Tether (USDT): What Are Its Benefits And What Concerns Does It Face

Tether, the largest stablecoin and third-largest cryptocurrency by market value, is widely used by 75% of investors due to its convenience, speed, and low-cost transactions. Tether is a link between virtual assets and fiat money, tied to the US dollar, making it a safe choice for storing funds or sending money without fear of sudden changes in its value. The utility of USDT extends beyond its value, as it plays a crucial role in the global crypto and financial industry.

Tether was launched in 2014 on the Omni Layer protocol and has been adopted by Ethereum and Tron. Its creation aimed to provide a stable cryptocurrency, avoiding volatile swings. Tether peggs each coin to a US dollar, meaning that one USDT equals one US dollar. This ‘fiat collateralisation’ has made Tether a valuable tool in the cryptocurrency market, facilitating smoother transactions and offering a digital equivalent to the US dollar.

Though Tether is a cryptocurrency that provides stability in the volatile market, it might face some risks regarding its transparency. The company says that each USDT is supported by actual US dollars in reserves, but investors are unsure about this claim because there are no regular audits to confirm this. There are still questions about the true nature of Tether’s reserves and assets, as no third-party company has conducted a thorough inspection. Global governments and regulators are carefully looking at how stablecoin issuers follow the rules against money laundering and know-your-customer regulations. This has led some people to support the idea of centralising stablecoins.

Why Tether Is So Popular

Exchanges and companies widely accept Tether payments due to their stable and predictable price. This makes them a safe choice for cryptocurrency transactions. Companies can accept USDT OMNI on their websites using Tether Gateway, a cryptocurrency payments processing platform. Tether transfers are quick, allowing users to close deals quickly and for those without convenient access to banking.

Transaction costs can be high, especially for fiat, but there are no transaction fees between Tether wallets, making them a preferred choice for consumers. This is especially beneficial for those who receive payments in crypto, like migrant workers or foreign employees.

Stablecoins can streamline worldwide payments, especially in countries with weak financial systems. USDT offers long processing periods and blocked funds, allowing users to access new financial solutions in the DeFi ecosystem. Stablecoins are also a great way to exchange goods and services and connect with those who don’t have easy access to banks, such as people living in rural areas or unbanked.

USDT has recently been used as a source of aid for areas affected by natural disasters and the pandemic, as it removed the inconvenience of transferring physical items and currency due to the difficulty of accessing banks.