If you’re unfamiliar with the cryptocurrency industry, you may frequently encounter the word “USDT” and initially question if it has anything to do with US dollars. Or is it truly in USD?
What is USDT exactly? Jayz can help you learn more about USDT.
What is USDT?
Tether, often known as Tether USD, is a cryptocurrency that is based on the steady value of the US dollar (USD). USDT stands for Tether.
Users can always swap USDT for USD at a 1:1 ratio because 1 USDT is equal to 1 USD.
Tether follows a rigorous 1:1 reserve guarantee, which states that $1 in its bank account is guaranteed for each USDT token created.
To ensure transparency, users can verify their balances on the Tether platform.
Advantages and Disadvantages of USDT
The material that follows is based on Tether’s public declarations.
Advantages
- Stability: By converting fiat money into cryptocurrency, Tether anchors or fixes the value of national currencies including the US dollar, euro, and yen.
- 100% supported: The traditional currencies in our foreign exchange reserves are always backed by a ratio of 1 to 1 for each currency. Thus, one dollar always equals one dollar.
- Transparency: We always allow independent audits of our foreign exchange reserves, which are daily reported. Every transaction always relates to our reserves.
- Blockchain technology: The Tether platform was created using this technology, utilizing the security and transparency it offers.
- Broad Integration: The most popular crypto-fiat currency at the moment is Tether. Transactions on Bitfinex, ShapUNK, GoCoin, and other platforms employ USDT.
- Security: Tether’s blockchain technology offers top-notch security while adhering to global standards and regulations for compliance.
Jayz viewpoint
The fact that one USDT is equal to one USD is the most significant aspect of USDT. As a result, it retains value well in the extremely volatile cryptocurrency market.
Due to the volume and volatility of the market, USDT will still cost slightly less than the US currency.
Disadvantages
The biggest question surrounding USDT, out of all the stable coins, is whether the company Tether is willing to back the cryptocurrency with a 1:1 USD margin, as they claim.
The only response from a Tether representative was, “We have no comment on the audit.
Investing in the market carries inherent risk, and those risks are amplified when the market is as volatile as the cryptocurrency market.
However, given that USDT has been around for a while and has through plenty of bull and bear markets, Jayz thinks that it is still a very stable currency.
How to use USDT
Avoid the risk of falling other cryptocurrencies
The three most common scenarios in cryptocurrency transactions are：
- When you purchase LTC using BTC, both BTC and LTC increase in value, giving you two benefits.
- One goes up and one goes down after purchasing LTC with BTC; the loss or profit is determined by the combined loss and gain of the two.
- Both coins are declining after purchasing LTC with BTC, therefore you must accept two losses.
However, with USDT, you can instantly convert other currencies into USDT coins when the value of other currencies declines, preventing any loss in your assets.
Reverse Operation: Digital Currency Extraction
You can withdraw money without using KYC-certified cryptocurrency trading platforms by first converting the cryptocurrency to USDT coins, which can then be converted to USD through Tether or other platforms.
The 3 different types of USDT
As a coin that exists on numerous separate block chains, USDT is distinctive. Currently, the chain types Omni, ERC20, and TRC20 support USDT.
- Omni-USDT based on the Bitcoin blockchain
- ERC20-USDT based on the Ether ERC20 protocol
- 利用智能合約在波場網路發行USDT，採用TRC20協議的TRC20-USDT
Differences between USDT models
On the exchanges, there are no distinctions between the three forms of USDT, but take note that the blockchain does not connect them.
The finest security, although the transfer speed is very slow, is Omni-USDT. You may prefer Omni-USDT if you have a huge sum of money but are not in a rush.
For regular trading in the cryptocurrency market, ERC20-USDT offers medium security and transfer speeds. ERC20-USDT is the best option if you frequently trade on short time frames.
The fastest transfer speed and no processing fee for on-chain transactions are provided via TRC20-USDT. However, since the security is the lowest, it is advised for little funds.
How to buy USDT
How then do I purchase USDT? The 4 methods of purchase, together with their benefits and drawbacks, are briefly described here.
| Purchase Method | Exchange | Advantages | Disadvantages |
| Credit Card | Binance | Quick and easy | More expensive processing fee |
| Taiwan Dollar | Max | Best remittance rate | KYC identity verification required |
| C2C | Kucoin | Fast, opportunity to buy at a better price | Bank accounts may be frozen if you encounter money laundering merchants |
| US Dollar Wire | Binance | When you have a large amount of dollars on hand, the handling fee is cost-effective | Small capital is not cost effective |
USDT FAQ
Conclusion
Although USDT is more stable than most other cryptocurrencies, a day of collapse won’t always come.
The consensus on stablecoins is likely to break down if everyone wants to exchange USD for USD at once and Tether doesn’t have enough USD reserves to support it.
With more than 80% of the cryptocurrency community using it and having the highest trading volume out of all stable coins, USDT is now regarded as a stable coin.
Author Profile – Jayz
Graduated from the Institute of Finance and Economics, because he has loved basketball since he was a child, and is deeply influenced by the idol Kobe’s belief in never giving up and pursuing perfection, he has a dual identity after graduation. He is currently working as a media worker and a virtual currency lecturer. With my professionalism and passion for cryptocurrencies, I hope more people can get a small fortune from it. Likes to read all kinds of sports news and is also very interested in cryptocurrencies.
