What is Tether (USDT) in simple terms

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2019-09-06 00:00:00:

Tether (Tezer or Teaser) is a cryptocurrency using the bitcoin blockchain. The coin is pegged to fiat money, including the dollar, euro and Japanese yen. It is used to carry out various financial transactions. The token is issued by the Tether Limited corporation, which claims that the coin is backed by a real stock of assets in accounts, in other words, 1 million tokens is equal to 1 million fiat money.

What is Tether (USDT)

The Tether cryptocurrency is a digital asset that differs from other coins by the backing of fiat (real) money. This feature excludes speculators. The Tether (USDT) platform converts US dollars.

The digital currency is built on the Omni Layer open source protocol, working in conjunction with the blockchain. This enables the creation and redemption of Bitcoin based tokens. Users can transfer, buy coins for other cryptocurrencies or fiat money, store them in wallets. The creators of Tether Limited assure that 1 Teaser coin is equal to 1 US dollar, in practice there are small jumps in the rate, but they do not exceed 0.1 dollar. The reason may be the fake linking of the coin to fiat.

Bitcoin was previously considered a promising digital currency that could provide maximum protection, fast and convenient payments. At the end of 2017, it became clear that this could not be achieved, but the coin is perfect for speculative actions. The Bitfinex crypto exchange took advantage of this by creating the Tether token (USDT). Within 1 month after the creation of the new currency, half a billion coins were issued, Bitcoin began to rise sharply in price to $ 20,000, after which a sharp decline began.

History of Tether (USDT)

Knowing what Tether is , it wont be superfluous to familiarize yourself with the history. The token was created in 2015 by Tether Limited, after which there were rumors that the organizations activities were associated with the Bitfinex cryptocurrency exchange. It was she who was the first to introduce the coin into her system for conducting transactions. After some analysis and investigation by the Paradise Papers, this information has been confirmed. Almost immediately after the release of the cryptocurrency, its integration was on the American exchange Poloniex.

The founders of the company are CEO Philip Potter and CFO Giancarlo Devasini of Bitfinex. The corporation is located in the British Virgin Islands. The token was originally named Realcoin. The coin was ordinary and could not compete with popular altcoins. After a series of updates, she changed the name, release technology. It was necessary to survive in the digital world of money. This is how the Tether cryptocurrency appeared, which became convenient for doing business and individuals.

On January 30, 2018, data from Bloomberg was published that Bitfinex and Tether Limited had been sent a subpoena from the Futures Trading Commission. The reason for the challenge is due to regulatory doubts that Tethers 2.3 billion coins are actually backed by a similar amount of dollars.

A year later, on 03/14/19, the creators said that the coin was backed not only by cash, but also by loans issued by related organizations. At the end of April of the same year, the creators announced that only 74% of the cryptocurrency is backed by fiat money (dollars). The history of Tether does not end with the described facts, the coin is actively used in the field of cryptocurrencies, it has a future.

Distinctive features of Tether

Compared to Bitcoin, Teaser is backed by real money held in Tether Limited accounts. The very first cryptocurrency was made as an alternative to fiat funds, as well as to remove intermediaries during financial transactions. Tether is designed to bring real funds into the blockchain by digitizing them. Since this mechanism is today considered the best in terms of security, for storage or transmission.

The functioning of the coin depends on the reliability of relations with banks, other institutions of this type and government support.

The main features of the cryptocurrency are as follows:

the number of coins is limited solely to the money invested in the accounts of the founders company;
the first coin was created on 03/12/15;
the token has no transaction blocks.

Distribution is possible through money transfers to Tether Limited accounts, and the company itself issues an appropriate amount of coins that can be backed by fiat money. Multiple transfers are available for traders, transferring coins to each other or to enter on exchanges.

The level of confidentiality can be considered zero, because funds are transferred to an account where the client needs to complete the KYC procedure. For this, personal data, passport information, place of residence and other personal data are indicated. The founders know almost everything about contributors. The functioning of Tezer is carried out on the BTC blockchain, in which case the transaction process will be fast.

How Tether works

As already mentioned, the coin is created on the Omni platform based on the Bitcoin blockchain. The principle of operation is very simple, 1 US dollar is equal to 1 Tether coin, but in practice it is quite difficult to make an equivalent exchange. Thus, the operation of the token depends on financial relations with banks and the state.

A reasonable question arises, why is this necessary? After all, the interest in digital currency among people is caused by a change in value with the possibility of generating large incomes. Tezer has a fixed price and there is no need to expect drops or rises in value. It is known that the purchasing power of any real currency decreases due to the rise in inflation, and a contribution to the Teaser can be considered a 0% deposit. The token is of great benefit to investors and traders, since it acts as a substitute for fiat money. There are several reasons for this:

The speed of operations. Working with dollars for depositing or withdrawing to foreign exchanges takes a long time, especially on weekends or holidays. Tether transactions take a few minutes, which is very important for traders.
Financial transaction costs. International transfers include high commissions, additional conversion rates, and other write-offs are possible. Working through cryptocurrency wallets is free.
Stable cost. Cryptocurrencies are volatile, so stability plays into the hands of traders, especially if there is no way to use highly liquid markets. For example, when buying Ethereum for Bitcoin , a trader receives the required number of coins, when a 10% growth appears, the trader sells it for the purpose of earning, exchanging for BTC. During the transaction period, the value of the second coin is reduced by 15%, which leads to losses. When using USDT, you only need to worry about the cost of Ethereum.

Mining a coin is impossible, because the generation is performed only after backing up with real money. This leads to bewilderment of some cryptocurrency users, because the idea is contrary to digital money. But it is precisely such a token that is the middle link between real and virtual assets.

Tether advantages and disadvantages

Through the use of blockchain technology , Tezer receives a number of advantages, including:

High speed of execution of transactions for buying and selling.
Complete transparency. The creators of the coin assure that they constantly analyze the correspondence of customer accounts and money in the vault. The balance is publicly available, data is regularly updated, transactions are recorded in the blockchain.
Linking to a dollar or another currency allows you to accurately understand the amount of fiat funds in your account.
Low volatility of the exchange rate is ensured by the link to real money. Every USDT is backed by a dollar. Tezer itself is not considered an electronic copy of the US currency, its creation is based on facilitating the transfer of funds, providing stability and a reliable replacement for Bitcoin.
The minimum commission for transferring a token into real money.
100% market stability.
Availability and openness for individuals. and legal. persons under the same conditions.
Complete protection against hackers and fraudulent attacks.
The use of the blockchain system helps to make profitable any type of trading and financial transactions on exchanges with contractors and partners. Transactions are performed faster and cheaper than using banking services.
Highly prevalent, there are many digital money platforms that accept USDT.
Anyone can deposit or withdraw coins without opening bank accounts.
Devaluation of the token is excluded, because the dollar is the most stable and widespread currency.
The teaser has its own wallet with API support and modern payment technologies.
The Tezer platform uses a high-quality support service, she always responds quickly to customers.

Among the disadvantages are:

Violation of the balance of the world market by the creators of the token, due to the combination of real and virtual money.
There are accusations that the company that created the coin uses a special reservation scheme, where more token is made than there is real money. Due to this, the Bitcoin rate increases to control the market.
Security issues caused by the events of 11/20/17, when the Tether system was hacked. Then 30 million USDT was stolen, the creators failed to return the coins, and the level of security did not increase.
Some traders have noticed sharp surges in the price of Bitcoin in 2017, just at this time there was a significant emission.Analysts believe that the coin was simply made as a speculative instrument.
Complete lack of guarantees.
Lack of a return system on the developers website. There are no contact details and the exact location of the company, but it is much worse that the token is not considered money.

The main difference between the coin is in focusing on fiat money, so there is no need to make other calculations in different units. Despite the original idea of a token in a fixed price against the dollar, the exchange rate fluctuates. There are several issues that are more likely to come from the mouths of Bitcoin opponents. They are interested in the collapse of Bitfinex.

How do I buy or sell Tether?

Mining a coin is not possible, so the only method to get cryptocurrency is to buy it. Today the teaser is traded on almost any platform, the list can be viewed on the official project page. The maximum daily volumes can be seen in USDT to BTC , ETH, USD, LTC pairs .

For residents of the CIS countries, the easiest way is to buy a token on exchangers for real money. There are options for a more profitable purchase through exchanges, but the process itself is more complicated, because they do not accept fiat, you will initially have to purchase other cryptocurrencies.

The corporation maintains close ties with exchanges, financial institutions and various exchangers, which allows you to buy Tether . The token adheres to all world standards and norms of the countries where it operates. To start financial activities with a company, the exchanges will need to conclude an agreement according to which no one can use USDT without the appropriate documents.

For individuals, buying and selling is possible through a personal account on the official website. To register, you must fill out a standard form, indicating:

FULL NAME;
location;
email address to confirm registration data through the link sent.

Two-factor authentication is required to protect user data. Account replenishment is carried out after verification with uploading documents and filling out a questionnaire.

Depositing and withdrawing coins is clear and simple. Performed on the official website according to the following guide:

You need to go to the "Add Funds" section.
Get the generated virtual wallet address.
Transfer currency.

To send coins, go to the "Send Funds" section and press the "Withdraw" button to withdraw them to the bank card. The work is very simple, understandable even for beginners.

Buying and selling is possible on specialized exchanges that trade cryptocurrency. The main ones are:

Bittrex;
Bitfinex;
Poloniex;
Kraken;
Liqui.

It is more convenient to transfer cryptocurrency to fiat through exchangers. The entire withdrawal process is carried out manually, so it may take some time.

Our exchanger also allows you to buy Tether. Popular directions for buying Tether Omni are:

Our system also has the ability to purchase Tether ERC-20 . Here are the popular destinations in this section:

As you can see, buying Tether or withdrawing cryptocurrency to Tether is popular in the service, since many traders fix profits in this way.

Selling Tether is equally popular, here are the popular reverse Tether Omni options:

For Tether ERC-20, the picture is almost the same:

Tether to ruble rate

Considering the rate of Tether against the ruble on 08/27/19, the price of the coin is 66.39 RUR. During the day, there was an increase in value by 0.6%. The capitalization of the coin is 236409964909 rubles.

Tether to dollar rate

When considering the rate of Tether to the dollar on a similar date, according to the site https://coinmarketcap.com/currencies/tether, the value of the coin is $ 0.999218. During the day, the price decreased by 0.2%. The total market capitalization reaches 4052272280 USD.

Tether to EUR rate

Studying the rate of Tether to the euro, you can see the cost per coin 0.900738 EUR, which gave an increase of 0.2% per day. The capitalization of the token is € 320,7605717.

Where to store Tether

You can store Tether on crypto wallets, which are a digital key with the ability for the client to access different currencies and monitor transactions on it. At the moment, there are "cold" and "hot" wallets. The former does not require the use of the Internet, while the latter requires access to the network.

A cold wallet is a physical device that resembles a USB flash drive. This is the hardware option that is the most secure today. It doesnt need internet access. Experienced traders store Tezer and other currencies in such wallets. They have a high degree of protection, all operations are safe. Scammers and other criminals in the cyber world cannot get hold of coins, because all information is stored offline.

More often hardware models of wallets have a small display on the case. It is made to simplify the verification of transactions, accounts. It can store a large number of coins at the same time, for example, Bitcoin, Tezer, Ethereum and others. For work, a PIN code is used, which increases the degree of protection, there are passphrases to restore access to assets in the event of a breakdown, loss of a wallet and other problems.

A hot wallet is a PC program or a separate resource that requires network access. The main subspecies are:

mobile - a separate program installed on mobile devices and is suitable for people who perform currency transactions every day. Your phone or tablet is always nearby, so making transfers or payments using Tezer is quick and convenient. Protection is not the best, because applications require remote third-party servers. For a small volume of coins, the choice is not bad;
paper - an unusual option for storing cryptocurrency, represented by a document with public and private keys. There are separate sites where you can create an address for Tezer and other coins, then print a picture with a couple of QR codes. One is used to receive a token, the second for transfer. The wallet is well protected, since it cannot be reached through the network or PC, and fraudsters cannot steal the key. The main thing is to carefully save the paper with the code;
browser - refers to a program that functions as a browser extension. The menu is ordinary, without a bright interface, everything is clear for the user and does not cause difficulties. Among the multi-currency options, Jaxx is recommended, which is open source and supports 14 coins;
online wallet - separate services that are served by specialized sites. Such a wallet can be an exchange, a payment system. Suitable for beginners who have not yet decided on the cryptocurrency, the scope of its use. Registration is required to work, but it is better to study all the features first. Such resources can be hybrid, where keys are stored separately and multisignature is used, as well as traditional ones with a private key. It is on the service, the owner can only receive a copy of it. The advantage of online wallets is their simplicity, availability, but they are highly susceptible to hacking;
desktop - a wallet in which all keys are stored on the hard drive, which provides a high degree of security. Everything is presented in the form of a program that is written to a computer. After that, access to the account with cryptocurrencies opens. The main problem is the need for regular updates, and the space should be at least 100 GB. Therefore, there are "thick" and "thin" wallets. In the first case, all circuit blocks are installed, they are constantly updated. The second type launches information from other services, so even if the key is stored on a PC, there is a risk of information leakage and theft.

The main advantages of hot types of wallets are the absence of the need to pay for use, easy access and high practicality. All resources are similar to classic digital payment systems, great for trading every day, and some are used as an exchange.

Several variants of the most popular wallets are used for the Tezer coin. Among them:

Official online service Tether Wallet. During the creation of a new digital currency, the creators immediately took care of a place to store coins. For this purpose, we have developed our own program where depositors can save USDT. The wallet works with Android and iOS mobile operating systems and is characterized by ease of use. The menu is clear and simple, there is a rich functionality, and registration is done through the official website.
Exmo is a resource that is both an exchange and a wallet. Often, such platforms are more convenient for storage, since you can quickly work with currency. The exchange is considered the largest in the CIS, popular, has a high rating among Russian-speaking users. The resource is registered in Britain and is under the control of financial regulators. The main plus is a simple and intuitive interface, there is a Russian language, you can save many popular digital currencies. Account replenishment is carried out using fiat money at a rate of 0.2%.
Omni Wallet is a free internet wallet. A multicurrency resource with a high degree of security, an intuitive menu and simple operation. All personal keys are stored on a PC, it is possible to use the minimum commission for operations, in comparison with other wallets.
Ambisafe Wallet is a service with excellent functionality. Customers can choose from several options for storing coins, including hardware, mobile and online. The work of the resource is carried out in conjunction with the internal wallets of cryptocurrency exchanges, which can work with Tezer. Among the disadvantages, users note the need to pay for use.
Coinomi Wallet is a mobile wallet that is in demand among cryptocurrency owners. It immediately supports a large number of coins, today you can transfer 138 types of assets, make an exchange of Tether . The wallet itself is multilingual, there is a choice of the Russian language. The advantage of the service is confidentiality, a high degree of security, which is achieved by encryption. During use, the IP address and the address of the wallet itself are constantly changing. All keys and passwords are kept by the owner, the commission is calculated only for currency transactions, and its size can be adjusted if there is a suspicion of a high rate.
Exodus Wallet is considered the best desktop wallet. The program takes only 75 MB, you dont need to download the full blockchain. There is a coin exchange function. To work, the service is installed on a computer under any operating system. The work is fast, operations are performed instantly, there is an automatic conversion. The wallet has never been hacked, because its protection is very reliable. The resource includes high-quality user support, program updates are constantly carried out, and the asset holders themselves can request to add new coins.

The main disadvantage of hot wallets is the high risk of being hacked. According to statistics for 2018, scammers stole about $ 1.1 billion in cryptocurrency equivalent from such resources. There are risks of viruses getting into programs.

The easiest option for storing and working with the Tezer coin is considered to be the use of the Tether.to platform, which can work with dollars and bank accounts. The registration and start-up process is carried out according to the following guide:

The site is being registered to get your own account. To do this, just go to the main page and press the "Register" button.
In the new menu, fill in personal data, press the key to create a profile.
The account has been created, but you will need to pass two-factor authentication to use it, which helps to increase the level of protection. To do this, use the Security Page tab.
It selects the protection itself, for example, using the "Google Authenticator".
After the operations done, there will be 2 confirmation methods - scanning a QR code or entering a captcha in the application on a smartphone.
After correctly performed actions, the code arrives, which is indicated in an empty line on the site. It will change every few seconds, so you need to specify it as quickly as possible.
A notification about the successful activation of protection will open, and for further access to the profile, you need to use a mobile phone.
An account has been created through which you can send, receive and store USDT. The client automatically receives an address for the wallet from which all transactions are performed. To view the digital address, you need to click on the section for adding coins.

If you need to invest in a coin to make a profit in the future, it is recommended to keep the token in a cold wallet. The safest options are the Ledger and Trezor hardware devices.

In the first case, open source is used. The device itself is like a conventional USB flash drive, it is convenient for transportation and storage. The crypto wallet supports many coins , and the main advantage is the ability to operate using its own applications on any computer. In addition, the user can remain calm about personal data, because protection is carried out using several chips. Offers device protection under the guise of a code and SMS confirmation. All actions are confidential, since during operation the client does not need to provide location and identity data.

The cost of the wallet is small, so it is in demand among cryptocurrency holders. Before using it, you just need to connect it to a computer using USB, and all actions are performed from the device menu or in a separate program. The client personally performs all operations, so even if a PC is hacked, fraudsters have no way to steal information.

The second option is Trezor, which visually resembles a key fob from a car alarm. The device is small, compact and works with any operating system. A fast processor with a high clock speed is installed inside.

Compared to the first option, all information is also stored remotely, which increases the degree of security. During operation, there is a limited connection, a signal is issued in both directions, which generates random numbers. The wallet supports a large number of coins, so the device competes with other cold types of crypto wallets. The characteristic difference is that the code is entered every time a transaction is executed. The creators added more powerful cryptography.

To work, you need to connect the device to a PC via a USB cable. Install a dedicated program or Trezor Bridge. Set a password that consists of 12-24 words. The advantages include compatibility with Electrum MultiBit, Mycelium, MyEtherWallet, NEM Nano Wallet wallets.

How much is Tether

Anyone who is into cryptocurrency might wonder how much Tether has been created since its inception? Today the total number of coins is 4095057493 units, however the circulating supply is 4056105372 Tesers.

Tether emission

In 2019, the developers made changes to the use of electronic currency. Previously, the company stated that all coins are fully backed up to the dollar in a 1: 1 ratio, today, in addition to real funds, the collateral is carried out by loans that the corporation issues to third parties.

The coin itself has not been independently audited for a long time, so many people doubt the security of the token, despite the fact that Deltec Bank in the Bahamas showed documents on the transfer of $ 1.8 billion to the corporations account.

During the period April 1-18, the capitalization of Teaser increased by more than $ 480 million and the creators do not even try to hide such information. The fluctuation in value is + - 10 cents, so the increase is caused by an increase in the supply of coins. Tether is issued through 2 platforms - Omni Layer and Ethereum. The rest of the coins that the corporation has authorized to issue have not yet entered the market.

What is secured by Tether

Based on the previously described information, Teaser collateral is only 74% of fiat money. Some experts believe that this percentage is high and does not differ from the classical practices of banks, which operate with lower reserves and do not contain customer deposits in their accounts. Other analysts believe that it makes no sense to compare cryptocurrency with the work of banks, because the token is stable and backed by the dollar in equal proportions. All documents indicate that the coin does not correspond to assets and liabilities, therefore there are problems with liquidity, solvency.

Since the creators of the token have updated the information, the coin should not be 100% backed by real money, it is possible to use other assets. Therefore, the developers state that there are other funds and loans in reserve. Investigations show that all assets are unable to cover the rest of the percentage.

The future of Tether

In theory, the Teaser can be withdrawn at any time in dollars through the native platform. However, its rules state that the token is not considered money or an instrument, and the company itself relinquishes the right to transfer coins to fiat, there are no guarantees of exchange, protection from losses during financial transactions.

Using this method, a company can insure itself against permanent restrictions, but there are risks of losing real collateral. Tether presents itself as a cryptocurrency platform that operates in a secure and transparent manner, so it is not possible to operate in some countries where there is no regulation of virtual currencies.

On the one hand, there is a future for Tether, because you can instantly transfer fiat money to digital money for doing business without a commission, but an increase in value is impossible. Due to this, it makes no sense to invest in a token. Income can only be obtained by purchasing shares of the corporation. The tool itself is convenient for traders, speculative moments are excluded.

Experts compare the rapid development of Tether with Bitcoin. If large contracts are included in the main cryptocurrency, then the development of the token will be successful. Considering all perspectives, negative sides should be highlighted. At the time of buying coins, an agreement is made stating that USDT does not belong to money. Therefore, the basis on fiat money is conditional, the company disclaims all responsibility for the use of such an asset. The verification process itself is complicated. To receive a wallet, it is necessary to secure scanned copies of documents, therefore confidentiality is excluded.

Tether can be considered a promising coin with a variety of uses in the future. Even today, many people exploit the token to store their income digitally, as the coin is not subject to sharp spikes in value.