of the same year, they reported that only 74% of the cryptocurrency is backed by fiat money (dollars). Furthermore, some have claimed that Tether is used to manipulate the price of Bitcoin. Despite these controversies, USDT remains one of the most popular stablecoins and is widely used on cryptocurrency exchanges.
How Does USDT Work?
USDT is pegged to its matching fiat currency — the US dollar. This means that each USDT Tether token is backed by an equivalent amount of cash, making it a safe investment during times of economic uncertainty. In addition, USDT can be used to purchase goods and services, with the volatility of other cryptocurrencies being out of the picture. To achieve this stability, USDT tokens are minted or burned based on demand. When more USDT tokens are needed, new tokens are minted and deposited into exchanges. When there is less demand for USDT, tokens are burned in order to reduce the supply. This matching of supply and demand helps to ensure that each Tether token remains pegged to the US dollar. As a result, USDT provides investors with a safe and stable way to store value.
ERC20-USDT stands for USDT issued by Tether on the Ethereum network, whereas TRC20-USDT stands for USDT issued on the TRON network.
USDT: Tether’s History & Founders
USDT was created in 2014 by Brock Pierce, Reeve Collins, and Craig Sellars with a mission to provide the world with a stable digital token ecosystem. Originally named Realcoin, the token could not compete with popular altcoins. However, after a series of updates, it changed its name to Tether and altered its issuance technology. The transformation was necessary to survive in the world of digital money. This is how the stablecoin Tether, which later on became a convenient choice for businesses and individuals, was born.
Tether is a digital token ecosystem that offers a risk-free opportunity to store, send, and receive digital tokens. Tether Limited is the company that issues Tether tokens. Soon after the launch, rumors emerged that the organization was associated with the Bitfinex cryptocurrency exchange since it was the first exchange to list the coin. After some analysis and investigation conducted by Paradise Papers, such information was confirmed. The Hong Kong-based corporation iFinex Inc., which also operates the cryptocurrency exchange Bitfinex, is the owner of Tether Limited.
Having reached the greatest daily and monthly trading volumes on the market in 2019, Tether overtook Bitcoin in terms of the trading volume. In 2021, USDT surpassed the $1 trillion mark in on-chain volume, making it one of the most successful cryptos in history.
Today, USDT is still one of the leading cryptocurrencies, with millions of dollars worth of transactions being carried out on a daily basis. Thanks to its convenience and security, USDT is likely to remain a top choice for cryptocurrency users for years to come.
How to Mine / Stake USDT?
Tether mining is not possible: its generation is performed only after backing with real money. This perplexes some cryptocurrency users because the idea is contrary to digital money. Nonetheless, this particular token occupies the middle ground between traditional currency and virtual assets.
USDT Advantages & Disadvantages
One key difference between USDT and other digital assets is that USDT is backed by commercial paper. This means that there is always real collateral backing each USDT in circulation. As a result, USDT has a very low risk of default. In addition, USDT can be quickly and easily exchanged for other currencies on crypto exchanges. This makes it an ideal choice for investors who want to trade digital assets without having to worry about the volatility of the crypto market.
However, some people argue that the use of commercial paper makes USDT less transparent than other digital assets. They also point out that the USDT exchange rate is often lower than the dollar-to-bitcoin rate, meaning that users may not get as much value for their investment in USDT. Other major cons are:
- Disturbance of the global market balance due to the combination of real and virtual money;
- Accusations that the company behind the coin uses a special reservation scheme, where more tokens are made than there is real money. By doing this, Bitcoin’s exchange rate increases to control the market;
- Security problems caused by the events of November 20, 2017 — the day when Tether’s system was hacked. 30 million USDT were stolen, the creators could not get the coins back, and the security level did not improve either.
Ultimately, each investor will need to weigh the advantages and disadvantages of USDT before deciding whether or not it’s a fit for them.
Tether Tokens Compared to Other Stablecoins
When choosing between stablecoins, investors should consider their goals and risk tolerance.
USDT vs USDС
There are currently two stablecoins vying for the title of the top stablecoin — USDT (Tether) and USDC (Circle). Both aim to provide a stable cryptocurrency that is pegged to the US dollar, but there are some key differences between the two.
USDT is issued by Tether, a company that also runs the popular cryptocurrency exchange Bitfinex. USDC is issued by Circle, a financial services company backed by Goldman Sachs. One key difference between the two stablecoins is that USDT is backed by real currency assets, while USDC is backed by fiat currency deposits stored in regulated banks. This means that USDT is more susceptible to fluctuations in the value of real assets, while USDC should be more stable overall. In contrast to USDC, which is renowned for its safety and greater regulatory compliance, USDT is more frequently used for trading and payments. This makes USDT more accessible to a wider range of users. Ultimately, both stablecoins have their pros and cons, but USDT remains the most popular choice for those looking for a stable cryptocurrency.
USDT vs BUSD
BUSD is the native token of the Binance Smart Chain, a blockchain that runs in parallel with the Binance Chain. By using this smart chain, users can develop decentralized applications (dApps), issue their own tokens, and use smart contracts. The transaction fees on the Binance Smart Chain are paid in BUSD, which is burned (destroyed) after each transaction. This reduces the supply of BUSD, making it a deflationary currency.
The total supply of BUSD is capped at 100 million. So far, 50 million tokens have been minted and are in circulation. The remaining 50 million will be minted over time as more transactions are made on the Binance Smart Chain.
USDT and BUSD are two popular stablecoins that have different benefits and risks.
BUSD is a stablecoin that is pegged to the US dollar, too. BUSD is 100% backed by US dollars in US banks insured by the FDIC. BUSD is available for purchase on Binance and other exchanges like Paxos. You can easily buy it on Changelly as well.
USDT is more widely available and has been around for longer, but unlike BUSD, it is not backed by an asset.
BUSD may be more volatile than USDT because it is new and can’t boast such a large availability, but it offers investors the stability that comes with being backed by an asset.
How to Buy USDT on Changelly?
At present, USDT is not available for fiat purchases yet. So, in order to buy USDT on Changelly, you should get BTC first and then exchange it for this cryptocurrency.
The first step: open the Buy page. Select the pair of fiat currency and crypto you’d like to exchange. In our case, it is BTC and USD. You can also exchange other crypto assets.
Next, select the amount you are going to spend to buy the coin in the “You spend” column. The service will automatically calculate the number of Bitcoins you will receive in exchange for this amount.
Then you must choose the payment offer you like. After that, you need to enter your card details and your crypto wallet address to which your coins will be transferred. If you don’t have a crypto wallet yet, you can open it right away on the same page. Cryptocurrency transactions are irreversible, so please double-check your wallet address before proceeding to the next step.
Finally, you need to confirm the payment. After a few minutes, you will receive your newly purchased cryptocurrency in your wallet.
And now, you can easily exchange BTC for USDT. To do so, open the exchange page, choose a favorable exchange rate, and set a crypto pair — in our case, it’s BTC and USDT. You can find information on the transaction fee, the network fee, and the estimated arrival time in the ‘Transaction details’ box. Next, you must enter your wallet address, confirm the payment, and wait for your transaction to be completed.
The Changelly exchange platform is intuitively easy to use. Buy USDT while reading this article!
FAQ & Everything You Need to Know
Is USDT a token or a coin?
USDT is a stablecoin that is pegged to the US dollar, but technically, it is a token. The USDT token was originally issued on the Bitcoin blockchain but has since been migrated to the Ethereum blockchain. USDT tokens are ERC-20 compliant and can be stored in any wallet that supports this standard. The migration to Ethereum was undertaken in order to take advantage of the platform’s smart contract capabilities.
How much is the USDT token?
Unlike other cryptocurrencies that fluctuate in value, USDT remains stable at $1.
How many USDT coins are there?
As of August 2022, Tether’s (USDT) circulating supply is about 66,476,525,454 coins.
The maximum supply of Tether’s USDT is unknown because the company issues new coins in response to user demand and reserve holdings.
Is USDT a good investment?
When it comes to investing in cryptocurrency, there are many different options to choose from. One option that has been gaining popularity in recent years is investing in USDT or similar stablecoins. Unlike other types of cryptocurrency, stablecoins are designed to maintain a stable value regardless of market conditions. This makes them an attractive option for investors who are looking for a way to hedge against volatility. In addition, stablecoins can be used to make purchases and transfers without the fees associated with traditional financial institutions. As a result, USDT has emerged as a popular choice for those looking to invest in cryptocurrency.
However, it is crucial to remember that stablecoins are still a relatively new technology, and there may always be unforeseen risks. As we mentioned earlier, some have raised concerns about USDT’s lack of transparency and its potential for manipulation. Market data suggests that USDT plays an important role in cryptocurrency trading, but crypto traders should be aware of the risks before investing.
What is the future of USDT?
The aim of USDT is to provide a stable alternative to traditional fiat currencies in the digital currency space. When you buy Tether, you are effectively buying a promise from the company that you can redeem your tokens for USD at any time. This gives the token its value and stability. USDT can be used to purchase goods and services, or it can be traded on digital currency exchanges. Unlike other digital currencies, which are often subject to volatility, USDT remains pegged to the US dollar, making it a more stable option for those looking to trade or use digital currencies. As the adoption of digital currencies grows, USDT is likely to become an increasingly popular option for those looking for a stable digital currency.
How do I cash out USDT?
You can use Changelly’s sell page to exchange your Tether coins for US dollars or euros.
Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
