Among the suite of cryptocurrencies, Tether is one of the most prominent ones. Therefore let’s understand some of its characteristic attributes which makes it so. It is usually denoted by USDT on many of the cryptocurrency exchange trading pairs and is confused with the US dollars. Even if you assumed so, then you can be considered as partially right, as the USDT is the cryptocurrency version of the US dollar. Its value is precisely fixed to the value of US Dollars, hence it is said to be tethered to the US dollars. Its value is so staunchly attributed to the to US dollars that it is estimated to be not more not 1 cent more or 1 cent less the actual value of the USD. As we all are very familiar with the fact that, the theory is far away from practicality. Hence the value of Tether is not exactly the same as the value of USD.
Similar to the US dollars even Fiat currencies of some of the most prominent countries of the world are looking forward to developing their respective Tether coin. for an instance, the European dollar is denoted by EURT, and Japanese Yen to be represented as JPYT.
In order to jump onto the cryptocurrency trading bandwagon, one must have cryptocurrencies handy, as many exchanges do not support the Fiat currencies. Hence it plays an important role, as it is supported by most of the cryptocurrency exchanges. One can get the US dollars converted to Tether on Kraken easily.
It is worth mentioning, that Tether is a completely Centralised form of cryptocurrency and at any point of time, the price of cryptocurrency might completely vanish off.
Although the cryptocurrency is more or less exactly similar to the US dollars itself then one might be wondering, why the cryptocurrency form of the Fiat currency is useful? There are there are a number of characteristic attributes which makes Tether highly useful in cryptocurrency domain. They are.
Imagine if some user wants to convert his cryptocurrency into the US dollars and needs to withdraw it. It is no wonder that it would take a longer time for the transaction to get executed. If the banks are closed due to public holidays and other events, the transaction type might increase up to days together, on the other hand, the transactions in case of Tether coin is settled within a couple of minutes as the whole system is online.
The traditional US dollar transfers which take place throughout the world is undertaken with the SWIFT (Society for Worldwide Interbank Financial Telecommunication) protocol. The protocol levies a percentage of the transaction, fee starting from $20 and adding on to that, a number of other fees such as Forex exchange fees are added which makes the transfer highly unaffordable. On the contrary, the transfer of USDT between the cryptocurrency wallets throughout the world is almost free of cost.
If a daily trader, uses some other cryptocurrency apart from USDT, in order to halt their trading, then due to the high volatility of the Altcoins, price slippage may occur, and unnecessary complications for the trader is increased. As the coin is already stable it is one of the most preferred one by the traders.
It has been well understood from the cryptocurrency exchange hacks that have occurred in the past few years that a user must safeguard his funds by storing them on his personal wallet and not leaving them on the cryptocurrency exchange, so as to avoid vulnerability. Also, imagine is Tether wouldn’t have existed. Then the users would have needed to convert the Crypto into the US dollars to keep away from the exchange. Again, if the user needs to resume trading, then transferring the Fiat currency through wire transfer would take days together, which can instantly happen in case of USDT.
If long-term profits are expected by the investors out of Tether, then he is in a wrong notion. As it was earlier explained, that the value of USDT is pegged on to the US Dollars, it is obvious that the value wouldn’t be gaining or losing value. However due to its Centralized nature, to an extent, a downfall might be expected. In a nutshell, it is not a good investment for profits.