At that point in crypto market development, hundreds of cryptocurrencies already have been created. The majority of these currencies are so-called “altcoins”, but, for example, our today’s guest belongs to another crypto currency type called “stablecoin”.
In this article we will talk about the stablecoins’ features, basic work principles, and about the pros and cons of Tether, particularly.
What are the distinctive features?
First of all, Tether and other stablecoins don’t have a blockchain system. In people’s terms, Tether is a Bitcoin blockchain superstructure that uses information about transactions to convert crypto coins into Tether currency via Omni Layer protocol. Also, it means that you don’t have to really worry about money safety because Tether token is secured pretty as much as Bitcoin.
It may seem strange, but pegging to valuable equities like gold or fiat currencies is a distinctive feature of all stablecoins, and Tether is not the exception. The main feature of Tether coin (USDT) is represented by alignment with the US dollar. Thus, a company-emitter exchanges 1 USD into 1 USDT.
Well, where is the meaning?
Tether digital currency has been gaining its popularity because of the demand for safe and stable ways to store money during bad times on the crypto market.
But why don’t just convert cryptocurrency into fiat currency? The reason is obviously simple – a commission. Short-time traders have to exchange their crypto values dozens of times per day to avoid losses and take profits. But paying a pretty big commission for converting gets really expensive, and here Tether crypto currency and other stablecoins provide a good solution.
Also, an alignment with the US dollar makes USDT one of the most stable digital coins – its market volatility commonly ranges between 1.0010$ and 0.9990$. By the way, it means that there is no space for profitable trading, but let’s be honest – it is not the reason for the existence of USDT.
So, let’s arrange all the advantages and disadvantages of Tether in one list
- Very low market volatility
- Low commission for Tether exchange
- Alignment with the US dollar which brings 100% stability
- High security level
- Based on Bitcoin blockchain system
- Fully transparent
- High prevalence
- No space for trading
- Only 74% of USDT coins are backed by real money
- Tether coins aren’t considered to be a money from a legal point of view
- No guarantees
- Coins can’t be mined
- Only one company-emitter (Tether Limited)
Actually, Tether is a good and secure method for storing digital money. But we would recommend you to be careful – if something goes wrong with the company-emitter, your money may be in danger. Even despite all the risks, Tether remains the most popular and safe stablecoin in the world.
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