Did you know that Bitcoin was created in 2009 to be a peer-to-peer electronic cash system? Nowadays cryptocurrency has become more popular and it has led to the creation of multiple types of crypto. We have put together this short guide to share all about tether including what is tether and what you can do with it.
Keep reading to learn the ins and outs of the tether.
What Is Tether?
In lamest terms, the tether is a type of stable coin. Stablecoins were created to be assigned a specific currency. In the case of tether, it is a USDT cryptocurrency where the United States dollar is its main given currency. The claim that tether makes is that every token is backed by a U.S. dollar that is held in its reserves.
The token value does not go up or down like other cryptocurrencies because the value is kept stable by bots that sell and buy if the value fluctuates from the dollar. Every time a user deposits a U.S. dollar into their tether account, the company behind tether (Tether Inc) mints one tether in return.
Every time there is a new coin created the company is supposed to acquire a new dollar in order to back that coin up. The value of USDT should stay equal to a dollar as long as the new dollars are created and destroyed accordingly.
What Can You Do With Tether?
Most crypto exchanges including some Canadian Crypto Exchange accept tether as a form of currency to purchase other cryptocurrencies. Many investors and traders use tether to maintain a stable value coin while holding a position in the crypto market.
People also use tether to hold their funds because the price does not fluctuate. It makes it easier for people to know how much they are holding vs buying a piece of a token such as Bitcoin because they can’t afford to buy an entire coin.
Is It a Good Investment?
Unlike other cryptocurrencies such as Bitcoin and Ethereum, Tether is similar to holding regular U.S. dollars. The value of each tether remains the same, with it fluctuating by a penny or two every now and then. As far as it is an investment – it’s not an investment because there is no potential for the price to appreciate.
Holding tether will not suddenly blow up your portfolio because it is a stablecoin that will always be around $1 U.S. dollar. It is more of an investing tool because you can use it to buy other cryptocurrency investments that the price will fluctuate and can turn out to be a good investment in the future.
Feeling Like a Tether Pro?
We hope that now that we went over what is tether and everything there is to know about this cryptocurrency, you are feeling better prepared to make a decision on whether or not you want to hold tether coins in your cryptocurrency portfolio. If this article helped you out please feel free to keep browsing our cryptocurrency section to become familiar with the other coins that are available.