Tether (USDT) is a stablecoin backed in by the US dollar (USD). It was launched in July 2014 under the name Realcoin, a layer-two token built on the BTC blockchain. USDT is issued by the Hong Kong-based company Tether. You can always redeem one USDT for one USD, equally you can also ‘mint’ USD into USDT at the same rate.
Tether USD is a virtual currency different from most other cryptocurrencies – it is a stablecoin. It follows the value of the US dollar. Stablecoins such as USDT, which is the market leader in terms of market capitalisation, have seen a huge rise in adoption in the last few years but what is USDT?
Tether was an altcoin known as RealCoin. However, the name was quickly changed. Tether defines itself as a service that transforms dollars and other major world fiduciary currencies into digital ones.
The principle is based on a balance between the total amount of USD in Tether’s account and the amount of USDT in circulation. The USDT that can be put in circulation is therefore only limited to the amount of US dollars in the world. At the rate that the Fed is printing them, it’s basically unlimited! This virtual currency went from just $10 million (~£7.5m) in January 2017 to over $4 billion (~£3bn) by the beginning of 2021.
Over the relatively short lifetime of this stablecoin, it has become the stablecoin to trade in and out of. No other cryptocurrency with the exception of BTC has as many trading pairs as USDT has. While there have been some controversies over Tether’s auditing process, users have always been able to redeem USD for their USDT.
Tether uses a blockchain technology that works with Omni software. It is open source software that serves as an interface. It ensures the transactions and the redemption/minting of the USDT tokens. One USDT can always be bought and sold for the value of $1 (~£0.75), as it is fully backed by the United States dollar.
Tether uses proof-of-reserve to ensure that the amount of Tether in the market matches its fiat equivalent. You can either use a cryptocurrency exchange like Binance or Crypto.com to buy USDT or you can direct mint (or redeem) USDT using real USD. This is the reason why Tether cannot be mined. Its supply is completely dependent on how many dollars are minted with the organisation. If someone wants to mint new USDT, the company must have the equivalent in dollars.
USDT has carved out a niche for itself as it is the stablecoin with most cryptocurrency pairs on the market. What this means is that when you go on an exchange like Binance, you will be able to buy and sell pretty much anything into USDT.
Traders are the main users of USDT as it allows them to consolidate their profits at the end of a trade. There are some traders who prefer to operate in and out of BTC, with the sole goal of owning more bitcoin. This is known as ‘stacking sats’. A well-known by bitcoin maximalists. For others, however, owning USDT makes it easier to count their winnings… or equally their losses. It also removes the risk of volatility of BTC.
Regardless of your strategy and controversy that surrounds the project – which you can read all about here in our guide on Tether. The reality is that as a trading tools no other stablecoin comes close. That being said, USDT is being closely followed by the likes of USDC & BUSD.
USDT can be bought on most major exchanges (such as Coinbase & Kraken) but the easiest and cheapest way to purchase USDT is on Crypto.com or Binance. If you have not used either of these exchanges before be sure to read our guides on how to buy cryptocurrency in our Ultimate Buying To Guide section. Also use the code TCT50 when signing up to Crypto.com to get a free card and $25 or set up a Binance account and get discounts on your trading fees.
On Crypto.com you can buy USDT using BTC, their native token CRO or pretty much any cryptocurrency. Simply click on Trade then Buy. You can also buy USDT using your credit or debit card and therefore your pounds.
You then need to use the search bar to find USDT, once you have clicked on it and selected Crypto Wallet, choose either BTC or CRO clicking buy once you have picked your desired amount. You then have 15 seconds to Confirm the trade!
On Binance, you can buy USDT with either BTC, Binance’s native token BNB or pretty much any cryptocurrency. As you will see you can also purchase USDT with a range of fiat currencies including GBP.
Once you have found your chosen pairing i.e. USDT/BTC through the Markets tab at the bottom of your app, click BUY. Then you can choose the price you wish to purchase USDT at and the total amount you wish to spend in the cryptocurrency you have chosen (in this case BTC). Once this has all been decided, click Buy USDT. Your order has been submitted, if you have chosen a market order it will be executed immediately, if you chose a limit order your order will only be executed once the said price has been reached.
If you plan on trading cryptocurrencies you should seriously consider starting off with a budget in USDT. As mentioned before, there is no stablecoin that comes close to USDT in terms of trading pairs. This means you will have the maximum freedom of buying and selling any number of altcoins.
If however, you goal is to buy USDT to have freedom of moving it around the world or to indulge in some yield farming perhaps looking at other stablecoins is wise. USDC & BUSD both have better reputations but are still centralised. DAI on the other hand is fully decentralised but does not achieve the same stability (with the US dollar) as the other three USD based stablecoins.
Of course if you are based in the UK you may be looking for GBP stablecoin and that is possible with the Trust Token range of stablecoins, namely TGBP. It also includes THKD, TCAD & TAUD – if you live in Hong Kong, Canada or Australia.Why not check out the cryptocurrencies we do think are worth buying here in our Ultimate Guides to Cryptocurrency.
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