Everything you need to know about Tether (USDT)

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Tether (USDT) is a cryptocurrency with a value that is meant to mirror the value of the U.S.D. The idea was to build a stable crypto that can be used like digital dollars.
Coins that aim to of be a stable dollar substitute are called “stable coins.” Tether is the most popular stable coin and even acts as a dollar replacement on lots of popular exchanges.
According to their site, Tether converts cash into cryptocurrency, to anchor or “tether” the value of the coin to the price of national currencies such as the US dollar, the Euro, and the Yen.
Same as other cryptos it uses blockchain. Unlike other cryptos, it was initially [according to the official Tether site] “100% backed by USD” (USD is held in reserve). Right now there are some upgrades that has changed this fact.
Every Tether is supposed to be backed by dollars kept in reserve in a 1:1 ratio. This being a big selling point and a potential problem in the otherwise rather untethered and decentralized crypto space.
Ideally, this means Tether trades at $1 on all exchanges and can be used instead of a dollar. However, in practice, the price tends to fluctuate a little.
Tether advantages
The primary use of this coin is that it offers some stability to the otherwise volatile crypto space and offers liquidity to exchanges that can’t deal in dollars and with banks. For instance to the sometimes controversial but leading exchange Bitfinex.
With USDT you can move into a coin that holds a stable value like USD, even when you are on an exchange that doesn’t deal in fiat currency. Many exchanges also offer USDT as a trading pair, thus allowing users to buy coins with a coin that mirrors USD. That is very useful, especially when Bitcoin’s price is volatile.
Tether disadvantages
There are some real considerations and concerns with Tether that any user should be aware of. There is concern that getting fiat for USDT might not work as intended at some point. Moreover, the crypto economy is now “tethered” to a somewhat centralized dollar substitute. Additionally, there are concerns based on the fact that some of the same people that run Bitfinex also run Tether (Bitfinex is a leading exchange that enables margin trading using USDT as collateral and that puts a lot of power in the hands of the few in this sense). Traders must that Tether isn’t always backed by the 1:1 ratio as claimed (and instead that perhaps there is some fractional reserve lending occurring). Etc.
In other words, there is some concern over the centralized nature of Tether.Additionally, users should remember that the public doesn’t have a way to fully verify the system that Tether has attempted to show via its documentation, public blockchain, and public audits.
The problems and benefits here all revolve around the same concept. That is, Tethering of the cryptocurrency space to a dollar substitute, controlled by a central middle-man, and then setting expectations based on that.
This problem of trust and centralization was largely the exact problem crypto was trying to avoid in the first place.
The underlying problem then is that the company Tether is not a decentralized distributed smart contract, although they use blockchain technology; they are a company run by potentially fallible people (who are asking us to trust them). The same is true for Bitfinex. Bitfinex isn’t a decentralized peer-to-peer exchange; they are a company.
At the end of the day, their centralized nature doesn’t make them inappropriate. It simply puts them more in the category with Ripple and XRP then it does with Bitcoin
Still, to put concerns aside and to stress the bottom line: Tether is really useful in practice due to its steady value, ability to be used in trade for many of the world’s major exchanges, and its potential to offer liquidity to exchanges.
To the extent that everyone agrees a Tether is worth $1, and especially to the extent that it holds true across exchanges such as Bitfinex, is to the extent that the utility of Tether outweighs its potential issues.
To conclude: Tether has worked rather well so far, and that has earned it a place as one of the top 20 coins by market cap.

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