The STEEMIT Crypto Academy Week #6 Homework Submitted to @yohan2on | The Tether (USDT) Stablecoin| @bukkyi4u

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What exactly is tether (USDT)?

Tether (USDT) can be classified under a kind of cryptocurrency known and referred to as stablecoins. In fact, over the years it has grown to become the most widely recognised stablecoin all around the globe.

The importance of it cannot be overemphasized. This is due, largely, to the fact that it can serve different purposes for investors. Actually, the tether (USDT) has had to pass through a lot of controversies before gaining its current prominence in the stable cryptocurrency ecosystem.

Interestingly, tether (USDT) has the ability to provide stability in the modern digital assets ecosystem. Again, it can be of help against the volatility in the market by providing liquidity as a buffer against it.

What is a stablecoin, anyway?

Stablecoin is a term used in referring to some important digital asset elements that have their values fixed to other commodities outside of the blockchain market.

Stablecoins are known to have a high level of stability. This is very useful in solving the problem of volatility as often seen in cryptocurrencies. In order to avoid the exigency of converting assets to fiat currencies, investors could more easily rely on and make use of stablecoins.

As has often been the case, stablecoins also have their values pegged or fixed to fiat currencies. The tether USDT has had its value fixed against the US dollar. So, one tether (USDT) is equal to $1. This is always redeemable at the Tether Unlimited.

Introduction of tether?

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Actually, the first to be introduced with the prototype of operating as a stable coin was the Realcoin. When the Realcoin project was first introduced in its whitepager in July 2014 it generated a lot of ripples in the market. Interestingly, the project was being spearheaded by some of the very big names in the market such as Craig Sellars and Brock Pierce.

By November the same year, the name Realcoin metamorphosed into Tether for some reasons. The first was the UStether which was fixed against the US Dollar in a ratio of 1 is to 1. The next one was fixed against the Euros. Lastly, the Yen tether was fixed against the Japanese Yen.

The operational model of tether

Pegging or fixing the price of a stablecoin to an outside commodity is not actually as simple as it may have been made to sound. In trying to tackle this, Tether Limited had initially claimed to hold, in reserve, an amount of dollar which is equivalent to the value of USDT issued.

However, this claim could not hold water over the years as the issuance of USDT gradually skyrocketed into billions. Consequently, the company claimed that the value of the USDT was backed by loans which had been given to companies affiliated to them. Globally, the tether is still the number one recognised stablecoin in the market.

Equally, the tether operates on the Omni blockchain protocol. Initially, the Omni protocol was known to have been anchored to Bitcoin. This is reassuring as the Omni is now also pegged to Litecoin and other blockchain cryptocurrencies. This further shows the ability of the tether USDT to adapt to the market.

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Importance of tether

1 The tether USDT can act as a fallback strategy when the bears take over the market and investors have to convert their tokens to fiat currencies. Goal.com the volatility and large fees involved for big corporations, it is useful and profitable to simply convert currencies and store up in tether as a third option.

1. Investors can frictionlessly avoid volatility by converting to tether USDT since it is also another cryptocurrency.

2. It can be sent round the world without attracting additional transaction or transfer fees. This is to say that it can very easily be transferred just like Bitcoin without having to be converted to any other form.

Conclusion

The tether USDT can help to provide a hedge against the volatility of the cryptocurrency market.

For US traders it can be purchased at the Kraken market. Also, it is available for advanced users at the Binance market.

Cc:-
@yohan2on
@steemitblog
@steemcurator01
@steemcurator02