Tether - the first and most famous stablecoin
Tether (USDT) is the first and most famous stablecoin in the crypto world. Other stablecoins include True USD (TUSD), Paxos Standard (PAX), and USD Coin (USDC). Tether tokens are assets that move through the blockchain as easily as other cryptocurrencies, and we call them stablecoins because they offer price stability, and are pegged to fiat currency(s). This offers crypto traders as well as funds a solution that provides a lower level of volatility while trading within the crypto market.
Tether is pegged to the US dollar, and as stated on its official website – “it is 100% supported with its own reserves”. In general, Tether, as a transparent society, regularly publishes records of current reserve assets on its pages. This stablecoin is owned by iFinex – a Hong Kong-registered company that also owns the crypto exchange BitFinex. Tether was launched under the name RealCoin in July 2014, then rebranded as Tether in November 2014, and began trading in February 2015. Although originally based on the Bitcoin blockchain, Tether now supports more than one protocol, such as: Bitcoin’s Omni and Liquid protocol, but also Ethereum, TRON, EOS, Algorand, Solana, OMG Network and Bitcoin Cash (SLP) blockchain protocols. The fact that Tether tokens exist as digital tokens built on different blockchains, creates a prerequisite for issuing Tether tokens on different blockchains with different capabilities depending on the transport protocol used.
Popularity and release of Tether
Due to their priorode – Tether tokens allow users to make transactions across different blockchains – without the inherent volatility and complexity commonly associated with digital tokens. That’s why Tether tokens have grown in popularity in recent years, with a market capitalization of over $77 billion (as of December 2021). As of May 2022. Tether becomes the third largest cryptocurrency after Bitcoin (BTC) and Ethereum (ETH), and the largest stable cryptocurrency with a market capitalization of nearly $83 billion.
Apart
- According to the total trading volume, Tether is the number one cryptocurrency (the total volume is higher than trading Bitcoin and Ethereum combined);
- Tether (USDT) is a. a stablecoin or tiga stablecoin that strives for a stable valuation;
- Tether is used by investors who want to avoid cryptocurrency volatility, while still “holding” funds within the crypto system;
- Tether’s creator paid in 2021. In 2001, he was fined nearly $60 million to settle for two regulatory investigations alleging he mismanaged and misrepresented his reserves.
Understanding stablecoins
Tether belongs to a fast-growing type of cryptocurrency. Crypto breed) which we call stablecoins. The goal of such currencies is to keep the price of their tokens stable, so they most often tie it to the price of a traditional fiat currency such as the US dollar. Note, Tether also issues tokens pegged to the euro, offshore Chinese yuan, and gold; But mostly – Tether crypto the stability of its USDT tokens is tied to the US dollar. Pegging to a traditional currency, often backed by collateral reserves consisting entirely or mostly of a tied currency – aims to ensure that stablecryptocurrencies are not as susceptible to price volatility as more speculative cryptocurrencies like Bitcoin. To be as transparent as possible about its stability, Tether updates the breakdown of its reserves on its website daily. From 12. [Getty Images] he reported assets of US$81.3 billion for Tether. On the same date, Tether reported holding:
- 83.74% of its reserves in cash, cash equivalents, short-term deposits, and commercial papers;
- 4.61% in corporate bonds;
- 5.27% in secured loans to unrelated entities;
- 6.38% in other investments including digital tokens.
How does the perception of cryptocurrency stability affect usage?
Stable value promotes the use of stablecoin as a medium of exchange that is almost as certain as conventional money. As noted above,stablecoins.have definitely contributed to less risky investments in the cryptocurrency markets. Their rapid growth in popularity stemmed from the fact that stablecoins are also used by decentralized (DeFi) lending and staking protocols in May 2022. The price of Tether briefly fell to just $0.96, after the value of another stablecoin – TerraUSD ( UST ), whose issuer is not related to Tether, nor to BitFinex, also fell. But the price of the Tether token soon returned to over $0.99, and Tether stated that it continues to meet redemption requirements that are 12. May reached 2 billion tokens at a ratio of 1:1 to the US dollar.
Why is Tether useful?
Tether is extremely useful because it helps investors move their funds between the cryptocurrency market and the traditional financial market, while reducing volatility precisely because of its attachment to the US dollar.
How did Tether “fare” during the FTX collapse?
Tether’s USDT token – or the largest stabilcoin by market value, lost its firm attachment to the dollar as market volatility continued to harass the crypto sector after the FTX collapse. Tether dropped 4% to about 96 cents. The issuer also tried to freeze a bunch of USDT tokens, which could be affected by an active law enforcement investigation. The reserve, worth roughly $46 million, was in an FTX-owned crypto wallet. A Tether spokesman declined to comment on specifics, but noted that the company openly cooperates and communicates with authorities, including the U.S. Department of Justice. Be that as it may, the FTX scandal isn’t the only blow Tehther has “survived.” Let’s also not forget about the Terra collapse, after which the amount of funds deposited in Tether recovered, as the volatility of cryptocurrency decreased. In addition to the decline in the value of Tehther as a stablecoin, the value of the largest cryptocurrencies is also currently falling. Thus, during November, Bitcoin fell by about 17%, while Ether fell by 19.3%. On this day, Tether’s value is very close to 1 US dollar, and you can track the movement of values in real time online. Paolo Ardoino, Tether’s chief technology officer, recently said on his Twitter account that the company has processed about $700 million in ransom demands in the past 24 hours. This fact definitely favors the long-term stability of Tether.
How is Tether as a stablecoin different from Bitcoin?
As we have already explained, stablecoin is a cryptocurrency that aims to maintain an unchanged price. Bitcoin, on the other hand, is the world’s largest cryptocurrency whose value is variable in nature. The concept of stablecoins was introduced only to reduce the volatility effect of Bitcoin and other cryptocurrencies, and to raise the level of uncertainty when investing in crypto. Bitcoin is one of the most popular cryptocurrencies whose price rises and falls in a short period of time – which is why traders are waiting for the right time to exchange their Bitcoins. Stablecoins whose value is only equal to any fiat currency, help exchange cryptocurrencies such as Bitcoin, and generally stabilize the volatile crypto market.
How is Tehter as a stablecoin different from Bitcoin?
As we have already explained, stablecoin is a cryptocurrency that aims to maintain an unchanged price. Bitcoin, on the other hand, is the world’s largest cryptocurrency whose value is variable in nature. The concept of stablecoins was introduced only to reduce the volatility effect of Bitcoin and other cryptocurrencies, and to raise the level of uncertainty when investing in crypto. Bitcoin is one of the most popular cryptocurrencies whose price rises and falls in a short period of time – which is why traders are waiting for the right time to exchange their Bitcoins. Stablecoins whose value is only equal to any fiat currency, help exchange cryptocurrencies such as Bitcoin, and generally stabilize the volatile crypto market.
How and where can you buy Tether?
Tether tokens can be bought and sold on cryptocurrency exchanges including Binance, CoinSpot, Bitfinex and Kraken, but you can also buy/sell it with us – at two kriptomat locations in Zagreb. Check out all the details of our currently available locations here. On our web you can also find instructions on how to use kriptomat, and if you get stuck somewhere – contact us directly via Instagram. To make it easier for you, we have prepared separate instructions for buying as well as for selling all available cryptocurrencies through kriptomat. Go into your crypto story and remember – don’t be distracted!
Until the next crypto blog,
Your Kriptomat.hr Team
