Introduced in 2014 by Tether Limited, Tether (USDT) is a cryptocurrency with a difference. Unlike its counterparts whose value is tied to an algorithm, Tether is an asset pegged cryptocurrency, and hence, sometimes referred to as a stablecoin. A stablecoin is a cryptocurrency designed to maintain resilience amidst volatile market scenarios. Every Tether coin is backed by 1 USD fiat currency.
Why Buy Tether or USDT?
USD-backed stable cryptocurrency
If you want the growth of cryptocurrency, but are concerned about the extreme volatility of the crypto markets, USDT trading is the way for you. It offers the stability of the fiat currency. Tether is redeemed for U.S. dollars. Moving value to USDT, is a good way to mitigate risks like sudden drop in the price of cryptocurrencies.
Overcome transaction fees
The conversion of cryptocurrency value to a fiat currency generally attracts some transaction fee. However, transactions using USDT as opposed to the U.S. dollar helps you save on transaction fees and delays that impair trade execution within the crypto market. So, whatever, you make in the trade is totally yours.
Faster and risk-free trading
Tethers are immune to market risks such as Black Swan events, liquidity crunches, etc. Being backed by USD, most of the times, exchanges price their coins in USDT instead of USD. It helps them move around the value freely without technical or accountancy related frictions.
Top 3 Exchanges to Buy and Sell Tether (USDT) in India
PCEX Member is a leading crypto trading platform in India to buy and sell USDT. Offered by Panaesha Capital Traders, this platform is backed by high liquidity. Manage your asset effortlessly using its mobile app available on Google Play.
Out of the many reasons why crypto investors in India prefer PCEX Member a few includes: acceptance of INR as a fiat currency. It means you can buy and withdraw in INR.
It offers smaller lot size as compared to its competitors. The advantage of low lot size means it fills faster, and you don’t need to wait long.
It has a low transaction fee of 0.3%. There is no deposit fee. Up to INR50,000, withdrawal fee is waived off (Standard). By paying a transaction fee as low as INR10, you can avail instant withdrawal.
Bitfinex was first to list Tether. Bitfinex is one of the largest Bitcoin exchanges by volume in the world. However, the above discussed allegation has substantially affected its reputation in the crypto trading market. It has a multi-tiered transaction fee structure starting from 0.1% (up to $500,000) to 0.0% ($30 billion).
Kraken is also a popular platform for trading USDT, but it currently doesn’t support INR as fiat. You have to buy and sell in terms of USD only. Kraken is a US-based cryptocurrency exchange. It keeps its transaction fee low. For buying USDT using a payment card (credit/debit), a transaction fee 3.75% + €0.25 is applicable.
A Sneak Peek into Tether Technology
- First Layer or foundation: Bitcoin blockchain model
- Second layer or intermediary: Omni Layer Protocol
- Third layer of the user interface: Tether Limited
- Tethers can be used just like bitcoins, i.e., in a P2P (Peer-2-Peer), pseudoanonymous, decentralized and cryptographically secure environment.
- Tethers can be integrated with merchants, exchanges, and wallets just as easily as Bitcoin
- Tethers uses Omni Layer protocol which include: a decentralized exchange; browserbased, opensource, wallet encryption
- Tethers have Bitcoin Based transparency, accountability, multiparty security and reporting functions
Step 1 The amount paid by a user to buy Tethers on any exchange goes into the Fiat reserves of Tether Limited.
Step 2 Tether Limited issues Tithers equivalent to the fiat. Tethers enter circulation. Amount of fiat currency deposited by user = amount of tethers issued to user (i.e. 10k USD deposited = 10k tether USD issued).
Step 3 User starts trading with Tethers. The user can transfer, exchange, and store tethers.
Step 4 The user deposits Tethers with Tether Limited for redemption into fiat currency.
Step 5 Tether Limited destroys the tethers and sends fiat currency to the user’s bank account.
Tether or USDT Controversy
Over the past few years, several critics questioned the reserve of Tether over price manipulation. Lewis Cohen, the New York Attorney General, has accused the Bitfinex exchange, where it was largely traded, of covering up a missing fund to the tune of $850 million since mid-2018. On 30 April 2019, Tether Limited’s lawyer confirmed a decline in Tether’s backing from USD1 to USD0.74. The company was expected to submit a verifiable audit of its dollar reserves.