Tether

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31 Jan 2024

Tether (USDT) is a cryptocurrency also known as a “stablecoin” designed to maintain a stable price point at all times. USDT cryptocurrency was created by Tether Limited Company with the aim of being traded like dollars on the internet. Each token of this currency is worth 1.00 USD and is also reserved for 1.00 USD in physical reserves. Tether is used by millions of blockchain users every day to invest, preserve value, and transact across various blockchain networks without the need for a trusted third-party intermediary. Despite being a popular choice on the cryptocurrency market, Tether has a controversial history, with allegations leveled against the company for manipulating the price of Bitcoin and failing to properly manage its reserves.

What is Tether?

Tether (USDT) is a stablecoin, a type of cryptocurrency that actively attempts to keep its value constant through market mechanisms. It is used by investors who want to keep the value of their goods stable in the cryptocurrency market and use these goods without any problems, as well as to protect against the natural volatility of their cryptocurrency investments.

Tether is a government-backed stablecoin. This means that it is a stablecoin backed by a government-guaranteed currency such as USD, CAD, AUD or even Yen (JPY). Tether; USDT was created to bridge the gap between government-guaranteed currencies and blockchain asset types, while offering a transparent environment, stability and low fees to its users. Tether's value is pegged at a 1:1 ratio against the US Dollar. Tether Limited does not provide any guarantee regarding the exchange or exchange of Tether with USD.

How does Tether work?

Each Tether (USDT) traded is backed by one US dollar worth of assets. All Tethers were initially traded on the Bitcoin blockchain via the Omni Layer protocol, but can also be traded on any chain that Tether currently supports. Once Tether (a single unit of US Dollar) is processed, it can be used in the same way as any other currency or token on the chain where it was processed. Tether currently supports Bitcoin, Ethereum, EOS, Tron, Algorand and OMG Network blockchains.

Tether uses the Proof of Reserves program. This means that at any given time their reserves will be equal to or greater than the number of Tethers in circulation.

Who are the Founders of Tether?

Tether (USDT) was first launched as Realcoin on October 6, 2014 by Brock Pierce, Reeve Collins, and Craig Sellars (Omni Foundation member). This allowed users to create Tethers on the Omni Protocol, which allows users to create and invest in smart contract-based properties and currencies that sit on the Bitcoin blockchain. On November 20, 2014, Tether CEO Reeve Collins announced that the Realcoin tokens would be renamed Tether (USDT).

Tether's controversial history begins with its launch. In January 2015, Bitfinex allowed Tether (USDT) to be traded on its exchange platform for the first time. Tether volume began to rapidly increase on the blockchain network, with USD transactions via Taiwanese banks, which would then transmit the transactions to Wells Fargo. This situation continued until 2017.

On April 18, 2017, Tether's international transfers were blocked by US Banks. The lack of transparency that caused these incidents to erupt, followed by leaks such as the Paradise Papers and accusations of market manipulation, left many users worried about whether Tether currency reserves actually existed or whether the entire stablecoin would collapse. This became even worse in 2017, when withdrawals were temporarily suspended. This news caused serious volatility for USDT holders.

The amount of outstanding Tether (USDT), which was 10 million dollars in January 2017, increased to approximately 2.8 billion dollars in September 2018. Following this, in April 2019, New York Attorney General Letitia James filed a lawsuit accusing Bitfinex and Tether of misusing reserve funds to cover an $850 million shortfall. Bitfinex and Tether agreed to pay a $18.5 million penalty in 2021. Tether remains the center of speculation in cryptocurrency markets and blockchain networks, with many users doubting its liquidity and stability.

Advantages of Tether

When we consider that Tether is a cryptocurrency backed by real money, we begin to see its advantages. Since Tether is equal to 1 US Dollar, making dollar transfers with Tether will save you from the extra money transfer fee you will pay.

Tether is currently mostly used on the Ethereum blockchain. Additioanly it presence as an erc-20 in this blockchain gives USDT an advantage. In this way, Tether can be easily used in Ethereum-based decentralized exchanges.
Price volatility in Tether is almost non-existent. The real currency reserves owned by the Tether company allow USDT to always be equal to 1 USD.
Tether is easy to understand. You don't have to deal with problems like when to fall or when to rise. Because 1 Tether is always equal to 1 USD.

Disadvantages of Tether

We mentioned many positive points about Tether above, but there are also situations that can be considered negative.

Tether Ltd. Although this interesting cryptocurrency, managed by , says it is independent, we can say that it is in the markets depending on many people or institutions.

According to the company, it keeps 1 US Dollar in its safe for each Tether, but there are confusing developments in this regard. In 2018, Tether admitted that its reserves covered the USDT amount by 75 percent. There has always been a lack of comprehensive, transparent and professional oversight of Tether assets.

Although Tether claims to have a decentralized structure, there are some controversial points here too. The entire Tether (USDT) network depends on Tether keeping its currency stable at $1. If they lose this feature, huge problems may arise.

We know that another purpose of cryptocurrencies is anonymity. If you want to buy or sell Tether, you can do this by hiding yourself. However, if you want to buy or sell fiat money on Tether's own website, the accounts you use must be verified and approved.

Tether mining

Unlike other cryptocurrencies, Tether does not have a mining system. So it is not possible to mine Tether. Instead, Tether company puts each Tether into the cryptocurrency markets with a value of 1 dollar.

Is Tether reliable?

As we mentioned earlier, the company has agreed to regular audits to verify its reserves and resources. However, the organization is experiencing problems with international regulators. It is also reported in the news that he had a few problems with banks.

Tether and the major cryptocurrency exchange Bitfinex are two sister companies. There are the same names on the boards of directors of both companies. While various studies are frequently published about the manipulation of the Bitcoin price with Tether, it is also claimed that Bitfinex covered up the loss of $ 850 million in customer funds with Tether's reserves and covered up this incident. A lawsuit filed on the subject is still ongoing in the USA.

What Makes Tether Unique?

Tether (USDT) has been accepted and used for years, and although it has often fallen on hard times, it has a legitimacy that very few projects can truly achieve. It is widely accepted as a payment method and medium of exchange by many vendors and protocols in the blockchain ecosystem. Due to the size of Tether's reserves, it does not suffer from market risks such as Black Swan events. USDT also has the same luxuries as other cryptocurrency tokens on the network, peer-to-peer trading, and PoW or PoS security, making it a desirable hedged investment tool for investors and users alike.

What Are the Things That Add Value to Tether

Theoretically, the task of USDT is to provide liquidity and a protected investment tool, as it does not lose value and is not subject to depreciation. The value of Tether (USDT) depends entirely on Tether's reserves. As long as Tether is backed 1 to 1, 1 Tether will be worth $1.

How Many Tether (USDT) Coins Are in Circulation?

There are 40,805,169,352 USDT Tether tokens in circulation. This supply; It may increase or decrease depending on demand and current market liquidity.
USDT tokens can be purchased through the secondary market or exchanges.

USDT does not support USDT staking or production farming. USDT must be purchased or traded.

How to Secure Tether

Currently, USDT tokens can be traded on various cryptocurrency networks such as Bitcoin, Ethereum, EOS, Tron, Algorand and OMG Network. Since smart contracts and tokens are hosted on these blockchain networks, basic security can also be handled by nodes and miners who keep these networks secure using the Proof-of-Work or Proof-of-Stake protocol. These platforms conduct regular audits to ensure the code is up-to-date, secure and compatible with the current framework, and Tether also ensures that USDT remains compatible with each network.

Other Technical Data

Stablecoin

a cryptocurrency whose value is tied to an external reference such as the US Dollar

Proof of Work Protocol (PoW)

a piece of data that is difficult to produce but that others can easily verify.

Proof of Stake Protocol (PoS)

users holding tokens or performing transactions on the network.

Black Swan event

a completely unexpected event that is often financially devastating (can also be used in a positive context).

How to Use Tether

Tether is a stablecoin that can be purchased on many popular exchanges such as Kryptomat. Tether (USDT) can be exchanged for a variety of goods at different merchants or used to exchange for a different currency. Some users will receive USDT to lend money, buy NFTs, and participate in ICOs. Tether's flexibility makes it incredibly versatile and can be used almost anywhere a user wants to transfer funds or make transactions.

How to Choose a Tether Wallet ?

The type of Tether (USDT) wallet you choose will likely depend on what you want to use it for and how much you need to store.

Hardware wallets or cold wallets offer the most secure option with offline storage and backup feature. Both Ledger and Trezor hardware wallets offer storage solutions for USDT. However, hardware wallets require some knowledge and are a more expensive option. Therefore, it may be more suitable for more experienced users to store larger amounts of ASSETS.

Software wallets offer another option, they are free and easy to use. You can download it to your smartphone or desktop computer and can be used with or without protection. Unprotected wallets use secure elements on your device to store private keys. While useful, they are assumed to be less secure than hardware wallets and may be more suitable for storing smaller amounts of Tether (USDT) or for novice users.

Online wallets or web wallets are also free and easy to use, these wallets can be accessed from multiple devices using a web browser. They are considered hot wallets and may be less secure than hardware or software wallet alternatives. Since you'll likely be relying on the platform to manage your USDT, you should choose a reputable service with a track record of security and protection. Therefore, these wallets are best suited for traders who trade smaller amounts or are more experienced frequent users.

Kriptomat offers a secure storage solution that allows you to seamlessly store and exchange your Tether (USDT) tokens. Storing your USDT with Kriptomat gives you an enterprise-level level of security and user-friendly functionality.
When you choose our secure platform as your storage solution, selling and buying USDT or exchanging them for any other cryptocurrency will be done in just a few minutes.

Tether remains one of the most popular stablecoins on the market, while providing liquidity for transactions worth millions of dollars in value each day. Despite any controversy, Tether serves as a safe haven for users in a highly volatile market and continues to be used by millions of users who want decentralized finance between regions, countries, and even continents.

Tether making strategic investment in Northern Data

A closer look at the investment reveals very important data. Accordingly, Tether USDT's significant investment includes the purchase of 10,000 Nvidia H100 processors worth $ 427 million. Additionally, as part of this transaction, Tether acquired a 20% stake in Northern Data Group. On the other hand, it added a strategic asset to its balance sheet.

Innovative distribution of processors

These purchased processors will be used through Northern Data's cutting-edge cloud service, Taiga Cloud. Customers will have access to these advanced resources starting in the fourth quarter of 2023. This strategic move is preparing to herald groundbreaking developments in the fields of artificial intelligence , communication and cloud data storage. The plan to rent these processors to leading artificial intelligence startups is particularly striking. On the other hand, Tether USDT's commitment to technological developments is also revealed.

In its official statement, Tether stated that this investment is an important step in embracing emerging technologies. It aligns with Tether's commitment to supporting technological innovations, including blockchain , Generative AI and scientific research. Partnership not only expresses a commitment to innovation. It also emphasizes responsible financial management by protecting the interests of its user base. Together, Tether and Northern Data aim to develop accessible solutions that benefit global communities.