What is Tether (USDT)?

What is Tether (USDT)?





What is Tether (USDT) and How does its work?



Tether (USDT) is the most popular stablecoin, a cryptocurrency that is designed to maintain its value by pegging to fiat currencies, such as the Euro (EUR), Chinese Yuan (CNY), Dollar, and Japan Yen (JPY). However, in Tether’s case, it is claimed to be backed by the U.S. dollar.



Tether was originally launched under the name “Realcoin” in 2014 by Brock Pierce, Reeve Collins, and Craig Sellars, before renaming it to “Tether”.





How does Tether (USDT) work? 



Tether is issued and managed by Tether Limited, which reserves its conventional currency to maintain a stable price for its stablecoin. Therefore, conversion from USDT to USD can be implemented without difficulty.



Tether Limited invented USDT as an alternative cryptocurrency for investors who wish to avert the price fluctuation risks involved in cryptocurrencies.



Besides USDT, the fiat-collateralized stablecoin, there are also 3 other types of stablecoins, differentiated by the currency or commodity they peg their value to, including; crypto, commodities, like gold, and algorithmic-collateralized stablecoin.





Strengths of Tether (USDT)



Backed and pegged at a ratio of 1:1 to the U.S. dollar, USDT is able to maintain its low-volatile nature, becoming its biggest main strength, differentiating itself from Bitcoin and other cryptocurrencies that can fluctuate by up to 10 - 20% or more in one day. Therefore, USDT can be a suitable option for low-risk investors and traders of any level, especially beginners, who need time to adjust to the nature of the cryptocurrency market.



USDT is one of the most accredited stablecoins with a market capitalization of $68.29 billion and is currently ranked at no.5 amongst all cryptocurrencies.



Apart from Bitcoin and Ethereum, USDT is one of the most widely-used cryptocurrencies in the physical world as a growing number of recognizable brands and small businesses around the world are accepting USDT as payment, Thailand is no exception.





Conclusion



Tether (USDT) is the most well-known and accepted stablecoin, a cryptocurrency with low volatility, meaning it does not fluctuate much in value due to the fact that it is pegged to a reserve asset; the U.S. dollar. Also, it is becoming increasingly popular for traders to spend their USDT on goods and services at merchants accepting USDT as a payment.





References:

Coinmarketcap, Investopedia, Wikipedia, Binance Academy

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