Learn Cryptocurrency
6 Jan 2022

Tether (USDT) explained: A complete beginners’ guide to Tether

Devansh Sinhal

Tether is one of the biggest cryptocurrencies by market cap, currently valued at more than $78 billion. It ranks #4 in the list of top cryptocurrencies in the world, trailing behind only top names like Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB). 

Tether is what’s known as a ‘stablecoin.’ This means that, unlike other cryptocurrencies, its value is not determined solely by market forces influenced by supply and demand. Traders use Stablecoins like Tether to hedge their funds in volatile markets and keep funds safe in uncertain times.

In this blog, we will explore the history and future of Tether, how it works, and how you can buy Tether as an investor in India.

Understanding Tether Cryptocurrency

As a stablecoin, Tether’s prices are not entirely determined by free-market forces like demand and supply. Its value is pegged to fiat assets like the U.S. Dollar to maintain a stable price range between which it can fluctuate. While most cryptocurrencies are highly volatile, often rising or slipping 10%-12% every day, Tether manages to stay stable because of its association with another asset.

Hence, at any given moment, 1 USDT will always roughly equal $1. Even though this holds true most of the time, shakes in the Tether market can cause it to dip or rise accordingly. However, past behaviour has shown that Tether always bounces back to become equivalent to roughly $1 in a short time.

Key Takeaways

  • Tether cryptocurrency (USDT) is a stablecoin, which means that its value is pegged to another real-world asset and is not wholly dependent on market forces.
  • Investors can use tether to hedge their funds in a volatile crypto scenario.
  • Other stablecoins like Tether are USD Coin (USDC), Binance USD (BUSD), etc.
  • Tether offers transparency, liquidity, and stability to otherwise volatile crypto markets, allowing investors to balance their risk.

tether key takeaways

History of Tether

The foundation of Tether began with a whitepaper initially designed for a coin named Mastercoin, first proposed by J.R. Willett. The Mastercoin Foundation developed the Mastercoin protocol in 2012, which would become one of the strongest pillars for Tether’s development. The Mastercoin whitepaper led to Tether’s technological development, and one of the most critical members of Mastercoin, Brock Pierce, would become the co-founder of Tether.

Tether was first rolled out on Bitfinex, a crypto trading platform, in January 2015. Since then, Bitfinex has been one of the world’s largest holders of Tether by volume in the world.

Now, there are five different Tether tokens out for trade-in all major crypto exchanges around the world:

  1. USD Tether (based on USD)
  2. Euro Tether (based on the Euro)
  3. USD Tether as an ERC-20 token (supported on the Ethereum blockchain)
  4. Euro Tether as an ERC-20 token (supported on the Ethereum blockchain)
  5. USD Tether as a TRC-20 token (supported on the TRON blockchain).

Today, Tether has a circulating supply of more than 78 billion tokens with approximately an average daily trading volume of $45 billion.

Tether vs. Bitcoin: Fundamental Comparison

There are some fundamental differences between Tether and Bitcoin, both in terms of their adoption and their functionality. These have been outlined in the table below:

Tether (USDT) Bitcoin (BTC)
Tether is a stablecoin. Its value is pegged to the U.S. Dollar. Bitcoin is not a stablecoin. Its value is determined by free-market forces like demand and supply.
The value of 1 Tether is almost always equivalent to $1. Bitcoin has shown a massive increase in prices over the last decade. It is currently at roughly $46,000.
Tether is centralized and regulated. Bitcoin is decentralized and unregulated.
Price fluctuations in Tether are easy to predict because they largely remain pegged to a specific dollar value. Bitcoin price fluctuations are primarily impossible to predict accurately.

Tether’s Allure

Tether belongs to a class of crypto coins designed to bring stability to the crypto market. While the other cryptocurrencies swing violently in prices most of the time, coins like Tether function as anchors that help keep the ship sturdy. They are pegged against government-backed assets and have a lot of functionality in a decentralized world. Stablecoins, in general, have a fundamental solid demand not only because they serve stability but also because they’re accepted means of payment. 

Tether can be used to transfer value P2P and B2B without worrying about market fluctuations. USDT coins are used as stores of value for risk-averse investors who still want to stay invested in the crypto market.

Technically, Tether is always supposed to be equivalent to $1. However, it briefly shifts from its position during market turmoil and goes up or down accordingly. Hence, there are no future price predictions for stablecoins of this nature.

We know that stablecoins act as essential buffers in the crypto market, ones that help traders and investors balance their risk and stay invested.

Benefits of Investing in Tether

Here are some benefits of investing in Tether (USDT):

  • Acts as a store of value – Tether acts as a store of value because it tends to stay stable during market fluctuations.
  • Ideal for P2P payments – Naturally, Tether is an ideal payments coin due to its fixed prices.
  • Acts as a hedge against crypto volatility Tether is a useful risk-balancing tool for crypto traders who use it to manage their resources sensibly and reduce risk.
  • Lets investors stay invested in crypto without consequences – Tether is a cryptocurrency without the downsides. Hence, investors who can’t stomach the risk and the others have the option to stay invested in crypto without indulging in volatility by buying USDT.

How To Invest in Tether in India?

If you want to invest in Tether (USDT) in India, the best platform you can use is CoinSwitch Kuber. CoinSwitch Kuber is India’s most potent crypto platform, with more than 14 million users using the app actively! The exchange supports Cardano, Ethereum, Bitcoin, and hundreds of other coins and tokens that you can buy, trade, or sell.

If you’re a believer in the Tether narrative and want to bet on its long-term growth, here are some steps you can take to set up your CoinSwitch account and get started.

  • Step 1: Open CoinSwitch – The first step is to, of course, download the CoinSwitch Kuber app on your Android or iOS mobile phone. You could also visit our website and enter your phone number, potent, and we’ll SMS you a link to the app!
  • Step 2: Register and open an account – Once the app has been successfully installed, you will be asked to enter your mobile number for OTP verification. Once the OTP has been received and entered by you, you will be asked to set a PIN on the app for added security.
  • Step 3: Complete your KYC – To complete this step, head on to the ‘Profile’ section of the app in the bottom right corner and click on ‘User Verification’. Enter your name, PAN number, date of birth, and email address for primary verification of your identity. Once this is done, you will be asked to upload your PAN card’s picture along with a picture of a government-issued ID card to complete the verification. On CoinSwitch, the KYC process is completed within 2 minutes!
  • Step 4: Add your bank account details – To transfer funds from your bank account to the CoinSwitch app, you need to provide the app with the relevant information. These include your account number and IFSC code only. The app sends Rs. 1 to your account to verify if the details are correct and if they are, the account is linked to your profile.

You’re now free to use the CoinSwitch wallet to buy, sell, or store Tether (USDT) coins. Investing in the coin is also very easy. 

All you need to do is:

  • Click on the currency you want to buy (in this case, USDT)
  • Enter the amount, and click Buy. 

That’s it! The corresponding amount of cryptocurrencies gets credited to your CoinSwitch crypto wallet, which can then be monitored under the Portfolio section of the app. Click on the link if you want to directly convert Tether into INR.

Conclusion

Stablecoins are a very vital part of the cryptocurrency ecosystem the world is shuttling towards. With Tether’s ability to provide liquidity, stability, transparency, and minimal transaction costs to users, it could be the key that enables widespread crypto penetration and adoption.

Frequently Asked Questions

Why would you use Tether?

Investors can use Tether for P2P payments, hedging risk, providing stability to a crypto portfolio, or even as a long-term store of value.

Is it good to invest in Tether?

Tether is the top stablecoin in the crypto world, with more than $78 billion market capitalization. However, whether you should invest in it is a matter of personal investment style and risk appetite.

How does Tether work?

Tether is a centralized cryptocurrency that is pegged to the value of another real-world asset – in this case, it’s the U.S. Dollar.

Is Tether safe?

Yes, most investors consider Tether a safe investment, primarily because it tends to survive volatility and fluctuations in the market.

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

writer

Devansh Sinhal

Content Writer

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