Tether 101: Everything you need to know

As the demand for cryptocurrency in Japan grows, more and more people are looking at digital assets as an alternative investment. Thanks to decentralisation, using crypto offers a fast, cheap and transparent way of sending and receiving funds. However, the market’s volatility often causes issues for users since this results in major price fluctuations when the market shifts. This is where stablecoins like Tether (USDT) provide more stability in investments by pegging their value in fiat like the US dollar. 

If you’re curious to know more about how stablecoins such as Tether help investors minimise risk crypto investments, read this article at Bitcasino. 

What is Cryptocurrency USDT?

Tether is becoming more popular in Japan since the Financial Services Agency (FSA) lifted the ban on stablecoins for 2023. As such, Japanese investors are looking forward to this as it provides a new investment asset that is less volatile and faster.

To answer what is cryptocurrency USDT, we need to define it first. The definition of this stablecoin is made by how it’s pegged from a legal currency which is the U.S. dollar. Tying this cryptocurrency to fiat money is what makes it more stable and efficiently traded compared to other cryptos

Cite a summary of Tether (USDT) in a table format

USDT Types in the market

We have established that USDT is a stable coin that many people rely on. As such, developments have been made to have variations to the coins which also have different use cases. Below are the USDT Types available in the market:

Omni Tether

One of the first partnerships of Tether was with Omni Core developers that helped make the Omni Layer protocol on its first platform which is the Bitcoin network. 

Omni Tether was created to fulfil key purposes like improving transaction fee estimations and further support for Segregated Witness transactions. This means better scalability solutions for the network because of transactions' malleability including functionality for on-chain decentralised exchanges.

ERC20 Tether

ERC20 refers to the USDT on the Ethereum network. The main purpose of ERC20 coins on this platform is to work with smart contracts which is a way to automate and facilitate contracts between two parties when they’ve agreed to the terms of the trade.

With how fast Ethereum can process transactions compared to Bitcoin, Tether was able to expand along with the platform and didn’t have to rely on the bitcoin blockchain only. It was at this point that both Omni Tether and ERC20 Tether became the most popular forms of tether used today.

TRC20 Tether

TRC20 is the Tether coin that was developed in partnership with the TRON blockchain after the Ethereum Blockchain. 

This project aims to offer faster transaction speeds and 0 transfer fees on the network for users. When transacting TRC20 tokens, this usually takes place in the TRON network.

Tether: How does it work? 

Stablecoin Tether is pegged by fiat currency in order to maintain its stable value. In fact, many popular stablecoins on digital exchanges are pegged to the U.S. dollar like Binance USD (BUSD), True USD (TUSD) and USD Coin (USDC).

Although pegged currency could be fiat, there are stablecoins that are backed by crypto, commodities or even minerals such as oil and gold.  

As such, Tether as a digital token serves as a link between fiat currencies and cryptos because of how its value is determined in part by the fiat currency that it’s pegged to.

Tether works when a user deposits fiat currencies, primarily U.S. dollars, into Tether’s reserves. The user then gets a corresponding amount for how much they sold their fiat money to buy the USDT. 

What is the current situation of Tether in Japan?

Japan is one of the countries actively adopting crypto as an alternative to fiat. With this in mind, the country aims to improve market safety for users by implementing laws to protect consumers such as requiring exchanges to make themselves known to governments and submit yearly reports.

Buying Tether in Japan has recently been allowed as of 2023 since the ban on stablecoins was uplifted. One of the main reasons why this ban was ordered in the first place was because of the negative situation of TerraUSD’s financial audit and collapse. 

The situation resulted in over 250,000 digital asset holders being affected and the investigation of the company’s co-founder Daniel Shin.

Following this, stricter regulations will have to pass and be revisited to protect customers from money laundering and other fraudulent acts, especially with Tether and how popular and stable it has been. 

But it seems that the ban being lifted also shows how willing the Japanese government is in accepting more stable coins like cryptocurrency Tether into the market 

With how healthy the Japanese crypto market is looking in 2023, and more opportunities to buy it opening up in the country itself, many have seen the price of Tether rise per yen. 

Features of Tether and its benefits

Now that you know what Tether is, let’s discuss what makes it so popular by talking about the features of Tether and the benefits that many investors enjoy:

Used as a base currency

Tether is a stablecoin tied to the U.S. dollar, which makes it a fiat-currency type that sets it apart from popular cryptos like Ethereum, Cardano, or Bitcoin. 

Since it’s tied to a legal tender, it introduces more stability to the crypto market and is resistant to market fluctuation as compared to the aforementioned cryptos.

This makes it a safe choice for investors who want to have an asset that they can rely on in times when the crypto market may be weakening or for beginner investors that have a lot of U.S. dollars and want to start their journey into crypto investing. 

Centralised currency 

Tether is centralised crypto which means banks oversee and can observe its tokens and their overall production. Additionally, it means it can be under regulations implemented by the government. 

Supervision of these coins can help make sure that the market doesn’t go overly turbulent and it reassures investors that another financial body is also watching the movements of the market while not overly restraining it. 

In addition to supervision, Tether is also a distributed autonomous organisation (DAO) which means that all major decisions are decided by peers from the bottom of the organization going up. 

Tether is decided as legal tender in Switzerland

In the race to become a cryptocurrency leader and revive its financial centre, the city of Lugano in Switzerland announced in March 2023 that it would declare Tether, along with a few other digital currencies such as Bitcoin, as legal currency. This means citizens can use digital as payment when buying, selling, investing, and transacting everyday goods by only using cryptos. 

What is in store for Tether’s future?

With its ability to control volatility, Tether is an ideal token for Japanese investors, especially in the ever-changing market. The future of this token is promising, especially in nations looking for more investment options other than fiat.

The future holds many possibilities and room for improvement when it comes to Tether like the official announcements it has made on its page. Two projects will be the main focus of which are:

1. Proof of solvency innovations that shows how organisations can handle their liabilities and assets for the short term to long term. It aims to provide a sense of security and transparency for investors.

2. Improvement of system algorithms and multi-signature and smart contracts.

In the realm of price predictions, many crypto experts are predicting that the value of Tether will be increasing over the next 10 years. 

For the first 5 years, this change will be minimal as the current value of USDT Tether is USD$1 and is predicted to go up to USD$1.01 by 2025. By 2030, more crypto investments, legislation, and investors will be joining the movement and thus, Tether is expected to go up in value to US$1.02.

If a few countries like Switzerland can make that change, then many are looking to see if it can be used as collateral for more crypto investments.

Conclusion: Tether the stablecoin of the future

Tether has given conservative investors an entry point into the ever-changing market of crypto. It helps lend stability to the market and is one of the innovations that has led many to believe that implementing cryptocurrencies as legal tender is becoming more possible with the example that Switzerland has shown. 

It’s still important to remember that crypto itself is a new market and should still be approached with caution and a lot of knowledge. But with the growth of Tether Japan and other stablecoins, innovation in the financial sector’s future is looking bright and exciting for users.

FAQ

What is USDT?

USDT is the acronym of Tether and both Tether and USDT are terms used interchangeably.

What type of cryptocurrency is Tether?

Tether is a type of stablecoin that’s pegged in U.S. dollars and is another digital asset in the crypto space.

What is the number of Tether issued?

Tether has a circulating supply of 71.12B coins as of March 2023.

When was Tether created?

Tether was launched in 2014 and is enabled by blockchain technology.

Who is Tether’s parent company

Tether’s parent company is iFinex which also owns the Bitfinex crypto exchange.