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What is Tether ($USDT)?
What is Tether ($USDT)?

Learn about the cryptocurrency Tether and how to buy it in Best Wallet.

Updated over a week ago

Tether ($USDT) is a type of cryptocurrency known as a stablecoin and was launched in 2014.

Unlike traditional cryptocurrencies such as Bitcoin ($BTC) or Ethereum ($ETH), which can experience significant price fluctuations, stablecoins like $USDT are designed to maintain a stable value over time.

In essence, $USDT is pegged to the US dollar, meaning that 1 $USDT is intended always to equal 1 US dollar. It also can be represented as being pegged 1:1.

Tether also offers tokens pegged to a range of fiat currencies, including the Euro, offshore Chinese Yuan, Mexican Peso, and even gold. However, these have yet to generate as much market capitalisation as the US dollar-pegged $USDT tokens.

What is a stablecoin?

Stablecoins are a special type of cryptocurrency engineered to maintain a steady value, typically pegged to a fiat currency like the US dollar.

They offer stability and security in a realm often characterised by volatility. There are several types of stablecoins:

  • Fiat-backed stablecoins: Tied to traditional currencies like the US dollar, ensuring stability through tangible asset backing.

  • Crypto-backed stablecoins: Supported by other cryptocurrencies, ensuring value through collateralisation.

  • Algorithmic stablecoins: Utilise algorithms to regulate token supply dynamically, aiming for price stability.

Tether’s transparency and reserves

Tether maintains transparency by regularly updating a breakdown of its reserves holdings on its website. As of 3 March, 2024, Tether reported assets totalling $99.45 billion for $USDT.

The company disclosed that 84.58% of its reserves consisted of cash, cash equivalents, short-term deposits, and commercial paper, with 76.87% of this portion invested in US Treasury bills.

Additionally, Tether allocated 0.05% of its reserves to corporate bonds, 3.62% to precious metals, 2.91% to Bitcoin, 4.95% to secured loans to unaffiliated entities, and 3.89% to other investments.

Why owning $USDT can be useful

Owning $USDT, or any stablecoin, offers numerous advantages:

  • Stability: Shield yourself from the unpredictable swings of traditional cryptocurrencies, ensuring a secure store of value.

  • Fast and Borderless Transactions: Enable swift and cost-effective transactions globally, ideal for cross-border payments.

  • Transparency: Many stablecoins undergo regular audits, ensuring complete backing and transparency, and fostering trust among users.

  • Funds for Swaps: Swiftly swap stablecoins for other cryptocurrencies, facilitating quick reactions to market movements.

Can I buy $USDT in Best Wallet?

Yes, you can buy $USDT directly within the Best Wallet app. Thanks to the integration of Onramper, acquiring stablecoins like Tether is seamless and straightforward.

You can also buy other major stablecoins like USD Coin ($USDC) and Dai ($DAI) in Best Wallet. This can help you deepen your crypto portfolio and react to market movers.

Swapping your $USDT tokens

Swapping your $USDT for another crypto token is simple and quick in Best Wallet. Respond swiftly to market trends and opportunities by simply swapping some of your $USDT funds for a trending meme coin or strong-performing altcoin.

Learn how to swap your cryptocurrencies in Best Wallet.

Why you should own $USDT?

Tether's transparency regarding its reserves, updated regularly on its website, instils users' confidence regarding its value's stability. However, it is essential to acknowledge that while Tether is primarily used to hold value whilst the market might be dipping or volatile, there have been instances where it hasn't precisely maintained its peg to the fiat currency it's supposed to track.

One notable example occurred in November 2022, when the collapse of the exchange FTX caused Tether to deviate from its peg, plummeting to nearly $0.995 before swiftly rebounding.

Despite such occasional deviations, Tether has generally managed to maintain stability and restore confidence in its peg over time. It offers crypto traders great flexibility to swap and acquire new cryptocurrencies with ease.

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