The one thing everycryptocurrency is that the value is subject to volatility. This means that you can easily lose money if market factors don’t go your way. However, there are some cryptocurrencies that have been created with the aim of offering stability against volatility. The oldest and most popular is Tether (USDT), and you can transact with it as well as convert USDT to PKR using the real-world value of the US dollar.
You can call Tether (USDT) the crypto version of the US dollar. This is because when it was established by Tether Limited in 2014, it brought in the idea of connecting the value of the fiat current to crypto, such that the crypto maintains the same value as the US dollar.
To maintain this, all USDT assets are pegged, or tethered, to the US dollar on a ratio of 1:1, according to the website. This means that for every USDT token issued, the company keeps one dollar worth of liquid assets. However, it’s important to note that questions have always been asked about whether the company has enough assets to equate to Tether’s circulation value.
Tether Limited also issues other stablecoins besides USDT. These include the EURT (pegged on the Euro), CNHT (pegged on the offshore Chinese Yuan), MXNT (pegged on the Mexican Peso), and XAUt (pegged on physical gold).
Tether Explained
You can call Tether (USDT) the crypto version of the US dollar. This is because when it was established by Tether Limited in 2014, it brought in the idea of connecting the value of the fiat current to crypto, such that the crypto maintains the same value as the US dollar.
To maintain this, all USDT assets are pegged, or tethered, to the US dollar on a ratio of 1:1, according to the website. This means that for every USDT token issued, the company keeps one dollar worth of liquid assets. However, it’s important to note that questions have always been asked about whether the company has enough assets to equate to Tether’s circulation value.
Tether Limited also issues other stablecoins besides USDT. These include the EURT (pegged on the Euro), CNHT (pegged on the offshore Chinese Yuan), MXNT (pegged on the Mexican Peso), and XAUt (pegged on physical gold).
How Tether (USDT) Works
One of the first things to understand about Tether (USDT) is that it doesn’t work on its own blockchain the way other blockchains such as Bitcoin and Ethereum do. Instead, it is a tokenized representation of real-world value and operates on other blockchains.
USDT was initially built on the Bitcoin network using the Omni Layer protocol. However, that was a long time ago, and today, it supports lots of blockchains, including Ethereum (ERC-20) and Tron (TRC-20). Others include Algorand, Avalanche, EOS, Liquid Network, Near, Omni, Polygon, Solana, and Tezos.
Tether issues tokens on these blockchains, and once you receive yours, you can trade, purchase items, or store them for later use.
The Significance of Tether (USDT) in the Crypto Market
As of 2024, Tether (USDT) is the third-most popular cryptocurrency after Bitcoin (BTC) and Ethereum (ETH). It’s also worth noting that most BTC conversions are usually to USDT, and Tether has a market cap of $90 billion as of 2024.
This shows the impact that the token has had in the crypto space. When it came about, it was a great way to bridge traditional finance with the world of crypto. It allowed people to come in and have a safe haven when not trading actively. Once you invest where you’d like to invest, you can then convert your assets to USDT. This way, you won’t have to worry about your assets losing value.
How to use Tether
It’s easy to acquire Tether, and the first step is selecting a wallet. Here, you can choose between a hardware wallet, which offers more security but is expensive, and a software wallet, which is free and offers more functionality. However, ensure that the wallet you choose supports the blockchain whose token you’d like to buy and use.
From there, you can go to a Crypto Exchange such as Binance and deposit funds to purchase funds, then buy USDT. You can then use your tokens to trade on the exchange, make payments to merchants that accept crypto, or use them as a store of value.
However, note that, unlike other cryptos such as Ether, Tether is not subject to an increase in value by holding. Its main purpose is to help you move in and out of other cryptos to mitigate market volatility.
