What is Tether (USDT) and how does it work ?

Tether (USDT) is a stablecoin, a type of cryptocurrency which aims to keep cryptocurrency valuations stable. The volatile nature of cryptocurrency and the constant fluctuation in price has always been a thing of concern. To provide a solution to this, stablecoins were created. Stablecoins are pegged to a currency or basket of currencies such as the USD or assets such as Gold. Stablecoins are pegged to currencies to reduce their volatility. For instance, if Mr. A buys Bitcoin at $40,000 and the price falls to $38,000, the coin has lost $2,000 out of its value. However, if Mr. A converts the $40,000 to USDT, he retains the value. A very good example of a stablecoin is USDT-Tether USD. In this article, we will find out—What is Tether, where to buy Tether (USDT), and the price of Tether USD.

A Brief Look into Tether (USDT)

Tether is a fiat collateralized coin which means it is pegged on Fiat (USD). It was launched in July 2014 as Realcoin and would later convert its name to Tether in November of the same year. The stablecoin is maintained by Tether LTS. and pegged on a 1:1 to the USD. More than 75% of Bitcoin trades have been carried out with USDT as of 2021. Ranking as the third-largest currency on the coin market cap, USDT enables traders to hedge against volatility and liquidity. 

When compared to the US dollar, Tether has several benefits, the most important has to be its ease of use in cross-border transactions. Since the USDT is pegged on the dollar, it is easy for overseas investors who do not own USD bank accounts to receive Payments and transact in the coin. Also, traders can maintain the value of the funds in their crypto accounts without fear of volatility. Equally unlike the USD, the Tether is built on the blockchain and is transparent, and can be traced easily. Transaction fees are also cheaper and faster than USD. 

Tether is issued by Tether Limited and is issued on a 1-to-1 ratio basis and although the value may fluctuate, USDT manages to stay pegged to $1 as backed by Tether’s reserve. 

How to Buy and Store USDT

Like other cryptocurrencies, you need an exchange to buy the coin and a wallet to store your coin. Depending on the country of residence, a user can either purchase the coin using fiat or convert existing cryptocurrencies that they hold to USDT. You can buy USDT in Nigeria and Ghana using Bitmama in the following easy steps. 

• Create an account with Bitmama.io to ensure you provide the necessary KYC to get your account verified.
• Click on the wallet and Fund your Fiat wallet with either Nigerian Naira or Ghana Cedis.
• Go back to the homepage and then scroll to buy, click on BTC and convert it to USDT.
• Input the amount of USDT you want and then click on buy. 
• And your wallet will be funded with USDT. 

To store your USDT for the long term, you can opt for a hardware wallet such as Trezor Nano S or a paper wallet. This article gives a comprehensive guide on how to start investing in Bitcoin in Nigeria.

Conclusion

While it may seem that USDT provides its users with a lot of coverage when it comes to volatility, it has come under several regulatory fires. For instance, regulators had to issue a subpoena after Tether LTD repeatedly refused to disclose the banks that hold its so-called $400 million worth of USD reserves. Also, Tether parted ways with its auditor and the reports disclosed that Tether LTD and Bitfinex exchange, a partner company, were in collaboration to drive up the price of bitcoin. The fear is not unconfounded as Tether has more than $60 billion worth of coins in circulation which is more deposits than most banks in the U.S. Earlier in 2021, the New York attorney general’s office and Tether and Bitfinex exchange reached a settlement removing the looming regulatory axe from off the necks of Tether.

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