Last updated on January 19th, 2024 at 12:22 pm
In recent years, cryptocurrency has been the talk of the globe, and there’s been growing interest from people trying to invest in these digital assets. However, finding the right token or asset to pick from the numerous ones can be daunting.
This article will concentrate on the Tether stablecoin, investigate the background of its stability, offer information on some of the top brokers that support Tether, and make predictions on whether the value of the United States Department of the Treasury (USDT) will surpass that of Bitcoin.
What Is Tether?
Tether is a blockchain-based digital currency with a 1:1 value correlation to the US dollar. This implies that every coin is worth the same as a dollar, giving the blockchain stability and accounting for regular fiat currencies.
Moreover, Tether tokens have various forms based on the blockchain powering them. They are available on popular blockchains like Algorand, Ethereum, BNB Chain, Tron, and Solana.
Furthermore, Tether is a reliable cryptocurrency that allows users to deposit funds on trading platforms. For example, to trade crypto, OANDA, a forex broker that offers trading services accepts USDT as an ERC20 coin, a TRC20 coin, and a BEP20 coin to conveniently transfer money into and out of your account.
The Tether coins will annotate the blockchain they operate on with various symbols, depending on the underlying network. For instance, there are USDT (ERC20) tokens for Ethereum Tether, USDT (TRC20) tokens for Tron, and USDT (BEP20) tokens for BNB Chain.
Understanding Stablecoins
The goal of stablecoin is to eliminate price swings caused by market fluctuations, making cryptocurrency more suitable as a form of savings than as a high-risk investment.
In a crypto market as volatile as the one we are currently experiencing, where it is difficult to convert between fiat currency and cryptocurrencies such as Bitcoins, stablecoin offers a source of liquidity. The US dollar-backed crypto tokens such as Tether USD (USDT), USD coin (USDC), and Gemini dollar are among the most prominent stablecoins.
Some stablecoins rely on other assets as collateral (backing), such as yen, euros, and commodities like gold and silver.
Why Is Tether Stable?
Let’s hop back a decade to understand the reason behind USDT stability. Tether was built in 2014 as an actual coin, and the first tokens were released on the Bitcoin network in 2015. Its success as the first stablecoin ushered in a technological breakthrough pioneered by a respectable founding team, which included Bitcoin Foundation director Brock Pierce.
As the first stablecoin, it battled a series of controversies before the adoption became widespread. It was accepted on subsequent networks like Polygon, renowned for offering alternatives to Ethereum’s exorbitant fees, sluggish performance, and lack of scalability.
Tether’s stability can be traced to further adoption on smart contract platforms like Solana and Algorand.
Following a popular legal battle with the New York Supreme Court, USDT has become more transparent by revealing the content of its reserves while providing regular updates.
What Should You Assess Before Trading Crypto with USDT?
Source: D-Keine, via iStock
Despite having many troubles in the past, Tether continues to be a relatively stable cryptocurrency. And to quench your curiosity, if you’ve been following the discussion from the beginning, USDT is so stable because it is backed by real-world assets such as the US dollar.
It is worth noting that Tether is still the most popular stablecoin, and although new competitors have emerged over the years, it is used extensively for trading. Tether can also be used to obtain loans and interest.
To enjoy this benefit, entrust forex trading brokers who accept Tether (USDT) as a fast and convenient method of transferring money into and out of your account.
Tether enables cost-effective international transfers with decentralization, avoiding financial regulators’ scrutiny as transactions occur across various blockchains.
Can Tether Overcome BTC in the Future?
It is a common phenomenon that people predict the future value of any cryptocurrency with complete precision. But when assessing the possibility of a drop in the value of USDT and if there’s potential for it to surpass Bitcoin’s value, there are a few factors to consider.
First, bitcoin and Tether are not classified under the same category regarding features and function. Bitcoin is a speculative asset backed by the market’s supply and demand, while Tether is a utility token backed by fiat currency (US Dollar). Thus, its value ought to be constant and barely fluctuate.
Source: Torsten Asmus, via iStock
Things To Consider for Tether’s Continued Stability
- Reliance on Tether’s reserves: The company’s ability to maintain sufficient reserves of fiat cash to support the Tether in circulation is essential to Tether’s peg to the dollar. Should the reserves run out, Tether’s value might decrease.
- Attention by regulators: Tether has already been subject to regulatory attention, and any new actions by regulators may affect its value.
- Market conditions: Despite being a stablecoin, Tether may be damaged if the larger cryptocurrency market suffers.
According to Paolo Ardoino, Bitfine, and Tether’s CTO, the goal of Tether is to be the dollar and not beat it. He believes that the role of the stablecoin is to ensure customers always get a one-to-one redemption to the dollar. It is practically impossible for Tether to surpass Bitcoin in value as they have different underlying features.
USDT Stability: Rising Above Market Fluctuations
The advent of Stablecoins marked a milestone, providing users with assets less susceptible to market volatility and the familiarity of fiat transactions on the blockchain.
Like any pioneering development, Tether (USDT) encountered challenges in preserving reserves and ensuring stability for users engaging in transactions on decentralized exchanges. It’s crucial to recognize that Tether, being a stablecoin, doesn’t emulate the intrinsic characteristics of native crypto assets such as Bitcoin and altcoins like Ethereum, Solana, and Matic.
