The term “stablecoin” is not a new one, since it has been around for almost seven years now. A stablecoin is exactly what the name implies: It is a coin that is supposed to be stable in price and resistant to volatility. The supposed stability comes from the backing of the coin by assets known to have stable prices. In fact, almost anything that has stability on the market can be used as backing for a stablecoin. The most popular assets used as backing for stablecoins are currencies like the US dollar, the euro, and the Swiss franc. Other assets often used to back stablecoins are gold, oil, precious metals, and other commodities.
There is an ongoing debate as to whether some of these assets can be considered real backing for stablecoins, since gold is inherently even more volatile in price than some cryptocurrencies. Still, the crypto market is quite content with stablecoins, since they provide a relatively safe asset that can retain most of its value compared to most other altcoins and even the leading cryptocurrencies. Stablecoins, like USDT, are traded, exchanged, and purchased on crypto exchanges all around the world, and there are many ways to do so.
What is The Tether USDT Stablecoin
The precursor to what we know as Tether, the most popular and controversial stablecoin, is a token that was called Realcoin back in 2014. Realcoin was launched on the Bitcoin blockchain by Brock Pierce, Reeve Collins, and Craig Sellars, the co-founders of a Santa Monica based startup. Since then, Tether has grown to become the most popular stablecoin on the crypto market. Though the company once stated that the Tether stablecoin was backed by the US Dollar, on March 14, 2019, they announced that Tether was changing its backing to include loans to companies affiliated with Tether.
The Tether coin was originally meant to be backed by the US Dollar at a 1 to 1 ratio. Though the company itself continuously states that the token is not a financial instrument, the crypto market perceives it as such, since its value has remained relatively unchanged throughout its existence. Despite the controversy that USDT is not backed by sufficient assets and that the company failed to provide an audit of its reserves, the price has remained stable. The price decreased and hovered at the level of $0.90 in October 2018, but that drop was largely attributed to speculation rather than real doubts about the stablecoin’s viability.
Regardless of the trials and tribulations that USDT has experienced, investors and crypto enthusiasts are eager to fill their wallets with it and are continuing to buy, sell, and trade it. Tether is currently the most popular instrument for risk-hedging on the crypto market, thanks to its stability and the faith investors have in the real backing the coin has in terms of US dollars.
How to Buy USDT
Tether can be freely purchased with fiat currencies, BTC, or ETH on virtually every large cryptocurrency exchange. As with all crypto assets, users and investors must first have a wallet to have their assets credited, and they must pass all the relevant KYC procedures that apply to the trading of crypto exchanges.
USDT is usually purchased with fiat currencies, since many investors see the stablecoin as a secure means of value accumulation. Some sanctioned countries with beleaguered economies and national currencies are currently experiencing a boom in crypto and stablecoin acceptance, as their populations are losing faith in the national currency and converting their savings into crypto assets. As such, Tether, as the most popular stablecoin, can be purchased with fiat using a debit card, credit card, or wire transfer on any of the following exchanges:
The other most popular way of purchasing the Tether crypto coin is via cryptocurrencies. One of the reasons for the popularity of this approach is that users often wish to convert their volatile crypto assets into a more stable medium. USDT can be purchased with popular cryptocurrencies like Bitcoin and Ethereum, as well as some other popular coins, on the following exchanges:
It is important to note that some exchanges, like Exmo and Kraken, even allow for the purchase of USDT through PayPal via a transfer to the user’s wallet account.
Try out the Xena Exchange terminal to see how the process of trading Tether and the ensuing operations works.
Why Buy USDT woth Fiat?
Fiat currencies are still the norm for financial transactions worldwide. Fiat maintains its dominant position for a number of reasons. First, fiat is what the vast majority of people hold as savings and what they receive as salaries. Second, the fiat infrastructure is considerably more advanced and widespread than that of the crypto economy.
Like other crypto assets, USDT can be purchased with US dollars, the euro, or any other fiat currency that can be transferred to an exchange for trading operations. The most important reason why USDT should be purchased with fiat is that the conversion rates are both accessible to most users and easily predictable.
The second reason why the best way to buy USDT is with fiat currencies like the US dollar is that Tether is traded on the vast majority of exchanges against other fiat currencies, meaning that users will be able to quickly and efficiently convert their Tether assets into any other fiat currency at a predictable conversion rate, since the exchange rate of Tether is stable at 1 USDT = 1 US dollar.
Where to Buy USDT Using a Credit Card?
The USDT coin can also be bought using a credit card. There are a number of exchanges that allow such purchases and operations. The most popular places for buying USDT with a credit card are the following exchanges:
There is no unified approach to buying the Tether coin with a credit card, since each platform has its own rules. Nonetheless, the approach is almost always the same, as users have to open an account, tie their credit cards, and perform a confirmation procedure. It is not advisable to trust platforms immediately, and you should always double check, since fake websites are quite common.
Why Buy USDT with BTC/ETH?
The crypto market embraces variety and volatility. The de facto basis of the crypto economy is the availability of Bitcoin and Ethereum coins in the wallets of crypto enthusiasts. Since many users have these coins, it is reasonable for them to want to convert these savings into more stable assets like Tether in light of the so-called “crypto winter.”
First and foremost, when traders by the Tether coin with cryptocurrencies, it’s typically to combat the volatility of those assets. As a result, it is highly recommended that users hedge their risks by fixing the profits. The main advantage of Tether as a stablecoin is that it is tied to one of the most understandable and stable assets in the world – the US dollar. Since we live in a world of fiat funds, it is most convenient to evaluate the results of any trading operations through the use of a stable asset like Tether.
For now, the best way to buy USDT is to use other, more volatile cryptocurrencies. The reason is simple: It will allow for value retention and subsequent conversion at predictable exchange rates.
The Tether coin can be traded on the vast majority of prominent exchanges, such as Xena Exchange, Binance, Bittrex, and others. The Binance exchange enables purchases and trading of USDT in the United States and other countries through Binance, despite the popular belief that trade is forbidden in the US. Trading Tether is just as simple as any other coin, though most traders prefer to keep the coin, as it has a stable rate. USDT is most often used a reserve currency for converting earnings from other sources on the crypto market.
Start trading USDT on Xena Exchange to see how the process works and what results can be achieved by converting other currencies into Tether.
There are many stablecoins in the world, and many of them can be considered ideological heirs of Tether. One of the most famous and controversial alternatives is the Venezuelan Petro. The coin is said to be backed by Venezuela’s gold, oil, diamond, and natural gas reserves. Still, the coin, which was announced in December 2017, has faced stiff resistance from the US government and is not being allowed to develop its full potential.
Another alternative is the TrueUSD (TUSD). Unlike Tether, TrueUSD has regular audits and is based on the Ethereum blockchain. Since the coin has proven its reserves and is traded on 27 exchanges, investors have much more confidence in it. Though the coin still has a comparatively low market cap, it is slowly catching up with the leaders of the stablecoin charts.
The USD Coin, or USDC, is another runner-up on the stablecoin charts. Also based on the Ethereum blockchain, USDC was introduced by Coinbase and Circle. It is also growing fast and reached the top 60 in less than two weeks after its launch. The numerous partnerships USDC has concluded with different companies is propelling it up the charts as well.
The youngest of the stablecoins is Huobi USD, which is available only on the Huobi exchange. Huobi USD is a pairing for TUSD, USDC, PAX, and GUSD on Huobi. Deposits made in these stablecoins on Huobi are converted to Huobi USD. Though limited in its use, Huoni USD is highly convenient for the exchange’s users, since it provides stability for their assets on the platform.
The availability of a large number of alternatives to USDT and the appetite of crypto users for them is because Tether is shrouded in controversy. Since the company has not produced any audits or evidence of its real backing of the coin by actual US Dollars, there is a high likelihood that the coins are not actually backed by anything, and that is a risk many crypto users are not ready to take.
The Yays And Nays
If we look at the Tether coin as an asset that has been available on the market for quite some time and that is being traded extensively, we cannot overlook its disadvantages and advantages.
The advantages are that it is widely available on many exchanges and that it retains its value despite the controversies. As such, USDT serves as a reliable asset in times of heightened crypto volatility.
The disadvantages are that Tether has no proven asset backing and that it could lose its value at any time. In addition, USDT has been marred by many leading experts of the industry, which tarnishes its reputation.
During an interview with CCN, expert Alex Krüger said that Tether and its price volatility will not affect the crypto market greatly:
“Circle and Gemini have the authority to issue stablecoins. Therefore, they are considered more trustworthy than other exchanges because there is lower credit risk associated to trading with them. The percentage of Tether will mostly migrate to Gemini (GUSD) and Circle (USDC).”
He also said:
“I don’t think Tether is going to crash, but there is the possibility that it will happen, as there always is. It simply means too much of something can be bad, even when a little is good. To illustrate, a person can drink two glasses of water and feel refreshed, but if that same person is forced to drink 15 glasses, it might be a problem.”
On the other hand, other crypto experts, like Mati Greenspan, are prophesizing other prospects for USDT. In a recent release, Mati said:
“While the crypto markets remained dull and bearish, the traders in crypto space were shocked to see the stablecoin Tether (USDT) take 4th place in the market cap rankings. While it has been reiterated that the market cap metric is not a great way to measure the value of crypto assets, seeing USDT rise up the ranks so quickly could be a very telling sign of investor sentiment. Generally speaking, if traders are fearful of volatility in the crypto market and want to reduce exposure, the default option at many exchanges is to store the funds in USDT.”
To conclude, it is safe to say that USDT is a good asset that can and should be used by those who trade actively and wish to fix their earnings in fiat, since the Tether coin can be easily converted into USD and other currencies. If trading is not on your mind, then you can use Tether as a portfolio diversification tool and a means of value storage and accumulation for a small portion of savings.
USDT is not an investment tool, since its value is stable and not subject to speculation. As such, it is more of a trading instrument and a facilitator of operations.
If our readers have already understood the point of investing in USDT as a store-of-value currency, then we welcome them to try out the simple and convenient process through the Xena Exchange terminal.