Tether is the first and still the most-popular stablecoin. It’s called a stablecoin, because one USDT always corresponds in value to one unit of the currency it has been tethered (in this case, the U.S. Dollar). Due to its popularity, USDT is the most liquid stablecoin. This is useful to traders who sometimes need to avoid market volatility by quickly converting their crypto to stablecoins. The USDT token exists on several different blockchains, the most popular one being Ethereum (ERC-20). Other Tether-supporting blockchains include TRON, Algorand, Solana, EOS, and the OMG Network.
According to the Tether Company, every USDT is always fully backed by the company’s reserves, which include traditional currency, cash equivalents and various assets and receivables from loans made by the Tether Company to third parties. While the validity of these reserves has been criticised on several occasions through the years, as of 2022 most traders and institutions seem to agree on Tether’s value as a stablecoin. In fact, USDT tokens have become an essential part of the cryptocurrency ecosystem.
The importance of Tether
Tether is important because it bridges the gap between crypto and fiat currencies. It provides a convenient way for investors to convert fiat currencies such as USD into crypto tokens (USDT), without the risk of sudden market volatility affecting the value of their funds. USDT’s 1:1 ratio with the USD allows investors to hold a stable-priced cryptocurrency, which they can easily trade for other coins on the crypto markets.
Many also use USDT to safely transfer funds between crypto exchanges. Some crypto-only exchange platforms do not have a fiat onramp for users to deposit and withdraw fiat currencies. However, they usually accept USDT transfers. Transferring your funds in USDT Tether to such exchanges enables you to trade without worrying about how the market volatility would affect the value of your funds on that exchange (as opposed to storing them in Bitcoin or other crypto assets).
How to store and send Tether
You can store your USDT tokens in your Coinhaven USDT wallet or on other cryptocurrency exchanges that you consider to be safe and secure. The safest way, however, is to store your USDT tokens in your own blockchain wallet.
One thing to always keep in mind is that USDT is issued on a range of different blockchains, so you have to ensure that you are transferring your funds to and from the same Tether network. If you are not careful and use the wrong Tether network, you may lose your funds. For example, never send USDT tokens from an Omni USDT address to an ERC-20 USDT address, as you won’t be able to recover your funds.