Tether Coin (USDT): Full Analysis
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If you use exchange platforms such as Poloniex, Bittrex, Binance and others, then you have probably seen or come across the USDT, EUR₮, and JPY₮ markets and you might have even used it regularly. Tether is also known as USDT. There are some of us that are still not fully aware of what USDT truly is and how the market works.
This article will look to address that and tell you exactly what USDT is, how it works, who uses it and other related information.
What is Tether?
The first question we will address is what Tether is?
Tether initially named “Realcoin”, was launched in July 2014, and it was renamed to “Tether” in November 2014. Tether is a digital currency that is issued on the Bitcoin blockchain using the Omni Layer Protocol. According to its design, each tether is backed by a US Dollars that is stored in the reserves of the parent company, Tether Limited. The funds can be regained via the Tether platform. Tether which is denoted as USDT, EUR₮, and JPY₮ on exchange platforms can be transferred, stored, or spent, the same as Bitcoin and other cryptos.
Crypto users can also transact and store Tethers using any wallet approved by the Omni Layer.
The Tether currency was developed to ensure the transfer of national currencies, to provide investors, traders, and exchanges with an alternative to Bitcoin that was stable and secure. The Tether’s Proof of Reserve Process is an alternative to the proof of solvency method.
In Tether’s Proof of Reserves system, the amount of USDT, EUR₮, and JPY₮ that is in circulation at a particular time can easily be known on the Bitcoin blockchain using materials that the Omnichest provide. The corresponding total amount of US Dollars held by Tether Limited at that time can also be proved by publishing the bank balance of the company and timely audit by professionals in the field.
The total number of USDT, EUR₮, and JPY₮ in circulation at a particular point in time is termed as TUSD. TUSD must always correspond with the amount of US Dollars in the bank account of the parent Tether Limited.
Tether cryptos with its USDT, EUR₮, and JPY₮ has created an extremely safe and transparent system that makes use of the Bitcoin blockchain to provide investors, traders, and exchanges with an asset that has a stable price. The parent company behind USDT, Tether Limited usually keeps fiat currencies such as the Dollars, Pounds, Euros, Yen, and others in their reserve bank account.
Some of the major features of Tether are;
- Stability: This is the most important feature of Tether. Due to the highly volatile nature of Bitcoin, Tether was created to offer a stable asset that traders, exchanges, and investors can rely upon at any given time.
- Transparency: Transparency is another feature that Tether takes pride in. the company claims that its fiat reserve account undergoes regular auditing in order to verify the amount in those accounts. The balance is updated on a regular basis.
- Minimal transaction fees: Another feature about Tether is the lack of transaction fees when users are sending funds between Tether accounts or wallets that are capable of storing it. Converting Tether back to fiat currencies, however, attracts some transaction fees.
How does Tether work?
Tether doesn’t work like most cryptocurrencies.
Tether cryptocurrency is built on the Bitcoin blockchain and works using the Omni Protocol. This is an open-source system that is designed to connect different blockchains so that Tether can be issued and redeemed.
The Tether platform has been fully reserved in case the total sum of the tether in circulation exceed or equals the balance of the fiat currency stored in reserve. The company’s transparency pages enable everyone to see those numbers in real time.
For what is Tether good?
Tether has several advantages for traders, exchanges, and investors.
Supports fiat currencies.
- Tether supports fiat currencies such as the USD, Euros, and the Japanese Yen. The Tether platform currencies are represented by USD₮, EUR₮, and JPY₮.
- The tether was developed on the open blockchain technology and follows the security rules strictly.
- Tether is now the most widely integrated digital-to- fiat currency. You can be able to buy, sell, and use Tethers at exchange platforms such as Binance, Bittrex, Shapeshift, GoCoin, and several other exchanges.
For Blockchain companies, Tether is of benefit to them in the following ways:
- It allows them to offer their services in several cryptocurrencies.
- They can name the price of goods and services in currencies their customers are familiar with.
- It helps reduce the cost of operation and time by removing the influence of financial institutions.
Exchanges do benefit from Tether in the following ways;
- Exchanges can use Tether as an alternative to depositing and withdrawing fiat currencies.
- Tether offers a secure way to manage customer assets using pure crypto processes such as multi-sig.
- The settling of fiat balances between exchanges has become much easier and happens in real-time due to Tether.
Individuals/Traders benefit using Tether in the following ways;
- They allow a seamless movement of currencies between exchanges and wallets.
- Tether enhances the cross-exchange and strategic currency arbitrage.
- They enable you to become the custodian of your fund and remove the risk involved in storing your funds in exchanges.
Tether Scam claims
Tether scam is something that is worth looking into.
Despite the advantages of Tether that we have discussed above, many companies such as Bitfinex and other individuals have raised concerns about it.
The concerns are that Tether Limited doesn’t really have that much US Dollars in reserve. Thus, this implies that they don’t have enough to back all the cryptocurrencies in circulation at the moment. These rumors have been around for a while now.
Bitfinex and Tether were served subpoenas back in December by the U.S. Commodity Futures Trading Commission after it received tips from an anonymous source.
The allegations led to Tether releasing more coins into the market in January, releasing roughly 850 million new digital tokens that month alone. The pumping of new coins into the market over the past few months has coincided with the all-time high prices recorded by most cryptos. This led to some critics suggesting that there is a price manipulation in the crypto market.
Some anonymous statistical analysis was posted online in February 2018 that shed light on the relationship between Bitcoin price and Tether. The report concluded that Tether was created at a time when Bitcoin was falling.
Back in September last year, Tether Limited released a document that showed that it had the required reserves to back up the digital currencies in circulation. The banks that the company stores its funds, however, was not revealed.
The accountancy firm that conducted the audit, Friedman LLP, cut ties with the company, and the accountancy firm reported having dissolved their relationship.
How To Buy Tether?
Tether is very easy to use. You will need to open a Tether wallet before you can store your Tether reserve.
- To use a Tether wallet, the first step is to create an account with Tether.io. Click on sign up, fill in your personal details and create an account. After that, your account will be created.
- Before you can use the wallet though, you will have to activate the 2-factor authentication. This is to give your account an extra layer of security. You can do this on the security page.
- Once you have done the 2FA authentication, proceed to your email and click the activation link sent to you.
- To deposit fiat currencies or withdraw them, you will have to undergo a verification process. Click your username tab on your homepage and click verification. Proceed to individual verification and continue to individual verification after reading the post.
- Complete the provided sections to verify your tether account fully. You will be given a Bitcoin wallet address which you can use to receive funds. All you need to do is go to the add funds section, and an address will be provided that you can use to receive USDT, EURT, and JPYT or Bitcoin.
- You can also fund your Tether wallet from your bank account. Go to the fund from bank section and follow the instructions provided.
- Using the Tether wallet, you can send Bitcoin to exchanges or other wallets. Go to send funds and enter the Bitcoin address you wish to send to and the amount of Tether you wish to transfer.
- To convert your Tether and send it to your bank account, click on the withdraw button and follow the information provided.
There are several exchange platforms where you can buy tether coins.
Binance >> This platform is perhaps the largest crypto exchange in the world. Its ease of use has made it a very good option for beginners. It is a reliable exchange platform that is located in Hong Kong. It offers USDT pairs such as BNB, BTC, ETH, NEO, LTC, and BCC.
- After depositing any of the above-listed cryptos in your Binance account, proceed to the market section and search for USDT. The USDT pairs will pop out, and you can trade the listed coins for USDT. The USDT funds acquired can be moved to your tether wallet for safety.
OKEx >> This is another exchange platform based in Hong Kong and is known as one of the most widely used and reliable exchanges. OKEx supports a wide array of cryptocurrencies, and its availability worldwide makes it ideal for every trader. The USDT pairs currently supported by the OKEx platform are BTC, LTC, and ETH.
- After depositing your funds in OKEx, search for the USDT pairs and the supported pairs will be displayed. Click on the pair depending on the currency you have and trade your crypto for the USDT. After that, transfer your tether to your wallet to ensure the safety of your funds.
Huobi >> This is a Chinese exchange platform that has managed to still operate in the country despite a clampdown by regulatory bodies. The exchange supports several altcoins and Tether is one of them. USDT pairs supported include; BTC, ETH, BCH, ETC, LTC, EOS, XRP, OMG, DASH, ZEC, TRX, MDS, HT, HSR, and IOST.
- To purchase USDT on this exchange, deposit funds in your account. Go to the market section; the USDT pairs will be displayed there. Select the currency pair that you have in your account, e.g. BTC/USDT if you have Bitcoin in your account. Click buy and place your order.
HitBTC >> This is a European exchange whose precise location is still unknown. This has cast some doubts about their reliability, but they have proven to be one of the most used exchanges in the region. It supports over 200 altcoins, and Tether is one of them. USDT pairs supported include BTC, BCH, and DCN.
- To purchase tether on this platform, deposit any of the above-listed coins in your account. Search the market for the USDT pairs and click on it. Click buy and place your order.
To Sum Up
The introduction of the Tether to the crypto market has brought a stable and secure alternative to the volatile Bitcoin. Despite the criticism the company faced, they have been able to provide benefits for blockchain companies, exchanges, and individual traders. Purchasing and using Tether is also very easy. Thus even beginners can use it.
The crypto world is an exciting one, and there is so much to learn about it. For more informational crypto articles, go through our site as we have more amazing contents.