What is Tether (USDT)?

Tether is a blockchain-based cryptocurrency whose tokens are backed by fiat currencies like the US dollar, euros or cash equivalents, which are held in reserve by Tether Limited. Tether (USDT) is a type of cryptocurrency known as stablecoins. Stablecoins are a type of altcoins that are backed by fiat currencies so that they can have the price stability of the currency they are pegged to.

Cryptocurrencies like bitcoin are known for their high volatility which leads to fluctuations in prices. And despite the solutions they provide as a medium of exchange and investment opportunities, this high volatility is a cause of concern for many cryptocurrency users around the world. In addition, access to cryptocurrencies with local currencies may prove to be challenging in some instances. But, Tether presents a solution to these challenges.

Tether is a type of stablecoins specifically known as fiat-backed stablecoins. This is relevant because not all stablecoins are backed by fiat currencies. Some are backed by commodities like gold, other cryptocurrencies like ether, or not collateralised at all. In the case of USD tether, however, there are actual US dollars held in a bank to back every tether token issued by the company. That means for every US dollar in Tether reserve, there is an equivalent tether token mined. So, 1 tether token has the same value as 1 US dollar.

Essentially, a tether token has both the characteristics of fiat money and a cryptocurrency. So, if you have US$100, you can purchase exactly 100 USDT with it. But you can do more with it than you can with your fiat money because it exists on the blockchain which inherently provides benefits such as transparency, security and ease of transacting.

USDT offers amazing opportunities for many, especially those living in countries with weak economies. We will highlight some of those benefits below:

Today, Tether is the most popular stablecoin in circulation. Most cryptocurrency exchange platforms offer tether pairs to their users so that they can easily trade cryptocurrencies. However, tether has faced many challenges since its creation; the most notable one has to do with tether reserves.

Proof of reserve

When tether was created, the company claimed that every tether token is backed by an equivalent dollar in reserve. But as the use of tether grew, the issuance of tether tokens ran into billions which began to raise doubt as to if the company actually had the reserve to back all the tokens in circulation. In response to this, Tether Limited announced a scheduled audit to verify reserves backing, however, the audit never came.

In 2019, the company changed the backing of tether to not just money in reserve but also pans to affiliate companies as well as clarify that each tether token was backed by only $0.74. While these controversies have raised some doubt about the transparency and reliability of tether, the stablecoin has nonetheless remained the top favourite by traders and investors around the world. Tether Limited also began to publish a daily report of its reserve for the sake of transparency.

As a company whose mission is financial inclusion for all, Yellow Card makes it easy for anyone to buy, send, receive, sell and even store Tether (USDT) with the Yellow Card app.

In 3 simple steps, you can take your fiat money or your Bitcoin and convert it to USDT easily. Here’s how to save USDT on Yellow Card:

That’s it!

You can store your USDT in your Yellow Card wallet for as long as you want or sell it whenever you want to convert it back to your local currency.

You may also send USDT to friends and family anywhere in the world by having them sign up on Yellow Card or to an external wallet at no fees from Yellow Card. With this, you can easily attain financial freedom by meeting your financial goals early.