All you need to know about Tether cryptocurrency
When and why Tether was created?
Tether (USDT) – is an unusual cryptocurrency that was created by Tether Limited Company in the beginning of 2015. Initially, it was designed as a cryptographically protected electronic equivalent of fiat (ordinary) currencies, namely dollar. Tether tokens are technically similar to the traditional cryptos by the majority of core features (for instance, blockchain use for decentralized data storage and processing). At the same time, there are important distinctions between Tether and “classic” cryptos; the major distinctions include Tether centralized emission and Tether managed rate.
Tether is not just about “crypto-dollars”
Abbreviations indicating specific Tether cryptocurrency varieties are formed out of the denomination of the “initial” fiat currency plus letter T. Thus, tokens that are equivalent to USD by price are defined – USDT; tokens equivalent to EUR – EURT, and tokens equivalent to JPY – JPYT (a number of denominated tokens can increase as far as necessary). However, talking about Tether cryptocurrency, USDT is generally meant due to significant capitalization and role of the other tokens; USDT capitalization makes more than 450 million USD.
Every new USDT token launch requires 1 USD (fiat-made payment) to Tether Limited; EURT token – 1 EUR and so forth. If you buy tokens on crypto-platforms, not emitent-based, the USDT price will be the same. In other words, Tether initial purchase is made through Tether Limited and never vice versa. You can still buy already issued tokens from the third parties.
Tether advantages. How to exchange Tether?
1. Tether can be used as transit cryptocurrency to transfer ordinary money to contractors cheaper and faster than it is done using bank payments. Transactions with Tether are performed with the same speed as transactions with any other crypto. If a user’s online wallet is provided not by third parties but Tether Company, then, fees are not paid for money transfer between users’ online wallets. However, fiat deposit is still charged with minor fees, usually equal to 1 USD. The use of blockchain-platform is quite advantageous, including the highest security of the payments.
Certainly, you can use other cryptos like bitcoin instead of USDT as a kind of transit funds. USDT transfers narrow down the risks of funds lost as result of the potential cryptocurrency rate “drop”. By the way, USDT rate is stable enough.
2. You can not only purchase USDT from Tether Limited but also re-sell it. You are transferring your USDT on Tether Limited website in the course of the mentioned deal. After this, the fiat equivalent of the tokens is paid off on your bank card but for withdrawal fees. USDT tokens that have been withdrawn in fiat in this way are no longer backed up with the appropriate amount of fiat funds and the company eliminates these tokens as an order requires (refer to #1 next section).
By the way, Tether sell operations can be more advantageous and less formalized on crypto-platforms.
3. A number of crypto-platforms enhanced their performance after the integration of Tether. These are crypto-platforms that could not include regular USD, for example, to the number of trading instruments due to the peculiarities of their legal status, inability to get license enabling to trade USD, or account keeping difficulties.
4. The greatest part of the fiat currencies, received by the start-up developers in exchange to Tether, is used as back-up funds ensuring market rate stability of the coins. Currently, back-up funds make up to 450 million USD, which can be compared to the total amount of Tether in circulation.
5. A number of leading crypto-platforms have already opened trading on USDT. Recently, a reputable crypto-platform EXMO joined the number of Tether-friendly platforms providing trading on USDT. EXMO users have an opportunity to buy and sell Tether for USD and RUB, exchange Tether to BTC and ETH, or store it in Tether wallets provided on EXMO. USDT enables users to transfer easily USDT from one crypto-platform to another without any additional, complex, and long-lasting bank procedures. USDT makes purchasing USDT with no fees on the initial crypto-platform, transferring it to another platform, and selling USDT for needed currency. Furthermore, if a user applies EX-CODE , he/she can transfer USDT with no fees to another user on EXMO.
6. There is another important feature about USDT – it can be easily integrated to online-wallets of other cryptos via specific program. Versions of bitcoin-wallets integrating Tether already exist.
Tether disadvantages
1. The matter is that you can deposit/withdraw USDT anonymously. However, USDT purchase and sell operations for fiat money on company website require deanonymization. You need to provide document scan confirming user identity to verify your account. The documents should be translated in English. However, you can buy USDT on some crypto-platforms including EXMO without verification due to a regular registration is enough.
2. USDT rate is still changing from time to time. Though volatility seldom goes higher than 2-3%, it cannot be called zero anyway.
3. Trading pairs with USDT do not all exercise sufficient percentage of liquidity on Tether crypto-platforms. In other words, it is more difficult to sell an order on some pairs, which is higher than a few thousands of USDT, at a reasonable price. Liquidity can be still better in online-exchanger providing worse USDT buy/sell rates.
4. Unfortunately, Tether independent mining is not foreseen. That means that Tether mining is exercised exclusively by Tether-founder company.
5. Tether Limited is not charged to buy out tokens whenever user requires. In most cases, it is quite easy to buy and change Tether to fiat money. However, Tether Limited keeps open an option to complicate the mentioned operations.
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