STEEM CRYPTO ACADEMY WEEK 6 HOMEWORK POST FOR @yohan2on – STABLE COINS (TETHER)

Hello professor @yohan2on, Thanks for this week's lectures. I'm grateful for a great opportunity to learn more about stable coins. Below is my homework task. Please join me!

Stable coins are those coins whose value is attached to the value of other assets like Fiat currencies, gold or other cryptocurrencies in order to reduce the the vulnerability of the coin.

With this in mind, we would be focusing on Tether (USDT) as a stable coin.

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TETHER (USDT)

This is a stable coin in which value is attached to that of the US dollars in a 1:1 ratio. This means that 1 USDT is equivalent to 1 US Dollar. Furthermore, if a Fiat currency like Naira is exchanged at the rate of N365 per Dollar, one USDT would be approximately 365 Naira.

If a cryptocurrency is to be used as a means of exchange, one major issue or challenge that is faced is the volatile nature of cryptocurrency as crypto rates change from time to time.

This same volatility challenge is applicable in the case of using cryptocurrency as a store of value. However, this issue could be addressed with the use of stable coins like Tether (USDT).

IMPORTANCE / MERITS OF TETHER (USDT)

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Below are the advantages of Tether;

1. Cutting across barriers:

Unlike the normal USD which is limited in scope, USDT is widely accepted by all individuals who deal on cryptocurrency no matter the location. It is a currency and it is accepted and supported by many organizations for transactions.

2. Shorter and easier access:

Exchanging USDT for a Fiat currency can be done in a matter of minutes in an exchange, unlike changing a local currency with the normal US Dollars which is time consuming and requires a lot of protocol.

3. Reduced risk of volatility:

Another advantage of USDT as a stable coin is that it is stable just like the name, hence, the risk of volatility is minimal.

For instance, in a case where a trader is trading and the cryptocurrency price starts fluctuating, the trader can simply convert that crypto to Tether and hold until the price fluctuations stop. This way, such trader is being protected from incurring losses.

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4. Protection against inflation and currency devaluation:

Countries that are prone to inflation especially developing countries like Nigeria are likely to experience weak and devaluing currencies. In order to guard oneself against lost of value for such a currency, one can simply convert their Fiat into USDT and hold.

To further explain this, take for instance that a US Dollar which was exchanged at about 360 Nigerian naira sometime ago could be exchanged at about 420 naira now because of the decrease in the value of naira. The impact of this devaluation would not be felt by those who held their money as USDT.

HOW DOES USDT WORK?

In order to bridge the gap between cryptocurrency and Fiat, USDT brings in more stability to these currencies. It us worthy of note that USDT is a fiat-collateralized stable coin.

In a situation where a local currency fluctuates one may decide to store value in a more stable form and in a more convenient way. USDT comes into play here. Converting the local currency to USDT would also enable the owner to make payment for transactions even outside his or her country; the USDT would be equivalent to the amount in US dollars.

HOW TO GET STARTED

To start purchasing USDT, you have to register or create an account with exchanges such as Binance, OKEx, Bittrex, Kraken, Poloniex, and ZB.co, etc.

Once you verify the account, you can deposit your Fiat or other cryptocurrencies and then start purchasing your USDT.

Thank you so much for stopping by. I appreciate.
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