Tether (USDT) is the most used stablecoin in the world, with millions of active users daily. If you are an investor in cryptocurrencies or you want to better understand how stable digital assets work, this article will provide you with essential information about what this Stablecoin is, how it works and why it is important for the crypto market.
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What is Tether (USDT)?
USDT is a cryptocurrency known as stablecoin , which means that its value is stable and anchored to a reference asset. In the case of USDT, this asset is the US dollar, and the ratio is $ = 1 USD. The purpose of this currency was to create the "digital money of the Internet," allowing users to quickly trading in the blockchain ecosystem, without being affected by the volatility characteristic of other cryptocurrencies.
Key Functionalities:
- Protects the value of your investments against market fluctuations.
- Facilitates rapid transactions between cryptocurrencies and fiduciary coins.
- It is available on multiple blockchains, including bitcoin, ethereum, throne and solar.
Who are the founders
USDT was launched in October 2014 by Brock Pierce, Reeve Collins and Craig Sellars under the initial Realcoin . Built on the basis of the Omni Layer protocol of the Bitcoin blockchain, Realcoin was renamed Tether in November 2014.
In January 2015, USDT was integrated into Bitfinex, one of the largest crypto exchange platforms, which has contributed significantly to increasing USDT use and popularity.
How it works
USDT works on the following principle:
- For each USDT unit issued, an equivalent amount of $ 1 in a bank account is theoretically reserved.
- This mechanism ensures the stability of USDT price, which means that it does not fluctuate like other cryptocurrencies.
Why is it unique
USDT has been differentiated from other cryptocurrencies through its excellent stability and versatility characteristics. More accurate:
- It is a unique digital asset due to its direct support of equivalent reserves in US dollars.
- Along with USDC, USDT has the largest trading volume of all cryptocurrencies, being used for liquidity and hedging in crypto markets.
- It can be used for both payments and rapid exchanges between various cryptocurrencies.
Another important aspect is that USDT is widely accepted as a payment method and value deposit within the blockchain ecosystem, which reduces the risks associated with market volatility.
How to secure
Tether Security is guaranteed by:
- Proof of Reserves ( Proof of reserves ): Tether claims that all the coins emitted are covered by 100% valuable assets. These reserves include Fiat money, government securities, gold and other safe investments.
- Multiple blockchain : USDT is issued on several networks, protected by consensus mechanisms of these blockchains, such as proof-office (bitcoin) or proof-of-stake (Ethereum, throne). The security of these blockchain contributes to the security of USDT transfers.
- Periodic audition : Even though there have been transparency controversies, Tether works regularly with several audit companies to provide attestations to his reserves.
- Offline storage (Cold Storage): Financial scholarships and institutions that manage large amounts of USDT often use offline storage to protect funds from online attacks.
How many tether coins (USDT) are in circulation
Currently, according to the data provided by Coingeko, a number of USD 143,937,546,292 .
Tether (USDT): Price history
Since its launch in 2014, USDT has gone through multiple transformations and controversies. Next, we will present the history and evolution of USDT price over various key periods, highlighting the major evolutions, but also the challenges encountered.
2015 - 1026 onset period
USDT became part of the Crypto ecosystem in 2015, when the Bitfinex platform decided to integrate it into its operations. During this period, USDT remained stable, with a constant report of $ 1, due to the insured reserve guarantees.
However, USDT's use has been limited, most traders hesitating to adopt a stablecoin in the absence of a clear regulation attesting the promised reserve.
Key landmarks:
- Putt input on Bitcoin Blockchain (Omni Protocol)
2017 - 2018: accelerated growth. The first controversies appear
Since 2017, the demand for USDT has increased exponentially, influenced by the growing popularity of Crypto market. The value of the USDT market increased from several million to over $ 2.8 billion by the end of 2018.
However, this period of rapid growth was not without scandals. In 2018, Tether was accused of lack of transparency regarding his reserves and market handling.
Key landmarks:
- The transactions dominated by USDT represented up to 80% of the Bitcoin trading volume in certain months of 2018.
- In October 2018, a moment of uncertainty caused the temporary decrease of USDT under US $ 1 ratio. This incident has also started more questions about the credibility of Tether.
2019 - 2023: dominance and resilience
During this period, USDT has strengthened its position as an essential element in the cryptocurrency industry. A key point was in 2019, when the USDT trading volume exceeded even Bitcoin, turning it into the basic asset for most spare platforms.
Despite the controversies and legal investigations, including the fines received from the CFTC for false reserves, Tether has resisted and maintained its position as the main stablecoin on the market.
Key landmarks:
- Creating USDT on popular blockchain such as Ethereum, Tron and Binance Smart Chain.
- Launch of the Bitcoin mining initiative based on renewable energy in Uruguay in 2023.
- Cooperation with authorities to help combat illicit activities worth USD.
2024 - Present: diversification and consolidation
Currently, USDT continues to set new standards for Stablecoins. With a record profit of $ 5.2 billion in the first half of 2024, the company diversified its operations, launching divisions dedicated to Bitcoin mining, artificial intelligence and blockchain education.
Key landmarks:
- Major investments in innovative technologies such as brain-computer interfaces.
- Plans for launching a new stablecoin related to AED indicates the increasing interest of Toter to diversify and explore new markets.
- The expansion of government involvement through strategic collaborations in states such as Georgia and Switzerland.
USDT vs. USDC: What is the best stablecoin for you?
What is USDC?
Launched in 2018 by Circle and Coinbase giants, USDC was created to provide a safer and more regulated alternative to its market competitors. Each USDC is supported in a proportion of 1: 1 US dollars or Active Cash equivalent.
TEASTS OF USDC:
- Regulation and transparency: USDC reserves are audited by independent companies.
- Compliance with Little (Markets in Crypto-Assets): USDC respects the regulatory standards imposed by the European Union.
- Global accessibility: available on major platforms and more blockchains, including Ethereum and Solana.
Circle has been based on transparency from the beginning to gain investor confidence. All reserves are supported exclusively of dollars and treasury titles and offer a high degree of safety.
The differences between USDT and USDC
Transparant and regulation
- USDT: Criticized in the past for the lack of a complete reserve audit, has raised questions among investors.
- USDC: Monthly audits made by Grant Thornton LLP, which provides investors an extra safety and clarity.
Use in transactions
- USDT: More popular for fast and cheap transactions in emerging markets.
- USDC: preferred in regulated markets, due to the compliance with the financial standards.
Volume and acceptance
- USDT: It has the largest volume of transactions and liquidity.
- USDC: Although not as widespread as USDT, it grows rapidly in popularity due to users' confidence.
Stability
Both coins are designed to maintain 1 -USD parity. However, in March 2023, USDC suffered a significant deviation from the established parity, decreasing to $ 0.90, against the background of the financial difficulties of Silicon Valley Bank. Despite this event, USDC quickly returned to the nominal value.
What to choose: USDT or USDC
Choose USDT if:
- Prioritize increased volume and liquidity.
- You need fast transactions, especially on platforms with extensive support for Tether.
Choose USDC if:
- Looking for maximum transparency and safety.
- You follow the strict regulations in the European Union markets.
Both USDT and USDC are essential stablecoins in the Crypto world, each with strengths and limitations. The correct choice depends on your specific needs, the level of risk you want to assume and the objectives you have as an investor.
The main differences between Tether (USDT) and other cryptocurrencies
Understanding the differences between Tether (USDT) and other cryptocurrencies is important to anyone who wants to enter the crypto. Here are some key points that an investor should consider:
The stability of the price
- USDT is designed to have a stable price (about $ 1). This provides safety to users who want to avoid the volatility of the crypto market.
- Other cryptocurrencies, such as Bitcoin or Ethereum, are extremely volatile and can fluctuate massively in a short period of time, which means a higher risk for investors.
Main use
- USDT is mainly used as a valuable reserve or for fast transactions between other cryptocurrencies. For example, many users convert Bitcoin or Ethereum to USDT to protect their earnings from market fluctuations.
- Cryptocurrencies such as bitcoin are considered more a long -term value deposit
- Other cryptocurrencies, such as Ethereum, on the other hand, are known for their ability to facilitate smart contracts and decentralized applications, instead of being focused on stability.
Volatility vs. reduced risk
- With USDT, the risk of high losses due to fluctuations is reduced to a minimum, which makes it very attractive for investors at the beginning of the road.
- On the other hand, investments in other cryptocurrencies can provide great earnings, but it involves a considerable risk.
The benefits and limits of USDT use
The benefits of USDT use
Remarkable stability
- Unlike Bitcoin, USDT value is not affected by market news or future regulations.
- Allow traders to keep their capital without major risks.
Fast transactions and low costs
- Many users use USDT to make fast money transfers, especially in markets where traditional transactions would involve big commissions.
Availability on multiple platforms
- Because USDT runs on multiple blockchain (Ethereum, throne, Binance Smart Chain, etc.), it is accessible to users around the world.
Useful in trading
- Traders use USDT to "freeze" the winnings without completely withdrawing them from the Crypto ecosystem. For example, if the price of a crypto asset drops suddenly, they can change that asset to USDT to protect their investment.
The limitations of USDT use
No matter how attractive it is, any financial asset comes with risks. What is important to know about USDT limitations:
Questions related to USDT reserves legitimacy
Over the years, Tether has been criticized for the lack of transparency regarding its financial reserves. Although the company states that each USDT is covered 1: 1 dollars or other reserves, there have been controversies that have raised question marks.
The Commission for the trading of Futures contracts on goods (CFTC) accused Toter in October 2021 of making false or misleading statements of reserves supporting USDT stablecoin. Specifically, CFTC found that Tether has falsely claimed that each USDT is held 1: 1 US dollars, while in reality, its reserves were not always completely supported by cash. In October 2021, the CFTC reached an agreement with Tether, which included the payment of a civil fine of $ 41 million and the obligation that the latter will cease any further violation of the Law on the exchange of goods (the one) and of the CFTC regulations.
The risk of loss of funds to USDT transfer
Because USDT is issued on different blockchain, users must be careful about the chosen network. Sending USDT on a wrong network can lead to loss of funds.
Unclear regulations
The cryptocurrency market is still in the process of regulating in many countries. Thus, changing regulations could affect how USDT is used.
Why use Tether (USDT) if you are an investor
Investors choose Tether because of its unique benefits. If you wonder why USDT would fit your strategy, here are some arguments:
Volatility protection
The cryptocurrency market is famous for the rapid and unpredictable fluctuations. Tether offers a safe gateway at this time. For example, if Bitcoin drops suddenly, investors can change their funds to USDT to protect their capital.
Perfect for global transactions
Have you ever tried to send international money through banks? The process can be slow and expensive. In contrast, with USDT, you can carry out transactions in a few minutes, with minimum or even non -existent commissions in some cases.
Easy to integrate into various portfolios
Experienced investors use stablecoins, such as USDT, to diversify portfolios without taking additional risks. Also, for certain trading strategies, USDT serves as a solid base to buy or sell other cryptocurrencies.
How to start using USDT
Starting USDT use is simple, especially if you follow these steps:
- Choose a digital wallet - you need a USDT compatible wallet. Some of the most popular options are Trust Wallet, Metask or hardware wallets such as Ledger.
- Buy Tether (USDT ) - you can buy USDT using the Abarai , simple and fast, taking advantage of advantageous and assistance courses in Romanian.
USDT and the future of stablecoins
As the adoption of cryptocurrencies continues to grow worldwide, stablecoins as USDT become more and more relevant. They serve as a bridge between traditional finances and the crypto world, offering a balance between stability and innovation. For investors looking for fast, safe and stable solutions, USDT continues to be a popular option. However, it is essential to remain informed and make conscious choices before investing.
If you are interested in starting using Tether or other cryptocurrencies but you have questions, we are here to help. Depart your knowledge about Crypto investments and discover valuable resources on the Abarai blog. Editor's choice:
