Cryptocurrency markets are known for their extreme volatility, with prices fluctuating wildly on a daily basis. For investors looking to minimize this volatility while still keeping value within the crypto market, Tether (USDT) offers a solution.
What is Tether (USDT)?
Tether (USDT) is a stablecoin, a type of cryptocurrency that aims to keep cryptocurrency valuations stable. It is issued by Tether Limited, a Hong Kong-based company, and mirrors the price of the U.S. dollar. The token’s peg to the USD is achieved via maintaining a sum of commercial paper, fiduciary deposits, cash, reserve repo notes, and treasury bills in reserves that is equal in USD value to the number of USDT in circulation.
How Does Tether (USDT) Work?
Tether tokens exist as digital tokens built on several leading blockchains, including Algorand, Avalanche, Bitcoin Cash’s Simple Ledger Protocol (SLP), Ethereum, EOS, Liquid Network, Omni, Polygon, Tezos, Tron, Solana and Statemine. These transport protocols consist of open-source software that interfaces with blockchains to allow for the issuance and redemption of Tether tokens.
Every Tether token is 100% backed by Tether’s reserves, which includes traditional currency and cash equivalents and may include other assets and receivables from loans made by Tether to third parties. The Tether platform is fully reserved when the sum of all Tether tokens in circulation is less than or equal to the value of its reserves ².
Benefits of Using Tether (USDT)
Tether offers several benefits for investors looking to minimize volatility within the crypto market. By pegging its value to the U.S. dollar, Tether provides a stable asset for investors to hold while still keeping value within the crypto market. This allows investors to remove themselves from the volatility that can sometimes plague the digital asset market as a whole without incurring any tax implications at the time.
In addition to providing stability, Tether also allows for holders to transfer value anywhere in the world at any time for minimal cost ¹. This makes it an attractive option for use in the remittance industry and among remote workers.
Tether tokens are also widely adopted across major exchanges, OTC desks, and wallets. This widespread adoption means that Tether tokens offer exceptional liquidity on tier-one exchanges, giving traders the ability to take advantage of arbitrage opportunities in the fastest time possible.
For merchants, integrating Tether tokens opens up an array of opportunities for consumers to purchase products and services. And for exchanges, Tether tokens play a pivotal role in the digital token ecosystem and are among the most actively traded in terms of 24-hour volume .
Conclusion
In conclusion, Tether (USDT) offers a solution for investors looking to minimize volatility within the cryptocurrency market. By pegging its value to the U.S. dollar and backing its tokens with reserves, Tether provides a stable asset for investors to hold while still keeping value within the crypto market. Its widespread adoption across major exchanges also provides exceptional liquidity for traders.
