What about converting a Fiat currency to a Digital currency: Tether is the solution to it.
What is Tether?
As mentioned in the whitepaper, Tether(USDT) is:
“A digital token backed by fiat currency provides individuals and organizations with a
robust and decentralized method of exchanging value while using a familiar accounting unit. The innovation of blockchains is an auditable and cryptographically secured global ledger. Asset backed token issuers and other market participants can take advantage of blockchain technology, along with embedded consensus systems, to transact in familiar, less volatile currencies and assets. In order to maintain accountability and to ensure stability in exchange price, we propose a method to maintain a one-to-one reserve ratio between a cryptocurrency token, called tethers, and its associated real-world asset, fiat currency. This method uses the Bitcoin blockchain, Proof of Reserves, and other audit methods to prove that issued tokens are fully backed and reserved at all times.”
Tether(USDT) is a cryptocurrency in Blockchain technology that has a value that mirrors to that of a US dollar. The underlying idea is to make a cryptocurrency which is stable and can easily be used as a digital dollar.
Stable coin here refers to a coin that can be used as a stable substitute for dollar. Currently, Tether is the most used and famous stable coin that is used a as digital currency.
Tether is a cryptocurrency that transforms cash into digital currency. Its main purpose is to tether or anchor the price of the coin to that of the currencies like US dollar, Euro and Yen.
Tether is based on blockchain technology and is “100% backed by USD”. This means that there is a 1:1 ratio of Tether to USD and trades at 1 USD on all cryptocurrency exchanges and can easily be replaced by the fiat currency.
Having said that, it is clearly visible that the main aim of Tether is to provide a stability to cryptocurrency market which otherwise is unpredictable in nature. Along with stability, it also offers liquidity to the cryptocurrency exchanges that can’t deal in US dollars and transact with banks. This means, with Tether one can easily deal with banks that do not accept Fiat currencies.
Also Read: Top 5 Trends of Blockchain Technology 2018
Benefits of Tether:
Tether offers many advantages over other coins and fiat-pegged cryptocurrencies, lets read further to know what they are:
- Tether works in Bitcoin blockchain environments rather than other less-developed blockchain environments like altcoin.
- Tether can easily be used as Bitcoins in different environments like p2p, decentralized etc. which are cryptographically secure.
- Integration with dealers, exchanges, and crypto-wallets is easy with Tether.
- Inheritance of Omni-layer protocol allows Tether to include: an exchange which is decentralized in nature? browser-based, opensource, wallet encryption? transparency, accountability, multiparty security and reporting functions based on Bitcoin.
- It is free from market risks like Black Swan event since they are 100% backed by US dollars.
- Since Tether is backed up by US dollar in a 1:1 ratio, it is easy for users to understand and use this cryptocurrency.
- As Tether is not affected by any liquidity or pricing issues, it is easy to issue and withdraw this cryptocurrency.
Applications of Tether:
This section describes all the areas where Tether can be applied in the Bitcoin blockchain environment and other users across the globe.
We have tried to bifurcate the beneficiaries into three categories mainly Exchanges, Merchants, and Individuals.
Listed below are the benefits that are common to all three categories:
- Tether has similar working properties of Bitcoin.
- It is less volatile and a familiar accounting unit,
- Migration of world’s assets to the Bitcoin blockchain.
Fiat currency deposits and withdrawals in the old-fashioned system are always complex, time-taking, risky and slow. These problems can easily be eliminated if the fiat currencies are replaced with the digital currency. Here are the underlying benefits of using Tether as a digital currency:
- Exchanges can easily benefit by accepting crypto fiats for deposit/redeem or storage, rather than relying on physical banking systems.
- Easy transactions in and out of exchanges.
- Customer assets are secured and accepted only by crypto processes.
- Provides security through multi-signature.
- Fiat balances between different exchanges can easily be settled in real-time.
The biggest problem for merchants is the poor payments solutions. Using Tether as the global payment system, the merchant can benefit in various ways. Below are listed some of the major benefits:
- Merchants can offer services in different digital currencies.
- Reduced operational costs.
- Fee reduction, enhanced privacy and low-rate of chargebacks.
- Easy pricing of goods and services in currencies familiar to customers.
Besides merchants and organizations, individuals are seen inclining towards Bitcoin blockchain. Here are some ways, they can benefit from Tether:
- Easy and smooth movements of cryptocurrency between wallets and exchanges.
- What can be done with Bitcoin as an individual, can also be applied to Tether.
- Easy elimination of Fiat banks to store fiat values.
Tether is the first fiat-pegged cryptocurrency based on Bitcoin blockchain environment. Backed up by US dollars in a 1:1 ratio, it is most secure and non-fluctuating cryptocurrency and is free from pricing and liquidity constraints.