What is Tether’s USDT stablecoin ?
Tether’s USDT belongs to the stablecoin category and ranks just ahead of USDC in terms of market capitalization. Some are reluctant to consider it a full-fledged crypto because it does not have its own blockchain. But in general, it is often referred to as a cryptocurrency all the same.
To understand the reason for its existence, we must go back a few years.
In the early days of cryptocurrency, virtual currencies were heavily criticized for their extreme volatility.
In order to respond to this problem, several companies have developed stable digital transaction units, whose price is paired with that of a sovereign currency, in other words a “real” currency. This is why they are called stablecoins.
The majority of stablecoins have as their reference, not surprisingly, the dollar. This is particularly the case of the USDT launched by Tether in 2014.
The year in question marked a turning point in the cryptocurrency market. First there was the bitUSD, pioneer of these currencies, very quickly followed (in October more precisely) by the USDT.
Who is the Tether company, behind USDT ?
Do not confuse tether, the name given to USDT as a token… and Tether Limited, the company whose experts developed and launched this stablecoin in 2014, first under the name (discontinued the same year ) of “realcoin”.
The company, therefore, based in Hong Kong, is founded by Craig Sellars, Reeve Collins and Brock Pierce. By going through the archives devoted to this company, which was also created specifically for the purpose of creating and distributing USDT crypto, we see that it had a difficult start.
Its early years were punctuated by controversies over the firm’s solvency. The situation stabilized in 2018, when Tether LTD officially unveiled its banking partners, providing greater transparency.
Either way, these days there are still skeptics to question the reliability of tether, despite its success. The doubts are much fewer… but remain. That’s why.
How is the value of crypto tether verified ?
Remember that tether does not have its own blockchain. Verifications are very centralized; they go through the company, which wants to be the guarantor of the transactions.
Stablecoins all work the same way. In order to always be able to price its token at the rate of a third currency, the company must always have the equivalent of tokens as its stablecoin.
So if 20 million USDT is in circulation, the Tether company must have $20 million in accounts.
An external auditing company should audit companies that have stablecoins to ensure that they are of the value they are supposed to be. This is where Tether fails a bit since they are quite vague on these aspects.
Their last audit dates back to 2018 and their accounts are offshore.
Where to buy USDT ? USDT Binance, Coinbase…
If you want to buy USDT, several solutions are available to you :
- Binance is a really effective and advantageous solution, which offers to buy crypto tether quickly and safely
- Coinbase offers more limited possibilities for USDT: only transactions linked to the Ethereum blockchain are possible
- Kraken, on the other hand, offers both alternatives, like Binance
Now let’s see what is the historical price of USDT.
Tether price / USDT price : what is its history ?
You might wonder how relevant this question is, since in principle the price of USDT aligns with that of the dollar.
There was, however, a singular mishap in May 2015, when a massive hack resulted in a significant loss for some investors: at its lowest, 1000 USDT was now only 854 USDT.
We can identify another sticking point: in April 2017, the 17th more precisely, 1000 USDT equaled $962.56. In question ? International transfers, managed by Bitfinex, have been blocked… and this has raised fears of major conversion problems.
Once the situation was restored, the tide turned : the tether price reached its historic high, posting a value of 1049.25 USD.
Since then, the fluctuations have been very weak and anecdotal; this is what characterizes the stablecoin.
USDT Euro : what is the ratio ?
If you are wondering about the value of USDT against the Euro… know that really, it is only a matter of conversion. The European currency and tether have no direct connection, so always refer to the dollar/USDT ratio.
A few words must now be said about other stablecoins following the course of the dollar.
USDT and other stablecoins : USDC and BUSD
USDT is not the only stablecoin in the cryptocurrency market.
What results do we obtain, precisely, when we confront it with the USDC and the BUSD?
USDT vs USDC
There is no reason to consider USDT to be more or less reliable than USDC. Both are attached to the same concept; that of offering a cryptocurrency with very low volatility.
The differences lie mainly in “administrative” details. The USDC generally wants to be more controlled. It is checked monthly by an American audit company and the accounts it holds are also in American banks.
USDT is more discreet about these audits, and its accounts are offshore, as is the company that audits it.
USDT vs BUSD
The main difference between USDT and BUSD is quite simple: where tether requires Hong Kong-based management, BUSD has a set of American banks as its epicenter.
But again, this has no particular implications in terms of “effectiveness” – the most skeptical will only say that USDT could once again surprise investors while BUSD has safeguards.
Why buy USDT ?
USDT or tether is not unanimous. In the stablecoin “family”, some prefer BUSD or USDC. But this rejection seems rather marginal to us.
Note that despite the controversies, doubts, criticisms… Tether LDT has managed to keep its alternative to traditional cryptos afloat, demonstrating ever greater transparency. In 2022, there is therefore no valid reason to advise against an investment of this type, especially if you are wary of volatility and prefer to play it safe.