What is USDT (Tether)
If you use Binance, along with a few other exchanges, then you have probably seen the UDST market a few times and you may even use it regularly. However, some may not be fully aware of what USDT truly is and how it works.
USDT is a cryptocurrency asset issued on the Bitcoin blockchain via the Omni Layer Protocol. Each USDT unit is backed by a U.S Dollar held in the reserves of the Tether Limited and can be redeemed through the Tether Platform. USDT can be transferred, stored, spent, just like bitcoins or any other cryptocurrency, users can transact and store tethers with any Omni Layer enabled wallet like Ambisafe, Holy Transaction or Omni Wallet.
USDT and other Tether currencies were created to facilitate the transfer of national currencies, to provide users with a stable alternative to Bitcoin and to provide an alternative for exchange and wallet audits which are currently unreliable. USDT provides an alternative to Proof of Solvency methods by introducing a Proof of Reserves Process.
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.
One can check the USDT in circulation here. The total number of USDT in circulation at any time be denoted as TUSD. The amount of USDT in circulation must always correspond to the amount of USD in the bank account used by Tether Limited to receive and send fiat currency to users who
purchase/redeem tethers directly on the Tether Platform.
To prove that the amount of USD in the bank account is the same or more than the USDT in circulation, Tether Limited publishes the bank account balance on its website’s Transparency page. Professional auditors will regularly verify, sign, and publish the underlying bank balance and financial transfer statement.
We’re left with an extremely safe and transparent system that relies on the oldest and most secure blockchain, Bitcoin, to provide users with a price-stable asset for national currencies.
How to use USDT
USDT is fairly simple to use. Once on exchanges like Binance, it can be used to purchase Bitcoin and other cryptocurrencies. It can be easily transferred from an exchange to any Omni Layer enabled wallet. Tether has no transaction fees, although external wallets and exchanges may charge one. In order to convert USDT to USD and vise versa through the Tether.to Platform, users must pay a small fee – Read more.
Buying and selling Tether for Bitcoin can be done through a variety of exchanges like the ones mentioned previously or through the Tether.to platform, which also allows the conversion between USD to and from your bank account.
To put it simply, you can trade any other crypto for Tether (USDT) and it will maintain it’s value. This is excellent when you want to move in and out of positions, or simply feel that the market is too unstable to mitigate possible losses…as well as gains.
Keep in mind that there has been some drama surrounding Tether, and some believe it will eventually fail, read more about this here.