What is USDT (Tether)? Why use it in 2024?
In 2014, USDT (Tether) was launched and pioneered the stablecoin model. Today, USDT remains the premier stablecoin in the crypto market as it is the most popular and widely traded. In fact, according to a report by Cryptocompare, USDT accounted for most of the exchanges out of Bitcoin by value in 2022. As of July 2023, Tether is the third-largest cryptocurrency by market capitalisation, with a market cap of over 83 billion dollars (coinmarketcap.com).
If you’re wondering what USDT is, how it works, and whether you should use it in 2024, this post is a must-read!
THE GIST
- USDT is a fiat-backed stablecoin with its value pegged 1:1 to the dollar and backed by Tether’s reserves
- It is a useful tool for crypto holders and traders as it offers both the price stability of fiat and the innovation of blockchain technology.
- USDT serves multiple purposes: enabling seamless transfers between cryptocurrencies, facilitating efficient cryptocurrency trading, and allowing fast cross-border payments.
WHAT IS USDT (TETHER)?
USDT is a type of cryptocurrency, known as a stablecoin. It falls under the category of fiat-backed stablecoins. Its value is pegged to the US dollar and is 100% backed by Tether’s reserves. Essentially, Tether holds an amount of US Dollars proportionate to the total token supply of USDT in their reserve to maintain the 1:1 peg. This fiat currency reserve serves as collateral for the stablecoin’s value. You can read more about how stablecoins work in our blog post, ‘All You Need to Know about Stablecoins.’
USDT (Tether) was developed by the Hong Kong-registered company iFinex and was originally launched in July 2014 as RealCoin. It was later rebranded as Tether in November of the same year. Since Tether does not have its own native blockchain, USDT tokens are currently hosted on the Ethereum, Tron, Algorand, Solana, Avalanche, and Polygon blockchains.
WHY USE USDT?
USDT is a stablecoin, which is not subject to the usual volatility associated with regular cryptocurrencies. In this way, it gives crypto holders the best of both worlds as it combines the price stability of fiat with the innovative nature of blockchain technology.
As a result, it is very useful for investors or traders who want to avoid volatility while holding funds in crypto. It allows crypto users to maintain their funds’ value without converting to fiat. This can be useful when a trader wants to observe the market direction before delving in.
So why use USDT instead of USD? First, USDT is borderless and can be used anywhere in the world, unlike the USD, whose use is restricted to countries like the USA, Ecuador, El Salvador, etc, where it is a legal tender. Second, it is decentralised and is not controlled by a single individual, entity, or government. This offers a level of freedom that is not obtainable with the USD, which is centrally controlled by the US Federal Reserve.
Why use USDT instead of non-stable coins like BTC? USDT is a safer store of value and better for conducting business in simpler manner than with Bitcoin. It eliminates the potential risk of a change in the value of the agreed crypto between the time of the transaction’s initiation and execution. It also boasts faster transaction times and lower network fees than BTC.
HOW CAN YOU USE USDT?
USDT has a variety of uses. You can use it to transfer between different cryptocurrencies or move investments into or out of fiat currencies without slippage or a decrease in value between transaction initiation and execution. It can be used to make cryptocurrency trading cheaper and easier. In fact, most Bitcoin trading is done using USDT.
USDT also makes cross-border payments easier. Normally, sending money can be a rather slow and expensive process. However, through USDT, you can send money to anyone anywhere in the world quickly.
FINAL NOTES
Over the years, USDT has continued to gain significance and establish itself as an important token in the crypto sphere. Whether you’re a crypto holder seeking to avoid volatility, a trader seeking convenience and low costs, or just someone looking to conduct cross-border transactions, USDT is a versatile tool you can use. Without a doubt, its mere existence fosters accessibility, speed, and convenience in digital finance. With USDT, you can unravel a world of new possibilities in your crypto and financial journey.
EXCHANGE YOUR USDT FOR NAIRA ON VENT AFRICA!
Vent Africa continues to be the leading platform for crypto-to-cash transactions. You can convert your USDT to cash on our platform at the best rates and with no fees charged.
