The grandfather of stablecoins, USDT was launched in 2015. Each Tether is supposedly backed by a US dollar in a bank account, a claim that has been argued and tested many times. USDT continues to rank in the top 10 cryptocurrencies and is widely accepted as payment at online retailers.
But what is Tether crypto? How does Tether work? And, how does USDT compare to other cryptocurrencies like Bitcoin? Our guide below will answer these questions and more.
What is USDT?
Tether, also known as USDT, is a stablecoin. Stablecoins are coins that are supposed to be pegged to the rate of a stable entity, such as the US dollar, which can act as a safe harbor in times of market volatility.
All stablecoins operate on essentially the same premise: the easiest way to put a fiat asset on the blockchain is to issue it as a token. Everyone has to trust the backing and the value of that token. It’s important because when you need to liquidate your stablecoins, you don’t want the money in the vault to be missing. Other popular stablecoins include TrueUSD (TUSD), USD Coin (USDC), Dai (DAI), and Pax Dollar (USDP).
The premise of Tether is simple enough. A trusted entity, namely Tether Limited, holds a bunch of cash for people and issues tokens. Each whole token is worth 1 whole dollar. Unlike regular dollars, you can split Tethers up into eight decimals.
A Brief History of USDT
In 2012, a new whitepaper (“The Second Bitcoin Whitepaper“) from J.R. Willett was published in which he described the idea of building new crypto coins on top of the already existing BTC blockchain. His initial implementation idea was with the crypto “Mastercoin,” now rebranded as Omni. This technology would go on to become the basis for Tether USDT.
The first tokens were distributed in October 2014 under the name “Realcoin.” Realcoin would be renamed Tether the following month when it was also announced that USDT would be backed by US dollars, euros, and Japanese yen.
In 2015, Tether was added to the popular crypto exchange Bitfinex. Tether saw turmoil in 2017 when concerns about the crypto’s transparency and questions regarding its currency reserves were raised. The company is now obligated to file quarterly transparency reports per court order.
By 2018, Tether was accounting for nearly 10% of the trading volume of Bitcoin. In 2019, USDT surpassed BTC in trading volume. Today, Tether continues to rank as one of the most popular cryptocurrencies used around the world.
How Does Tether Work?
Initially, Tether worked on the already existing Bitcoin blockchain. Again, the biggest difference here is that the USDT tokens are pegged to real-world currencies on a 1-to-1 basis and are backed 100% by Tether’s reserves.
Over time, Tether continued to grow and expand. Tether tokens now exist as digital tokens built on various blockchains, including Algorand, Ethereum, EOS, Liquid Network, Omni, Tron, Bitcoin Cash’s Standard Ledger Protocol, and Solana.
USDT is not mined, nor is it decentralized, like other cryptos. Instead, the Tether company itself issues and destroys tokens using the economics of supply and demand.
How to Buy Tether
To purchase Tether crypto, you will need to do the following:
Step 1: Find a Trusted Crypto Exchange
Your first step towards buying USDT is to find a crypto exchange. At top crypto exchanges, you’ll be able to buy, sell, and trade your Tether coins Popular exchanges include:
Once you have found the exchange you want to use, you will need to create an account and verify your identity. Verification may include giving personal information like a birth date, photo ID, and a credit/debit card number.
Step 2: Purchase Tether Crypto
You will need to deposit fiat money into your exchange account via a credit/debit card to make your crypto purchase. If you already have crypto of some kind, you can also use that on the exchange to purchase your Tether. Once you have made your deposit, you will need to decide on the amount of Tether coins you wish to purchase. Enter the amount and submit your request, and you will see your USDT in your exchange wallet.
Step 3: Secure Your Tether in a USDT Wallet
Once you have your Tether coins, you will want to put them someplace safe and secure. Do not leave your USDT crypto in your exchange wallet! Instead, you will need to place your Tether in a crypto wallet. You can find hot/software wallets and cold/hardware wallets. Hot wallets, like Lite.im, will offer you more convenience, while cold wallets, such as Square, offer more security. If you are staking your Tether, you will probably want a cold wallet. But if you are looking to use your USDT for trading other cryptos, a hot wallet will be your preferred option.
Step 4: Decide How to Use Your Tether
Many investors with USDT choose to hold their crypto due to its price stability. Remember, your Tether is directly tied to the US dollar, so it offers reduced risk compared to other cryptocurrencies. If you are looking to accrue interest, you can also engage in the moderately risky choice of staking. You can also choose to trade your USDT on the crypto exchange for other currencies, including fiat and crypto.
How to Mine Tether
The USDT crypto cannot be mined, but there are other alternatives you seek out to earn free Tether coins.
Tether Faucets
Crypto faucets are a great way to earn free USDT. These platforms will reward you with various small amounts of crypto coins by completing small tasks such as completing surveys, solving puzzles, and playing games.
Popular Tether faucets include:
Earn Tether Playing at Crypto Casinos
If playing online games is more your speed, you can certainly add to your USDT by placing wagers at online crypto casinos. At top casinos, you will find online slots, table games, live dealer games, and originals like Plinko, Crash, and more. The goal, of course, is to wager a little in hopes of scoring some big wins.
Some of the best crypto casinos that allow you to play with Tether are:
The Advantages of Using Tether Crypto
BTC vs. USDT
| As of 08/2022 | Bitcoin (BTC) | Tether (USDT) |
| Price | ≈ $23,600 USD | ≈ $1 USD |
| Market Cap | $459,213,771,997 USD | $65,939,585,004 |
| Total Supply | ₿21,000,000 | 69,157,777,036 USDT |
| Algorithm | (PoW) Proof of Work | – – |
| Max Block Size | 1 MB | 1 MB |
| Block Time | 10 minutes | 10 minutes |
| Block Reward | 6.25 BTC | – – |
Tether Price Predictions
While Tether may not be the most exciting crypto, it is certainly the most popular stablecoin out there. Investors in USDT can feel assured knowing that it is tied directly to the US dollar. The downside here, of course, is that its value will never go $1. But this does seem to make it the cryptocurrency ideal for digital transactions.
So what do you think? Is Tether for you? Or will you be investing in one of the many other cryptocurrencies to choose from?
FAQ:
What is Tether crypto?
Tether is a popular stablecoin directly linked to the value of the US dollar ($1). All Tether tokens are pegged at 1-to-1 with a matching fiat currency. This makes USDT a lot less of a risk for investors.
Is USDT and tether the same?
The Tether coin is also known as USDT on exchanges. USDT is the abbreviation for the Tether crypto.
What is the Tether price prediction?
Tether is not predicted to exceed the value of $1 USD. Its developers specifically designed it to be pegged with a 1-to-1 value to the US dollar, so analysts do not predict to see it rise in value the way other cryptos do.