Crypto Academy Week 6 Homework Post for @yohan02 - Tether(USDT)- Stablecoin Crypto

Before I commence with my week 6 homework I would like to aknowlwdge and give thanks to @yohan02 for making corrections on my last week homework post. Stablecoin is a type of cryptocurrency that has its value pegged to an outside asset, like gold or U.S dollar to make its price stable. Examples include, tether (USDT), true USD (TUSD), binance USD (BUSD), Steem backed dollar(SBD) and DAI. I would be writing about Tether (USDT) stable coin.

WHAT IS TETHER (USDT) STABLECOIN?

Tether is a blockchain- based cryptocurrency that has its coins pegged by an equivalent amount of traditional fiat currencies, like dollar, euro or the Japanese yen, which are kept in a designed bank account.
Tether is the most popularly known stablecoin used around the globe.

It is called a stablecoin because it was purposely created to always be worth $1.00 and maintaining $1.00 reserves for each tether issued. Tether is a controversial cryptocurrency with tokens issued by Tether Limited.

Tether was launched in July 2014 as RealCoin and was rebranded as Tether in November by the Tether Limited and started trading in February 2015.

The tokens of tether and the native tokens under token network are all traded under the USDT symbol. Tether is categorized under the fiat collateralized stablecoins that is they are pegged to the USD and EUR currencies.

HOW DOES TETHER WORK?

Tether converts cash into digital currency, to tether the value of the coin to the price of traditional currencies such as the US dollar, the Euro and the Yen. It also uses blockchain just like the other cryptos. But it is 100% backed by USD, i.e. every tether is backed by dollars pegged in reserve in a ratio of 1:1. This means 1 Tether USDT Token is equals 1USD.

HOW TO BUY TETHER COINS USING BINANCE?

Tether can be purchased using credit card or Tether digital wallets such as Binance, OKEx, Bittrex, Kraken and Poloniex. The following is the steps in buying tether using Binance;

1. Register for binance account if you don’t have one.
2. After registration you then fund your account by selecting wallets from the website, then you select deposits.

1. After clicking on deposit, enter the ticker (BTC for bitcoin or ETH for ethereum) for the cryptocurrency you wish to deposit and select it from the drop- down menu.
2. Copy the address given out by the website and go to your wallet and send the amount you want to purchase to the address copied.

1. Check your balance to confirm whether your funds is fully deposited.
2. Now place a buy order for tether by clicking on trades
3. Then you select the currency exchange you going to use, i.e. Tether/BTC exchange

1. Enter the amount you want to buy. eg.10 Tether
2. Now click on Buy Tether to confirm your transaction.

HOW TO SELL TETHER USING BINANCE

1. Enter on markets to make your trade

1. Select the exchange you want to sell your tether to. Eg. Tether/ETH
2. Enter the amount of tether you wish to sell
3. Click on Sell Tether and then confirm your transaction made.

ADVANTAGES OF USING TETHER

1. Low fees: Tether as compared to other stablecoins cryptos has a low fees to them. i.e.there are no fees for transfer of tether once it is in the Tether.to wallet.

2. Easy to use: Tether can be used and understood by non-technical users due to their one to one backing system.

3. Tether doesn’t endure price volatility: Tether’s currency reserves make sure that one Tether will always be equal to one USD.

4. No Liquidity Constraints: Tether users can choose to buy or sell any amount of tether tokens at whichever pace they wants without any liquidity concerns.

5. Easy integration

6. Strong industry supporters and partners

DISADVANTAGES OF USING TETHER

1. Dependent on good financial relationships and legal authorities: Tether is highly reliant on the banks which they operate with as well as legal institutions.

2. Centralized, Permissioned and trust Dependent: Tether limited and their currency reserves are all centralized but they claim to be decentralized which is not. The whole tether system is dependent on Tether Limited’s capability and willingness to hold the currency peg.

3. Unknown Audits: Tether Limited has released many updates on their website but have not mention any new anything concerning mew auditors. Their most recent audit was in September 2017.

4. Deanonymization to buy and sell Tether: Tether’s website requires verification and confirmation of accounts for any buying and selling for fiat money, meanwhile users can deposit and withdraw tether anonymously on their website.

CONCLUSION
Tether as a stablecoin has many potential benefits but it’s very significant to consider whether its approach is feasible and realistic. I would say tether is still in its early stages but we wait to see whether Tether Limited can realize the full potential of its product.

Tether gives the pros of a cryptocurrency with its stability with the traditional fiat for
now, but the Tether token also leads one to the risks in both systems as well so be lets be vigilant and invest wisely.

Thank you to all and sundry for reading my post.
Thanks to;
@yohan02