What To Know Before Investing In USDT
Cryptocurrencies are considered one of the world’s best-performing assets as far back as 2019. Digital currencies are known to have multiple advantages over fiat currency when it comes to a thriving investment, which USDT has been making a buzz in the crypto industry.
Valued with a market cap of $72 billion, Tether is ranked the fourth largest cryptocurrency currently ranks as the third-largest cryptocurrency. Unlike another cryptocurrency with fluctuating prices, Tether’s price is pegged at $1. This illustrates that investing in USDT is not like investing in cryptocurrency in the real sense. Here’s a full primer with all the important information about it.
In the move to invest in USDT, here are some facts to know about the stablecoin:
Table of Contents
1. USDT Has A Controversial Reputation
USDT might appear because of its status as a stablecoin that is decentralized, but there is a need to be wary of investing in it. This is because Tether Limited, which is the issuing company lacks the best reputation.
‘Trust’ is the hallmark of USDT’s stance on crypto investment. Tether’s claim to being supported by $1 has been refuted following a report which shows that 2.9% of USDT is supported by fiat money.
Also, USDT has been indicted for allegedly covering up its nexus to a crypto exchange, Bitfinex. It was revealed that USDT and Bitfinex are owned by the same parent company, in which the latter has since been blacklisted before.
2. The Allegation Of USDT Used To Distort Bitcoin Price
There have been claims from different critical quarters that USDT (stablecoin) is wired towards Bitcoin price inflation. However, it is best to know that USDT company, Tether Limited has absolute control over USDT supply. Contrary to how Bitcoin is created through mining, the Tether company is chiefly saddled with the responsibility of releasing new coins at its prerogative.
Therefore the digital currency is acclaimed of mint coins being the function of the number of funds needed. Due to these conjectures, USDT is not reputed with a perfect 100% transparency.
Meanwhile, USDT company has the propensity to create new coins to buy Bitcoin, thereby availing the company with buy Bitcoin with digital currency and shoot up the Bitcoin price.
3. USDT Price Has Fluctuated From $1
The real intention behind USDT is its price being at $1. However, there has been a narrative twist to its value as there have been some events when the price has had an increase and decrease.
The question is what has caused this shift from the original in those instances? This answer is attributed to demand and supply. The fall in prices of cryptocurrency in the interest of investors wanting to sell more coins, demand for USDT can lead to a price increase. This scenario is evident in 2020, following a slight increase in USDT price to $1.06. On the other hand, negative news about USDT has been contributory to its price fall in the past. This happened briefly in 2018 when it had a value of $0.90.
In these similar events, USDT company has it in its capacity to control the supply to get the price back on track. So it is important to have in mind that buying USDT is not a guarantee that it will be redeemed for $1.
4. USDT Can Be Used To Buy Crypto, Transfer Money, Or Earn Interest
USDT may not be one of the best crypto investments, but it is considered the best stablecoin. USDT is useful in various ways.
- Buy cryptocurrencies: sending money from a local bank account into a crypto exchange might. be a matter of days, but buying USDT is fast without hassle. USDT can be easily used to make cryptocurrency purchases.
- Send money: a good option of sending money between crypto exchanges or wallets is using USDT. This is because USDT transactions between USDT wallets are free of fees, albeit there are standard blockchain charges.
- Earn interest: cryptos like USDT have the benefit of a stable value towards earning a 25% interest rate while lending coins. Even at that, money could be lost in the event of a fall in the price of the cryptocurrency being lent.
For the reason that USDT is created to perfectly work with other cryptos across the world as a viable asset, the technology is still in its earliest stages of operation. Buying USDT is characterized by the relevance of being able to exit discrepancies in cryptocurrency, which is from trading towards the consolidation and security of USDT value. However, it is very easy to buy USDT from any wallet and store it in wallets like Prestmit wallet.