Cryptocurrencies have become a popular choice of investment and trading among users. Some investors enjoy the excitement that volatile cryptocurrencies bring, while others are hesitant to explore due to the same reason.

The alternative that captures the latter group’s interest are stablecoins. Stablecoins are less volatile and hence, less risky. Today, we’re looking at one of the more popular stablecoins: Tether (USDT).

1

The Tether Network

Tether is a blockchain-based cryptocurrency pegged by the US dollar. The circulation of USDT is backed by the equivalent number of US dollars in reserves, making it a stablecoin.

Because of its comparatively stable value, Tether is rarely used for speculative investments. Hence, it is used primarily as a medium of exchange or as a mode of storing value.

Unlike Bitcoin and Ethereum, Tether does not have a unique blockchain network. Instead, it is hosted on both Bitcoin’s and Ethereum’s blockchain networks, among many others, where users can transact in USDT.

2

Maintaining the Blockchain

As we have previously mentioned, Tether does not have a unique blockchain network. It is available on major crypto exchanges, trading like a standard cryptocurrency. However, its value remains the same.

Tether claims to provide a ratio of 1:1 against the US dollar, and it also claims to hold reserves equal to the token in circulation.

3

Mining Tether

USDT, unlike other cryptocurrencies, cannot be mined. Instead, when the investor deposits money, he receives tokens equal to the amount. Tether Limited issues tokens for trading, and Tether trades on major exchanges and has infinite tokens. The value of Tether remains the same, thus offering stability.

Like other digital money, Tether is available on crypto exchanges. USDT is transferable to any wallet and convertible to any fiat currency. The process to buy tether tokens is very simple. The investor has to deposit the amount, and the tokens are available in his crypto wallet.

One of the advantages Tether offers is exchanging tokens for USD. Tether offers a ratio of 1:1 against USD. Hence, the cost and delays of transactions go down in the crypto market. Tether trades on Binance, Coinbase, and a host of other exchanges.

4

Tether's Value

Tether comes under the category of stablecoins. This means that the value of the currency remains the same.

USDT aims to contain the volatility of the crypto market. It also offers easy trading across all platforms. In addition, it is helpful for short-term payments, and it facilitates the repayment of loans and acts to save investments.

Based on the above observations, it is safe to say that Tether serves as an alternative. It offers stability without the hassle of transaction fees. But it is not without its share of controversy.

For example, Tether claims to hold USD in its reserves against the tokens given. But this claim was never verified. Furthermore, tether’s audit practices aren’t verified, and they are not transparent in their dealings either.

The company can deny or change its rules and regulations without prior notice. Tether’s rising popularity is due to its backing of traditional currencies like USD.

FAQ

Is Tether safe?

USDT offers a stable rate of exchange for short-term fund transfers. But there are risks associated with Tether’s price downfall.

Can I get good returns investing in Tether?

Many exchanges offer good returns for storing USDT coins. The return ranges between 6% to 12% though this depends on the market scenario.

Are Tether fees high?

Tether charges a small transaction fee for moving funds between exchanges. But, if you make a transfer in a non-supported fiat currency, banks charge a conversion fee.

Can I convert Tether to USD?

There is a small charge for the same. And you can convert it into USD and withdraw the amount.

Can I convert Tether to other cryptocurrencies?

When trading on exchanges, it is possible to convert Tether into other cryptocurrencies.

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