What are the features of cryptocurrency Tether (USDT)? Explain the future potential and advantages / disadvantages

A virtual currency (cryptographic asset) that attracts attention due to the violent price movements of Bitcoin. There are now over 1000 types of virtual currencies, and many people may not know what the characteristics of each are.

In this article, I will explain about Tether (USDT), which is attracting attention as a stablecoin among virtual currencies. After explaining the features, advantages and disadvantages of tether (USDT), we will also introduce recommended exchanges, so please refer to it.

The point of this article

  • Tether is a “peg currency” operated by Tether Limited.
  • It is a “stablecoin” that is less likely to cause price fluctuations.
  • It is not treated as an investment target because a large price increase cannot be expected.

What is Cryptocurrency Tether (USDT)?

First, let’s summarize the characteristics of tether (USDT). Tether (USDT) has a very different mechanism when compared to other virtual currencies.

“Peg currency” operated by Tether Limited

Tether (USDT) is a “peg currency” operated by Tether Limited . The peg currency is a currency that aims to be linked to the value of another currency, and the tether (USDT) is linked to the US dollar.

The biggest feature is that 1 dollar (USD) is fixed to be about 1 USDT. The value is maintained by equalizing the amount of US dollars held by Tether Limited and the issued Tether (USDT).

Prices are stable and hard to fluctuate, but difficult to invest in

By linking with the US dollar, tether (USDT) is unlikely to be an investment target that can be expected to rise significantly in the future.

Therefore, tether (USDT) is considered to be positioned as the key currency (stablecoin) of the virtual currency market rather than being owned for investment purposes Since there is a sense of security that the price does not fluctuate easily, it is common to exchange the coin for tether (USDT) when you want to fix the profits made in other virtual currencies.

Tether (USDT) prices and charts

If you actually look at the Tether (USDT) chart, you can see that the price fluctuations are not large . Since it is very stable as a virtual currency, it is treated as an evacuation destination when the price movements of other virtual currencies such as Bitcoin are turbulent .

What is the future of Tether (USDT)?

What is the future of Tether (USDT), which plays the role of peg currency? Here are some of the features in the white paper that are expected to be implemented in the future.

Safety is improved by implementing multisig

The white paper states that tether ( USDT) will implement a multi signature . Multisig is a measure to improve security by creating multiple passwords required for accessing virtual currency and managing them separately.

With ordinary security management, there is only one password, but when multisig is implemented, it is protected by multiple passwords, so the risk of unauthorized access can be reduced. It can be said that it is a big merit that the security is significantly improved by installing multisig.

For example, let’s say you have created three or more passwords and set them up so that you can access them using either two. That way, even if the cryptocurrency is stolen from the exchange , you may be able to recover your cryptocurrency.

However, it is said that the current issues are the difficulty of setting for implementing multisig and who should deposit multiple passwords.

Implement smart contracts for secure and easy transactions

The white paper also states that tethers (USDT) will implement smart contracts. Smart contracts are technologies that can be contracted automatically. When a smart contract is implemented, it will be a system that certifies the contract by writing the transaction details on the blockchain in a state where it cannot be tampered with.

In current transactions, not only sellers and buyers but also third parties are generally involved, and brokerage fees are paid to third parties. With the implementation of smart contracts, if transactions can be made without an intermediary , no intermediary fee will be required .

Furthermore, it is said that safe and easy transactions can be realized, such as eliminating human error caused by manual work .

Tether (USDT) past soaring and future

As mentioned above, tether (USDT) is a virtual currency that is extremely unlikely to fluctuate in price. Due to the nature of the peg currency, it is unlikely that a big surge will occur.

In the past, when Bitcoin caused a crash, there was a so-called “tether suspicion” that tether (USDT) may have been involved . “Tether allegations” are alleged that Tether Limited may not have the US dollars that support the value of Tether (USDT).

If the allegations were true, the value of Tether (USDT) would be lost at once. It is possible that the problem will not be limited to tether (USDT) but will develop into a major problem for the entire cryptocurrency market.

In response to this suspicion, a hearing held in 2018 ended without clarifying the suspicion.

Advantages and disadvantages of owning a tether (USDT)

Holding a tether (USDT) has different properties than holding other virtual currencies such as Bitcoin, so the advantages and disadvantages are also different. The main advantages and disadvantages of owning a tether (USDT) are explained below.

Peace of mind with little change in value

The biggest feature and merit of tether (USDT) is that there is almost no difference in value from the US dollar . A gap of about 2% may occur, but it is very small compared to other virtual currencies. Therefore, it can be held with confidence even in an unstable market where price movements are rapid.

If you own a virtual currency such as Bitcoin and make a profit, it will be effective as an asset to fix the profit .

Adopted by many exchanges as a standard

Especially in the US exchanges, there are many places that use tether (USDT) as the base currency. The advantage is that it is easy to trade because it often has currency pairs that can be traded with tether (USDT) . Exchanges suitable for tether (USDT) trading will be described later.

High counterparty risk

Tether (USDT) is a stable cryptocurrency, but it is managed under the strong centralization of Tether Limited to fix its value. It all depends on Tether Limited, and in the unlikely event that fraud is discovered or goes bankrupt, it can lose value at once.

Such risk is called counterparty risk . Tether (USDT) tends to have higher counterparty risk than other cryptocurrencies .

What are the recommended exchanges for trading tethers (USDT)?

Here are some recommended exchanges for trading tethers (USDT). Tether (USDT) is handled by many overseas exchanges, but let me introduce the exchanges that have a particularly large number of transactions.

However, some overseas exchanges are not safe, as the Financial Services Agency has issued warnings. If you want to try cryptocurrency trading more safely, we recommend opening an account at a domestic exchange such as Binance.

Binance

Binance is a Chinese exchange. Since its birth in 2017, it has become the “world’s number one” exchange with many registrants. The transaction volume and the number of registrants are said to be the highest in the world.

The appeal of Binance is that it offers even more discounts by paying with low fees and Binance coins. The fee is 0.1%. In terms of trading volume of Tether (USDT), Binance ranks first among the exchanges, and the handling of other currencies is abundant with more than 100 types.

Cryptocurrency tether (USDT) will continue to attract attention

In this article, I explained about the cryptocurrency tether (USDT), which is attracting attention. It is a peg currency that has a different meaning from other virtual currencies, and its biggest feature is that it has a stable value in any virtual currency market.

In order to maintain the low price fluctuations that are the merit of the peg currency, it is essential that Tether Limited always operates stably. If this collapses, there is a risk of a sudden crash. These disadvantages should be well understood when trading tethers (USDT).

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