Blog Crypto Tether (USDT)—Why the Crypto With a Fixed Price Is So Valuable

Tether (USDT)—Why the Crypto With a Fixed Price Is So Valuable

date November 27, 2021 time 5 min read 1260 views

Tether (USDT) might not be the cryptocurrency of choice for investors hoping to make a wild profit, but it has a valid place in the blockchain world. Not only does it maintain a stable price over time, but it also plays a crucial role in crypto projects that require a more reliable store of value and gives investors more flexibility. If you’ve ever been curious about how tether works, you’re in the right place.

We’re living in an era where cryptocurrency markets have exploded beyond (most people’s) expectations, so it’s no wonder that most of us have forgotten the original intentions behind crypto innovations. Not to create the hottest new investment product or make a small group of people rich beyond belief—but to provide a better way to move and use money. Tether (USDT) serves as a reminder of that key function.

If you’d like to enjoy the stability of the US dollar along with the decentralization benefits of blockchain technology, USDT might just pique your interest. And even if you’re a thrillseeker who shuns stability, you’ll do well to recognize the importance of stablecoins in the crypto sphere. Here’s a guide to how tether began, its purpose, and how to buy USDT.

USDT explained

Before you start thinking about how to buy tether, make sure you understand how it works.
Before you start thinking about how to buy tether, make sure you understand how it works. (Source: Tether)

Tether has the fourth-highest market rank of all cryptocurrencies, placing it just behind bitcoin and ether and just ahead of solana. Yet it gets a fraction of the mentions these crypto giants receive. Why? It has an unusual feature—it’s pegged to the US dollar.

This means USDT is a permanent mirror of the US dollar’s value, and you can always buy it for the same price. You guessed it: $1. It’s what’s known as a stablecoin, and it’s not the only one out there (although it is the biggest). Other examples include USD coin (USDC) and TrueUSD (TUSD).

Although it might sound like a strange idea, the Tether team actually just copied a concept that’s almost as old as money itself. The US dollar was once linked to the value of gold as part of the Gold Standard, and there are various national currencies across the globe that are still pegged to the US dollar, such as the Cuban convertible peso.

Tether just brought the concept to crypto. 

History of tether (USDT)

Tether was launched by a team in Hong Kong in 2014 (although it was first called Realcoin), and it was built using the same blockchain technology as bitcoin to take advantage of the technology. Now, there’s also a newer version of Tether built on the Ethereum blockchain, making it suitable for use on decentralized applications.

Usually, when we examine different cryptocurrencies, we like to go over their price histories. But in the case of tether, there’s not much to say (for obvious reasons). As you’ll see below, the line of its value over time is practically horizontal, and the only slight dips (of a few cents) are due to temporary changes in liquidity caused by the volume of transactions.

A far cry from the crazy swings we tend to see on the graphs of cryptocurrencies. 

Tether’s price history is as stable as can be.
Tether’s price history is as stable as can be. (Source: Coinmarketcap)

However, it’s worth noting that just because tether is always worth 1 USD, it doesn’t mean that it’s 100% stable. After all, the value of the US dollar relative to other currencies is always changing, and inflation is always changing its real value. 

Some have been very concerned about the recent increases in inflation in the US, so this could cause doubts about whether it’s really a good idea to peg a cryptocurrency to fiat currency. After all, one of the proposed uses of crypto initially was to offer more stability than national currencies that are at the mercy of monetary policy—to avoid travesties like the runaway inflation found in Venezuela. 

Have we done a 180?

What’s the purpose of tether?

You might be wondering what the point is of having a cryptocurrency that does exactly what regular fiat currency does. But because stability is so unusual in the crypto world, stablecoins can play a crucial role.

Most other crypto projects involve costs within their platforms, such as paying for services within crypto applications. Advertising these costs in USDT makes a lot more sense than a cryptocurrency with a price that changes every hour.

Tether’s standout feature is that it’s pegged to the US dollar, meaning it retains a constant value. (Source: Pixabay)

Tether also provides a great option for investors who want to trade different cryptocurrencies on a regular basis. There are often delays and fees involved when converting between cryptos and fiat currency, but you might not want to keep your money in (say) bitcoin when its value could drop in a few days—temporarily converting your money to a stablecoin like USDT is the perfect solution.

Because of its similarity to fiat currency, tether could even provide an alternative to conventional payment processors like PayPal for those who want to avoid the fees involved. It’s especially useful for transferring money between borders—why send money over to your relative in Mexico and face a terrible exchange rate and fees when you could simply send it in tether and let the recipient on the other end do the conversion?

Tether (USDT)—the stable crypto

USDT might not be the cryptocurrency you reach for if you want to maximize your returns, but it can still play an essential role in your portfolio and crypto investing strategy.

If you’re a crypto trader, the most likely use you’ll have for tether is as a way to give you liquidity and flexibility when you’re investing. 

However, before you go ahead and buy a load, we should note that it’s not without its fair share of controversy. There are some doubts about whether USDT is really as backed by reserves as it claims since Tether relies on third parties. In fact, a New York Attorney found that Tether’s claim the currency was backed in reserves was false—meaning maybe it’s not that stable after all.

However, it hasn’t held the crypto back too much, and Tether has claimed it is in fact fully backed. Our recommendation? Do your research first.

How to buy USDT

Although the price you can buy USDT for might be unusual, it’s the same old routine when it comes to how to buy tether. The coin is available on major exchanges, including Binance, FTX, and OKEx.

But if you’re wondering where to keep it while you trade, there’s an even better option than keeping it sitting in an exchange. 

Get the most of your tether with MyConstant 

On MyConstant, you can deposit your USDT in our multi-cryptocurrency wallet and start earning 4% APY straight away. This offer only applies if you deposit idle stablecoins and not the many other cryptocurrencies, so you’ve got an extra incentive to keep things stablecoin.

All you have to do is send your stablecoins over from your current wallet to your MyConstant wallet address—it’s a process that only takes a matter of minutes.

Other benefits include:

  • 24/7 customer service.
  • Rates as low as 6.5%.
  • Early repayments for lower rates.
  • Instant matching.
  • Store and borrow against over 70+ different cryptocurrencies.

Sound interesting? Sign up for a free account today and start buying tether.

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George Schooling

George Schooling

Borrow against your multi-crypto portfolio in minutes from just 6% APR

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