When you start to join the crypto market, one of the first coins you meet probably is Tether token (USDT). USDT is a blockchain-based cryptocurrency whose tokens issued are backed 1:1 by U.S. dollars. It is also featured as a stablecoin. Here’s everything you need to know about this cryptocurrency.
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What is Tether (USDT)?
USDT stands for Tether tokens, which are pegged to the value of a U.S. dollar and are claimed to be backed 100% by Tether’s reserves.
USDT exists on several blockchain networks, including Omni bitcoin platform (OMNI), Ethereum (ERC20), EOS, and Tron (TRC20). Different blockchain platforms offer different transaction speeds and require different transaction fees.
USDT’s issuer, Tether, also issues other stablecoins:
- EURT, which is pegged to the Euro
- CHNT, which is pegged to the Chinese Yuan; and
- XAUT, which is a digital token backed by physical gold.
Is Tether a Stablecoin?
Tether is a stablecoin. A stablecoin offers less volatile price, which often is pegged to fiat money or other assets. USDT is one of the early issued stablecoin by Tether, who claims that USDT is backed up by Tether’s 1-to-1 USD reserve.
Where can I buy USDT?
Like other cryptocurrencies, you can get USDT from another seller via a P2P transaction or buy on some crypto exchanges. Buying on an exchange may be a good idea. Exchange platforms let you easily pair up USDT senders and/or allow you to purchase USDT directly. You also need to spend effort researching a reliable exchange platform. After that, you need to register an account on the exchange platform. The registration sometimes requires identity verification by providing a copy of your passport or ID in your judiciary.
How to use USDT?
USDT has two prominent functions, as a digital currency to buy other cryptocurrencies and as a stablecoin to preserve value in the volatile crypto market.
1. Buy other cryptocurrencies
USDT is often used to buy other cryptocurrencies. There are two advantages of using USDT to buy cryptocurrencies instead of fiat money (such as USD): low fees and low latency.
You can think of USDT as a common currency in the crypto market. Compared with trading cryptocurrencies with fiat money, transactions between cryptocurrencies may have lower handling fees, also faster transaction speeds. Since USDT can be sent digitally, irrespective of the border, it allows the buyers and sellers to trade at lower fees without involving banking services.
The price of a cryptocurrency is changing all the time. Therefore, the shorter the time between “investor wants to place an order” and “order is established”, the better, so as to avoid that when the order is established, the price that investors originally looked at is no longer there.
2. Preserve Value
In addition to purchasing cryptocurrencies, USDT is also used to preserve value in the crypto market. When investors are worried that the value of the cryptocurrencies they own may plummet, investors can exchange the cryptocurrencies for USDT to save the value without withdrawing from the crypto market.
How to withdraw USDT?
Although USDT is a stablecoin, you still may want to withdraw USDT from exchange platforms or from the crypto market to save the value or for other usages.
If your USDT is bought on a crypto exchange and held by the exchange, you can withdraw USDT from the exchange and send it to your digital wallets or another exchange platform. The follows are the common steps you are going to take:
- Visit your account of the exchange holding USDT
- Request withdrawal for USDT
- Select the right network
- Copy and paste your wallet’s digital address
- Confirm and send the USDT
If you want to withdraw USDT completely from the crypto market, you need to sell your USDT for fiat money. The trade can be done on some online exchanges or even in physical stores. On an online exchange, you can sell your USDT to the exchange or other users.
Selling USDT to the exchange would allow you to convert USDT to a fiat currency (e.g USD) almost instantly. However, you need to be aware of the transaction fee and exchange rate. Often a small amount transaction will incur a higher transaction fee in terms of percentage.
You can also sell your USDT via P2P transactions. You can find USDT buyers via an exchange platform or a real crypto-exchange store. You and the USDT buyer agree on an exchange rate for your USDT and a fiat currency.
Where to stake USDT?
Staking refers to locking up specific cryptocurrencies to help validate the transactions on that crypto’s blockchain with the same coins rewards. USDT are issued and redeemed by Tether without the use of mining or staking. Therefore, USDT does not deal with staking in this way.
However, some crypto exchange platforms provide staking for USDT in a broader sense that users can earn rewards by depositing USDT in that exchange. The users can redeem their deposited USDT after a specific time or anytime, depending on the plans.
Quick recap
Tether (USDT) is one of the most famous stablecoins; it is a form of crypto that is pegged to the U.S. dollar, serving as a common cryptocurrency for further crypto trading. If you are new to the crypto market, getting USDT would be one of the gateways to the market. You can also sell other cryptocurrencies for USDT if you foresee the crypto market will go downward in the short term.
If you are holding USDT, a smart way to earn passive income is through staking, i.e. depositing your USDT to earn interest. Like many other investments, staking presents an opportunity to earn more, as well as risks, which can be extensively limited by ensuring due diligence before investing in a staking program.
One platform to start your staking is on hi.com. The platform runs a PoS consensus mechanism that supports staking for participants. Hi.com offers flexible earnings for stakes, with eligible payouts in 7, 180, or 365 days. The platform also supports earnings for users who hold their crypto assets on hi, with up to 40% annual percentage yield (APY) – arguably one of the highest across the blockchain industry today.