What is Tether? Beginner’s Guide to Tether (USDT)

About (USDT)

Tether (USDT) is a stablecoin issued by a company called Tether Limited that is governed by the laws of the British Virgin Islands, but the actual company is incorporated in Hong Kong.

Stablecoins are cryptocurrencies that are pegged to an asset with a stable value, like fiat money or exchange-traded commodities (such as precious metals or industrial metals). Stablecoins aim to maintain stability despite the volatility of other cryptocurrencies like Bitcoin, Ethereum – that allows it to be used as a means of exchanging and storing value, instead of being a speculative vehicle.

Tether is pegged against the U.S. dollar and maintains a 1-to-1 ratio with the U.S. dollar in terms of value, meaning that for every Tether issued, there is an equivalent amount of dollars kept in reserve.

In the Tether Proof of Reserves system, the amount of USDT in circulations can be easily checked on the Bitcoin blockchain via the tools provided at Omnichest.info, while the corresponding total amount of USD held reserves is proved by publishing the bank balance and undergoing periodic audits by professionals.

The steps in the life of a typical Tether token are illustrated in the following image from the Tether white paper:

  1. Users deposit fiat currency into Tether Limited’s bank account (For this example, we are assuming the fiat is USD).
  2. Tether Limited issues an equivalent amount of USDT and deposits it into the users’ Tether accounts.
  3. Users can transact with one another.
  4. Users looking to exchange their USDT for USD can redeposit their tokens into their Tether account.
  5. Tether Limited destroys the deposited tethers and gives the users an equivalent amount of USD.

There are 3 separate protocol versions of USDT — the Bitcoin network-based USDT-Omni, Ethereum-powered USDT-ERC20 and USDT-TRC20 (USDT-TRON).

  • USDT-Omni: USDT-Omni is the USDT first issued by Tether based on the BTC network. The currency deposit address is the BTC address; the recharge and withdrawal will be taking place on the BTC network. The protocol used by USDT-Omni is the Omni Layer protocol built on the BTC blockchain network. USDT-OMNI address starts with “1………………………………”
  • USDT-ERC20: USDT-ERC20 is the USDT issued by Tether based on the ETH network. Its deposit address is the ETH address and its deposit and withdrawal use the ETH network. The protocol of USDT-ERC20 is the ERC20 protocol. USDT-ERC20 address starts with “0x………………………….”. USDT-ERC20 is a type of USDT issued after USDT-Omni, overcoming the disadvantages of USDT-Omni. At Tiktakbtc, we decided to utilise Ethererum-based USDT as the token incurs much lower blockchain transaction fees and has considerably faster confirmation times compared to it’s Omni layer counterpart. These benefits help to facilitate a much smoother and faster deposit/withdrawal process on the platform whilst also giving the same advantages of the Bitcoin-based version of the stable coin.
  • USDT-TRC20: USDT-TRC20 (USDT-TRON) is the USDT issued by Tether based on the TRON network. The currency deposit address is the TRON address, and the recharge and withdrawal will be taking place on the TRON network. The USDT-TRC20(USDT-TRON) uses the TRC20 protocol. USDT-TRC20 address starts with “T…………………………”

USDT is not an Alcoin, according to Reeve Collins, previously co-founded of Tether.

“We’re not an altcoin, we’re not our own blockchain. We’re a service, a token that represents dollars. Our speciality at Tether is currencies on the blockchain, so Tether means a digital tie to a real-world asset and the digital assets that we’re focused on is currencies.”

USDT supports bitcoin and altcoins to penetrate deeper into the international payment market. In other words, USDT is not a competitor of cryptocurrencies – It’s a powerful assistant.

As a stablecoin, with a stable price, no pumps, no dumps, no bubbles, without a doubt, Tether offers an odd coin. The purchasing power of the US Dollar (and all fiats) steadily erodes over time, due to inflation. Therefore, Tether certainly can’t be considered to be an investment. Owning Tether is more like a deposit in a (somewhat risky) bank account that pays 0% interest. So if Tether is riskier than regular cryptocurrencies and provides no possibility of financial gains, why use it at all? (99bitcoins.com)

The reality is that Tether is extremely useful to traders and investors as an alternative to fiat. There are several good reasons why:

  • Make transactions fast and conveniently, reduce intermediate costs: As a stablecoin, price of Tether is quite stable. Along with being a payment gateway on major exchanges along with BTC and ETH, it helps investors to switch between different cryptocurrencies on the exchanges flexibly without having to change to BTC, ETH or USD, eliminating costly intermediary costs.
  • Reducing the risk of price volatility in the cryptocurrency market: Tether is primarily used as a risk prevention tool for crypto traders whenever bad news appears on the market – it’s called “safe haven” in the cryptocurrency market. For example: When U.S. Securities and Exchange Commission (SEC) denied Winklevoss application for a Bitcoin ETF, many traders converted their BTC to USDT to preserve their investment value without leaving the market by withdrawing their investments with the dollar.

However, there is much controversy around USDT. It is a lack of transparency about whether Tethers are 100% backed by actual dollars, as well as doubts about Tether manipulating the market, and the murky relationship between Tether and Bitfinex. Although Tether claimed that “Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD”, many still did not believe this statement. They claim that Tether Limited has issued more USDT tokens than its dollar reserves in its bank account. They also claimed that the Tether team had deliberately pumped Bitcoin price by printing more USDTs.

Summary of Tether’s features:

  • Tether (USDT) is a stablecoin issued by Tether Limited.
  • There are 3 separate protocol versions of USDT — the Bitcoin network-based USDT-Omni, Ethereum-powered USDT-ERC20 and USDT-TRC20 (USDT-TRON).
  • Tether currencies are backed up 100% by the actual currency assets of the reserve account and are interchangeable and disbursed according to the Tether Limited Terms of Service. The conversion rate is US $ 1 ₮ equals US $ 1.
  • Tether is extremely useful for investors and traders because of the convenience of trading, helping to save costs, as well as being “a safe haven” whenever the cryptocurrency market has bad news. Besides, it also has arguments about transparency, market manipulation and an unclear relationship with Bitfinex.

With its breakthrough idea, Tether (USDT) has become an extremely important coin in the cryptocurrency market: More than half of the world’s largest cryptocurrency exchanges use Tether as a payment gateway to exchange, for example BTC/USDT, ETH/USDT, XLM/USDT, etc., and Tether’s trading volume is often ranked 2nd, just after bitcoin, according to CoinMarketCap.

A lot of cryptocurrency exchanges support USDT pairs. Source: CoinMarketCap.

Tether’s trading volume is often ranked 2nd, just after bitcoin. Source: CoinMarketCap.

Go to the Tiktakbtc website: https://tiktakbtc.net/en/ and click Login on the top right side.

If you do not have an account at Tiktakbtc, please enter this link: How to Register and Update the account information

Deposit

Step 1: Click Wallet, click Deposit or you can click DEPOSIT button (green button)

Step 2: Choose Tether (USDT)

Step 3: You are going to see your address. You can copy your address or scan QR code to send USDT-ERC20 to your wallet at Tiktakbtc.

Note: You deposit USDT – ERC20 to your ETH wallet at Tiktakbtc. To avoid losing money, you do not transfer USDT-Omni to this address. There is one way to help you to distinguish USDT-ERC20 and USDT-Omni: USDT- ERC20 address starts with 0… and USDT–Omni address starts with 1….

Withdraw

Step 1: Click Wallet, click Withdraw or you can click WITHDRAW button (yellow button)

Step 2: Choose Tether (USDT)

Step 3: Insert properly the information about: your addressquantity, fee that you want to withdraw. You can choose the levels of fee (medium fee or high fee). If you choose high fee, your transaction will be processed more quickly.

After all, click WITHDRAW

There is a withdrawal notification, insert Google Authenticator code (or not) then click WITHDRAW.

Buy

Step 1: Click Exchange, click Buy/Sell

Step 2: Choose USDT/VNDT, then click EXCHANGE

Step 3: Enter the number of USDT-ERC20 you want to purchase. Then click CONTINUE

There is a confirmation. You will confirm and enter Google Authenticator (or not) then click Buy to finish.

Sell

Step 1: Click Exchange, click Buy/Sell

Step 2: Choose USDT/VNDT, then click EXCHANGE

Step 3: Enter the number of USDT-ERC20 you want to sell. Then click CONTINUE

There is a confirmation. You will confirm and enter Google Authenticator (or not) then click Sell to finish.

If you have any questions in  using services of Tiktakbtc, please feel free to contact with us through: https://support.tiktakbtc.net/hc/vi

We are already to support you anytime. Good luck!

The article is still being developed by Tiktakbtc in order to provide customers with the best information!

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