Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain
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Summary:
- What is the Tether Platform and how does it work?
- Advantages of the Tether exchange.
- Tether's past, present and future price positions.
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The Tether USDT Platform
Tether is a Hong-Kong based company that issues the USDT is a stablecoin that mirrors the price of the US Dollar. Tether. A stablecoin refers to a stable-value cryptocurrency. The token is pegged to the US Dollar, the peg is achieved via maintaining a sum of fiduciary deposits, cash, commercial papers, treasury notes and reserve repo notes in reserves that have the same US Dollar value as the number of USDT that are in circulation.
Tether has a current market capitalization of $73.198 billion, more than 73 billion USDT in circulation and no maximum supply.
The aim of the Tether platform is to combine the unrestricted nature of cryptocurrencies (transferring of assets between parties without the need of a financial intermediary) with the stable value of the US Dollar.
Tether USDT was originally launched as Realcoin in July 2014 through using Omni platform. Realcoin was built as a second-layer cryptocurrency token built on Bitcoins blockchain, which was then updated later to work on Ethereum, EOS, Tron, Algorand and OMG blockchains.
In recent times, stablecoins are sometimes being used as a hedge against inflation, instead of keeping fiat currency in an account earning small interest where users can lend their stablecoins and earn yields between 3-20%.
What makes Tether USDT unique?
Tether guarantees to its users that their USDT coin value will remain pegged to the US Dollar, this is guaranteed through the promise of updating the reserves with the value of USDT that is issued, ensuring that the 1:1 ratio always exists. Therefore ensuring that USDT is fully backed up by cash and cash equivalents.
USDT is protected from the normal price fluctuations that occur daily in the cryptocurrency market, making USDT one of the more reliable cryptocurrencies to hold value. This feature of USDT makes the coin a safe-haven asset for cryptocurrency investors, during periods of high volatility in the cryptomarket, investors can leave their crypto assets in Tether without having to cash out into US Dollars. In addition, USDT provides an easier way to transact a U.S Dollar equivalent between continents, regions, and countries via blockchain, without having to worry about a slow, expensive intermediary like a bank or another financial institution.
Security of USDT
Tether does not have its own blockchain, instead operates as a second-layer token on top of other cryptocurrencies’ blockchains: Ethereum, Bitcoin, EOS, Tron, Algorand and OMG, the hashing algorithms of these blockchains secures Tether USDT.
Advantages of the Tether platform and USDT
- Price stability: 1 USDT = 1 US Dollar.
- User transactions are extremely cheap, sending money from one USDT account to another has no chargers with it. There is a small fee attached for other transactions like trading USDT for other cryptocurrencies or fiat currencies.
- Highly integrable currency, it is easy for users to integrate USDT into other exchange platforms.
- It is successful in protecting the funds of traders and potential cryptocurrency traders as it allows users to quickly trade more volatile cryptocurrencies like Bitcoin in a more stable cryptocurrency.
Past, present and future price of Tether USDT
After going to market, the price of the USDT coin originally saw a substantial amount of growth, and then saw a lot of volatility. Since then due to its peg to the US Dollar, the price of Tether USDT has remained relatively stable over the years.
The current investor risk off sentiment has not affected Tether USDT the same way it has to some of the other cryptocurrencies, instead Tether has mainly held its position in the market. However, in May, Tether’s price did drop, this reflected the irrationality of the investors in the market during the recent sell off sentiment.
Looking a few years ahead, some analysts predict that the price of Tether USDT will rise to above $1 and hold around that position for the large part of the decade. This forecast is based solely on numerical data, due to the volatility of the cryptocurrency market, it is difficult to make an accurate forecast for the price of USDT despite its increased stability.
USDT Price Chart
Purpose of creating Tether
- Its users do not have limitations when making transfers, Tether users receive all the benefits of owning cryptocurrencies without the high fees or any major problems.
- The Tether platform allows exchanges to maintain a high level of liquidity and protection against the volatility of the crypto market.
- It offers a way to protect investments from traders within an exchange platform.
- In terms of volatility, the Tether platform offers a secure form of payment.
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Sources: academy.bit2me.com, finance.yahoo.com, coinmarketcap.com, capital.com
