Tether (USDT) is a cryptocurrency whose exchange rate is always as close as possible to 1 US dollar (USD). Such coins are called stablecoins (“stable coins”). This is a great way to enjoy all the benefits of the blockchain space (decentralization, independence, privacy) without having to worry about losing money due to the volatility of the crypto market. Using or storing Tether is like using a regular dollar, but on the blockchain. Today, the editors of Profinvestment.com propose to consider all the ways to withdraw and cash out Tether when you need fiat money.
What blockchain chains does Tether operate on?
The Tether token was originally launched on the Bitcoin blockchain (Omni protocol). But from the moment the stablecoin became more popular, it began to expand to other blockchains in order to speed up work, reduce fees, or add new usage functions.
At the moment, the number of supported chains exceeds ten - among them are popular blockchains for developing DeFi applications, proprietary chains of crypto exchanges, etc. The most popular formats hosted on blockchains are:
- Bitcoin (example address 1FJ7sEqf2eHAZWs3fBoKXrFvN7kUkKTkJx)
- Bitcoin Cash (example address 1CzyuvQXYCLrFDJtJ57D5B6n2vPtFsq13c)
- Ethereum (example address 0x88122D927057F27c971B15661Ddf409763EeccaC)
- Tron (example address TAUN6FwrnwwmaEqYcckffC7wYmbaS6cBiX)
- Binance Smart Chain (example address 0x2465176c461afb316ebc773c61faee85a6615daa)
- Algorand (example address SN3FSQVLLNWSI3I7QCMQEQN6L42OW5RP4FNM6BNOZHBRKHODSQYU4MUPKE)
- OKExChain (example address 0xfebfe31f128bf4d95dcd7f8f2b741739aa676bb6)
In any of these blockchains, Tether (USDT) has the same value, properties and uses, however, you need to be careful when choosing wallets and exchanges for storage/exchange, because services usually do not support all formats.
Retrospective
The project was launched in 2014 by Tether Limited. The creator of the currency is Stanley Hainsworth, who previously worked in marketing for Starbucks. At first, the coin had a different name - it was called Realcoin. Realcoin turned out to be uncompetitive, and after some time the developers changed the name and operating technology.
In early 2015, Bitfinex introduced Tether, a cryptocurrency that was positioned as a solution to the problems of interaction between digital coins and the banking system. Tether tokens were almost immediately launched on one of the most famous crypto exchanges – Poloniex.
Prospects. USDT vs other stablecoins
2020 was sometimes called the “year of stablecoins,” and 2022 is not far behind. Such coins are becoming increasingly popular, not to mention that banks in many countries around the world are in the process of launching their own official government stablecoins.
Will Tether be able to retain its audience, or will it be supplanted by more advanced assets? This is influenced by the following factors:
- Centralization. This is one of the main disadvantages of USDT, BUSD, USDC and other coins issued by companies. Essentially, everything is controlled by a central organization, whose decisions can negatively affect the system as a whole. As an alternative, decentralized stablecoins such as DAI are emerging.
- Security. Users must be sure that in a critical situation (technical problems, hacker attack) their money will be refunded. Therefore, centralized companies keep reserves in their accounts equal to or greater than the amount of stablecoins issued into circulation. In the case of Tether, the reserves consist partly of USD and partly of other assets such as shares. Not everyone likes this, since company shares are also quite volatile investment instruments.
- Application. For example, USDT is most often used by traders and investors, USDC by institutions and corporations, and DAI by traders focused on decentralized finance.
Thus, all existing stable coins have their own characteristics and advantages. At the moment, there is no reason to believe that USDT will lose its audience, especially considering that it is the third largest cryptocurrency in existence by capitalization.
How to earn Tether?
In 2015, Tether developers recognized the need for a cryptocurrency that would provide a connection between investors, buyers and sellers using digital and fiat money. This is how the first of the stablecoins appeared – USDT. So, to earn USDT you don’t need:
- Buy expensive equipment - ASICs, farms on video cards (tether cannot be mined);
- Buy a masternode or join a pool for forging.
The coin was not intended to be mined or minted, and is not affected by either mining or forging.
Tezer does not have such a property that is inherent in cryptocurrencies as high volatility. Therefore, the opportunities to play on exchange rate instability are limited. But the risks inevitable in the field of cryptocurrency circulation have been reduced. Thus, cryptocurrency can be transferred to Tether at any time, eliminating the threat of exchange rate fluctuations.
Stable digital coins will not make huge profits overnight and will not bankrupt you overnight. However, investing in such a currency makes sense.
Tether: features
Stablecoins solve two main problems for users of cryptocurrency exchanges:
- On almost all exchanges, cryptocurrency can only be purchased with another cryptocurrency. If you have dollars and want to buy ether, then you will need to buy bitcoins with dollars and then ethereum with bitcoins. Part of the amount will be lost on paying two commissions. With Tezer, the exchange process is simpler - you simply exchange USDT for ETH and pay a minimal commission (less than 1% of the exchange amount).
- Some exchanges trade cryptocurrencies in pairs with fiat money. But in order to put money on your balance, you need to go through a lengthy verification procedure and pay a commission. It’s the same with withdrawing your balance in fiat money – you have to wait and pay. Tether is fiat money that has already been converted into digital format. By sending them to your balance or withdrawing funds from the exchange, you pay the same commission as if you were withdrawing any other altcoins.
The possibilities of using USDT coins are not limited to transactions on cryptocurrency exchanges. With their help, you can quickly and profitably transfer money to other users. Transactions on the network take place instantly, and no commission is charged for transfers between wallets registered in the Tether system.
Connection with the Bitfinex exchange. Bitcoin rate manipulation in 2017
Tether is often accused of artificially inflating the Bitcoin price in the second half of 2022. Then new USDT tokens were “printed” at breakneck speed, and it was probably these millions of dollars that Bitcoin was purchased for, which led to an abnormal increase in the rate. Each release of a new batch of USDT preceded a new upward impulse for Bitcoin, until finally the price of one coin reached 20 thousand dollars.
It was then that investigations began into Tether’s connections with the Bitfinex exchange. It turned out that the same people manage these projects. This information was subsequently hastily deleted from the official Tether website.
Theoretically, this group of people could create new tokens and use them to buy Bitcoin and other cryptocurrencies on the Bitfinex exchange, and on other large cryptocurrency exchanges too. This operation inexorably raised the rate of the first cryptocurrency, which led to frantic growth and a further protracted correction.
Currently, Tether is undergoing a number of inspections by US regulatory authorities. They are trying to find out whether the project management was involved in such large-scale manipulations.
In addition, the news reported several times that Tether conducted an audit and found out that the company’s accounts actually contain all the dollars that are backed by each token. It is just not mentioned that the companies that conducted the audit do not have licenses or the necessary qualifications for this. That is, there is no trust in their data and the value of such an audit is in great doubt.
Tether (USDT) Cryptocurrency Review
First of all, it is worth mentioning that the Tether coin is not a unique cryptocurrency by its origin, but a token that runs on the Ethereum blockchain. By looking at the Coinmarketcap website, you can see the statistics of this asset. The Tether cryptocurrency consistently occupies high positions in the ranking of the best. The project's capitalization is $2.6 billion, and the price of one coin is around $1.
Tether cryptocurrency always costs one dollar
A total of 2,830,109,502 USDT coins have been created (and their number is constantly growing). Tether cryptocurrency mining is not possible. New coins are released by developers as needed.
How to create USDT on the TRON network (TRC-20)?
If you are going to use the USDT token in the Tron cryptocurrency blockchain, then you need to add it to a wallet that supports TRX. The best option is TronLink. Next, I will tell you in detail how to add a cryptodollar to it.
In TronLink
As many readers of my blog already know, TronLink is presented as a browser extension and mobile application. Regardless of which option you use, the procedure for adding a USDT token will be identical. After logging into your wallet, use the “+” button.
Click the search button, and then in the list that opens, select the token you need - USDT.
On the Tronscan website you can check the smart contract address to ensure that you have added the correct token.
Your USDT wallet number will be exactly the same as your TRON number. It is this number that needs to be inserted in investment projects, exchangers, etc. In addition, you need to have some Thrones on your balance to pay the transfer fees.
When was USDT introduced?
The world saw the first USDT in 2015. The creator was the company Tether Limited, whose founders were Philip Potter and Giancarlo Devasini. At the very beginning, the coin was called Realcoin and was no different from other cryptocurrencies. But then the developers carried out several updates, thanks to which the crypt began to have a number of advantages, which helped it gain popularity in the cryptocurrency market.
In 2018, the number of Tether in the world amounted to 2.3 billion tokens . This number of coins was believed to be 100% backed by US dollars. But the US Commodity Futures Trading Commission accused Tether Limited that not all of the tokens were backed by fiat money.
During the investigation, it turned out that only 74% of the coins issued by the company are backed by American dollars. According to the company, the remaining number of coins is secured by other assets and loans. But there is information online that the company’s assets and loans are not able to cover the remaining 26%. Nevertheless, 74% security is a fairly good indicator with which you can conduct financial activities.
Using coins on cryptocurrency exchanges
Exchange of dollars to Tezer is popular. Tokens are issued at the moment the national currency is deposited into the account. When funds are withdrawn from the system, the coins are " erased ".
Tether is used on crypto exchanges as a reliable alternative to Bitcoin. This is especially true for platforms that do not work with fiat funds, for example, Binance. USDT allows you to take profits in dollar terms without fear of a rate collapse.
To fund your Binance exchange account with USDT cryptocurrency, you need to go through several steps:
- Register on the site.
- Go to your profile and click “ Calculated cost ”, after which you will automatically go to the “ Deposits/Withdraw cash ” tab.
- After entering the name of the currency, click the “ Deposit ” button - funds will be credited to the specified address.
- To withdraw money, you need to do the same steps, but instead of “ Deposit ” click “ Withdraw ”. It is important to focus on the commission amount and input and output limits.
Go to Binance website
To trade, you need to go to the “ Shopping Center ”. Here you trade at market value or through pending orders. Today the USDT to dollar rate is 0.99 USDT.
How and where to buy USDT?
As I already noted at the beginning of the article, the USDT token is in great demand among traders, so this asset is liquid and there are no problems in buying or selling it. Moreover, you can purchase a coin in several ways:
- Exchanges - almost all major modern exchanges support one or another USDT format, some work with several standards at once. In this case, the user can, at his own discretion, choose either a centralized exchange or a decentralized one.
- Exchanger - on the BestChange monitoring site you can select the exchange direction you need and find a lot of proven exchangers with favorable rates.
- Official website – as an option, you can purchase tokens for fiat on the official Tether website, however, this procedure is not easy and requires verification.
When purchasing USDT, be very careful and do not forget about the existence of tokens of several standards. When purchasing coins through an exchanger, you need to use your Tron or Ethereum wallet address as the sending address.
Other ways to store USDT
In general, storing USDT is possible in any wallets that support the standards on which the token was issued:
- Tether Omni – Omni Wallet, Omni Core;
- Tether ERC-20 – Trust Wallet;
- Tether TRC-20 – imToken, Math Wallet.
Some users prefer to store USDT tokens in hardware wallets or exchanges. The last option is convenient because many exchanges support several USDT formats at once - the user only needs to indicate when carrying out transactions which token format he needs.
However, it is important to understand that by choosing such convenience, you are sacrificing the security of your funds, so it is better to keep your money in your own wallet rather than in exchange accounts.
How Omni Layer works
Tether was launched in July 2014 and was initially based on the Omni Layer protocol. Omni Layer itself started in September 2013 as a project called Mastercoin. The latter rebranded in January 2016 and already then became known as Omni. The project positioned itself not as a cryptocurrency, but as an add-on to the Bitcoin protocol, giving the user additional functionality.
Here's a description of Omni Layer on GitHub.
The Omni Layer is a communications protocol that uses the Bitcoin block chain to enable features such as smart contracts, user currencies and decentralized peer-to-peer exchanges. A common analogy that is used to describe the relation of the Omni Layer to Bitcoin is that of HTTP to TCP/IP: HTTP, like the Omni Layer, is the application layer to the more fundamental transport and internet layer of TCP/IP, like Bitcoin.
That is, Omni is a protocol that uses the Bitcoin blockchain to add additional capabilities. These are smart contracts, custom currencies and decentralized Peer-to-peer exchanges.
A simple analogy here is that Omni is for Bitcoin what the HTTP protocol is for the fundamental TCP/IP transport. Only in our case, Bitcoin creates a connection between network participants (TCP-IP), and Omni transfers data (HTTP) and allows us to use functions that Bitcoin does not have.
Based on the powerful Bitcoin network, Omni automatically gains many benefits. The main ones are security (for example, from a 51 percent attack) and the stability of the BTC network. In turn, Omni nodes are also Bitcoin nodes. As a result, the security and reliability of the Bitcoin network also increases.
Essentially, all coins created in Omni Layer are “tokens” on the BTC blockchain. Accordingly, any wallet or exchange that supports BTC transactions automatically supports Omni token transactions. And without the need for additional software upgrades or modifications.
Every Tether transaction on Omni is recorded as a BTC transaction, shares the same transaction hash with it, and is confirmed on the Bitcoin network. The average transaction confirmation time is 10 blocks.
Here's an example: this Bitcoin transaction in block 592601 contains a transfer of almost 350 thousand USDT. And here is a link to the Omni Explorer.
There are not many tokens based on Omni Layer: OMNI, MAIDSAFE, Synereo and SafeExchange. Tether is, of course, the most successful project and accounts for over 95 percent of all network transactions.
Token distribution on the Omni Layer protocol
It is logical that Tether is actively used on crypto exchanges: they store the largest amount of the dollar equivalent in their wallets.
The richest Tether wallets. Source: wallet.tether.to
If you look at the screenshot above, it will be clear that over 90 percent of the entire USDT supply in the Omni Layer was concentrated in the hands of 0.2 percent of participants.
Using the BTC blockchain also has its downsides. The transaction speed here is not high - the estimated time between BTC blocks is approximately 10 minutes. Plus there is a pretty decent commission and a block size limit.
Who benefits from using Tether?
Tether cryptocurrency is beneficial to many exchanges. It is used to allow users to trade against a fiat dollar, without having to bother working with real fiat. To do this, it is most convenient to use an intermediate asset pegged to the dollar, which has low volatility and a constant price than other digital currencies that change their value every 5 minutes.
Using fiat money for transfers between exchanges is also not profitable, since at the moment exchanges are not entirely legal trading platforms for selling digital shares. In general, their relationship with states and banks is not very good, in addition, transfers of fiat funds from one deposit to another take a very long time (especially when the transfer is made between different countries). Therefore, using stable USDT is the most profitable and convenient option for calculation.
The Tether cryptocurrency is very useful for traders and large investors in the market who have a lot of bitcoins and other various cryptocurrencies in stock. These people make their living by trading digital assets, buying coins at low prices and selling them at high prices.
After concluding another profitable deal, they need to lock in the profit. However, withdrawing money to fiat, paying huge commissions and experiencing other problems, is not very convenient. The easiest way to do this is to use Tether, which has a constantly stable price even during market corrections.
In general, Tether cryptocurrency is a very convenient tool for temporary diversification of your cryptocurrency portfolio, which is very popular and easy to use.
However, you should not regard Tether as a single and reliable tool for saving your investments. There are also some risks here, which we will talk about in the next paragraph.
