- News and analysis
- Tethering the Blockchain: A Coin That Could Revolutionize Crypto
Tethering the Blockchain: A Coin That Could Revolutionize Crypto
Cryptocurrency volatility is a double-edged sword. On the one hand, volatility provides great opportunities for investors. On the other hand, volatility makes it difficult to use cryptocurrencies as a means of storing value. But did you know that there is a way to reduce the potential risks and negative properties of volatility? Stablecoins like Tether (USDT) serve exactly that purpose. Unlike other cryptocurrencies, the price of Tether usually holds steady at $1.
Stick around as we tear into the nuts and bolts of USDT and find out what makes it tick! ⚙️
The Origins of Tether USDT
We're going to jump in the time machine and ‘dial in’ January of 2012 when a fellow by the name of J.R.Willet proposed the idea of building new currencies on the Bitcoin protocol. This idea materialized in Mastercoin, which aimed to use a new second layer on the Bitcoin blockchain. Mastercoin would eventually become the technological backbone of the Tether cryptocurrency. The MasterCoin protocol has been incredibly successful. Renamed and now known as "Omni Layer," it now serves as the underlying protocol for the Tether USDT, which is the most traded cryptocurrency token after BTC itself.
In July 2014, a few team members from the Mastercoin project established their own startup called Realcoin. Later that year, Realcoin was renamed ‘Tether’ referencing its ties to fiat currency, the US Dollar.
What is USDT?
On the farm, animals are often tethered to something using a rope. We rarely use the term in the technological sense, but our smartphones can also be tethered to other devices via WiFi or Bluetooth. 📱📶
So what does this have to do with Tether the cryptocurrency? The word Tether means "tying" in a cryptocurrency context, that is, we are talking about tying Tether to real-world fiat currencies. 🌎
The stablecoin, USDT is considered a new type of crypto ‘species’. Stablecoins are a type of cryptocurrency backed by reserve assets; these assets could be anything from gold to the Euro or in most cases, the US Dollar.
The key with stablecoins that many say is it gives owners a sense of security like crypto with the potential stability like in fiat.
Tether combines fiat currencies with cryptocurrencies, creating a new digital asset that has all the benefits of blockchain-based cryptocurrency, but with less volatility. Each token is backed by a fiat currency such as the U.S. Dollar, Euro, or Japanese Yen, and the coin maintains a 1:1 ratio (1 USDT = 1 USD). Meaning for every 1 USDT on the market there is an equivalent 1 USD in its reserves.
Tidbit: By definition, a 'tether' is a line tied to an object to restrict its range of movement. This connection is represented digitally, meaning each Tether coin is equivalent to 1 US dollar or alternant reserve currency essentially, making it a 'digital dollar'.👾
How does Tether work?
The mechanism used by Tether Holdings Ltd, in which it holds U.S. dollars provided by investors, helps create dollar reserves. When a user deposits fiat currency into the Tether pool by selling fiat to buy USDT, Tether then issues the corresponding digital amount in tokens. The USDT can then be sent, stored, or exchanged.
Furthermore, Tether moves around the blockchain like many other digital currencies. Tether tokens are available on various blockchains, such as the original with Omni on the Bitcoin platform, Ethereum (ETH), and TRON (TRX), among others.
👇 Quick Breakdown:
- Omni Layer is neither a fork of Bitcoin nor its own network, but rather a meta-layer on top of Bitcoin. In essence, it is a software layer built on top of the Bitcoin blockchain that extends Bitcoin's capabilities with its own additional features.
- Omni is a digital currency based on the Bitcoin blockchain.
Tether (USDT) has been issued on Ethereum in accordance with the ERC-20 standard in large numbers, accounting for about 50% of the total supply of this stablecoin. In August 2019, the ERC-20 USDT version surpassed the Omni version in a number of transactions, and in October of the same year, it surpassed it in the market cap and never looked back.
Today, the ERC-20 version of Tether is the indisputable leader in the market cap between the two. 🏆
Why use Tether?
Now let's consider Tether USDT’s main characteristics:
🧱 Stability and Collateral. Each token is tied to a specific fiat currency, so its value always remains the same. Stability of value is ensured by a 1:1 ratio, i.e. 1 USDT will always be equal to one 1 USD.
Transparency. If you have any doubts about the reliability of the fiat reserve, don't worry. Tether publishes daily reports, and you can verify that all USDTs in circulation correspond to the reserve.
🛡️ Blockchain technology provides security of use. Tether is based on an open blockchain and because of this, it can take advantage of the benefits that make blockchain secure and transparent.
Moreover, Tether regularly expands and offers its own counterparts in the market:
EURT - Euro CNHT - Chinese Yuan XAUT - Tether Gold MXNT - Mexican Peso
Benefits and Features
Traders and investors can use Tether for a variety of purposes, taking advantage of the cryptocurrency's versatility:
- Tether is extremely stable and not subject to volatility. Discrepancies in the exchange rate can be tenths of a fraction.
- Tether functionality allows users to remain anonymous and not risk personal data. 👀
- USDT is a reliable cryptocurrency that is accepted by many crypto exchanges around the world, including NAGAX. It can be successfully converted to any local currency at a favorable exchange rate.
- Tether is insured against risks by Tether Limited's own assets.
- Currently, Tether USDT is the third-largest cryptocurrency by market capitalization, behind only Bitcoin (BTC) and Ethereum (ETH).
Is Tether a good investment?
Tether is not really considered to be an investment because it is designed to keep its price at $1. However, unlike other cryptocurrencies, Tether has very few risky elements. Therefore, it is considered a stable and secure cryptocurrency.
Tether (USDT) has the potential to be more widely used in online transactions. It could also become more popular among traders on cryptocurrency exchanges.
Tether at NAGAX
Tether (USDT) is an exciting stablecoin that combines the novelty of cryptocurrency tokens with the relative stability of fiat currencies. Until today, Tether remains the most popular stablecoin in the cryptoverse. With billions in daily volume, the ability to run on different blockchains, and almost universal acceptance in cryptocurrency applications, Tether is a favourite among traders and crypto-enthusiasts.
With NAGAX's easy-to-use features, you can invest in crypto assets with ease. To buy $USDT on NAGAX, follow these three steps:
- Sign up for a NAGAX account.
- Buy $USDT instantly with a Debit/Credit Card or with other cryptos through the intuitive NAGAX Wallet or Exchange.
- That’s it - you’re good to go!
When it comes to buying crypto, you have a lot of options. You can directly purchase $USDT with a credit/debit card or other cryptocurrencies (BTC, ETH, and more) in the NAGAX Wallet.
To learn more about buying crypto at NAGAX, please click here.
Discover Tether with NAGAX today! 🚀
- Tether is the third-largest cryptocurrency in the world by market value.
- Tether provides transparency, liquidity, and stability to volatile cryptocurrency markets, allowing investors to balance their risks.
- All Tether transactions are stored in public blockchains.
Important Notice: Any news, opinions, research, analyses, prices, or other information contained on this feed are provided as general market commentary and do not constitute investment advice or solicitation for a transaction in any financial instrument or unsolicited financial promotions. All material published on the website is intended for informational purposes only. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and therefore, it is not subject to any prohibition on dealing ahead of dissemination. We do not make any warranties about the completeness, reliability, and accuracy of this market commentary. Past performance is not an indication of possible future performance. Any action you take upon the information on this feed is strictly at your own risk, and we will not be liable for any losses and damages in connection with the use of this feed.
Risk Warning: Cryptocurrencies are highly volatile and trading can result in the loss of your invested funds. Before investing you should be aware that cryptocurrencies may not be suitable for all investors. You should therefore carefully consider whether trading or holding digital assets is suitable for you in light of your financial condition and not invest money that you can not afford to lose.