How to Buy Tether USDT: A Clear and Knowledgeable Guide
Investors who are interested in purchasing Tether (USDT) may find this article helpful. Unlike Bitcoin or Ethereum, Tether is a stablecoin that aims to maintain a constant value, although this is not guaranteed. While Tether may experience fluctuations in value, most holders seek stability rather than price gains.
For educational purposes only, Forbes Advisor has provided this content to inform investors about Tether and not to influence their decision to invest in cryptocurrency. It is important to seek appropriate financial advice and only invest what one can afford to lose when considering any investment, including cryptocurrency.
Tether is a Stablecoin. What is a Stablecoin?
Stablecoins are a type of cryptocurrency that aims to maintain a stable value. Unlike other cryptocurrencies, which can experience wild price fluctuations, stablecoins are designed to remain at a constant value. Tether is one such stablecoin that is pegged to the value of the US dollar.
To maintain its stable value, Tether is backed by a fund of collateral assets. This means that for every USDT in circulation, there is an equivalent amount of US dollars or other assets held in reserve. This backing helps to ensure that Tether remains stable and provides a reliable store of value.
However, stablecoins like Tether are not completely free of risk. In May 2023, Tether lost its $1 peg during the TerraUSD stablecoin crash, dropping as low as $0.9485 before recovering to its intended one-to-one peg with the US dollar. This momentary price fluctuation demonstrated that stablecoins are not a sure thing in the world of cryptocurrency.
Additionally, Tether presents risks due to a lack of regulation. There is no public auditing to check whether the reserves for Tether can fully back the $75.6 billion in USDT in circulation. If it were to be revealed that the Tether treasury only has $5 billion in reserves, there would be a discrepancy between what is circulating around blockchains as USDT, compared with the real amount in US dollars and assets backing Tether.
Despite these risks, Tether has regained its dollar peg and still endures as the stablecoin with one of the largest market caps. However, investors should always exercise caution when investing in stablecoins or any other type of cryptocurrency, as past performance is not a reliable indicator of future results.
Where to Buy Tether
Investors looking to purchase Tether have several options available as it is listed on most of the best cryptocurrency exchanges. Tether can also be paired with other cryptocurrencies on most centralised and decentralised exchanges, allowing users to be liquid in the markets. However, it is important to note that Tether is a stablecoin pegged to the U.S. dollar and does not truly “pair” with other cryptocurrencies. Despite this, Tether remains a popular way to purchase crypto. According to Kaiko, a digital assets provider, nearly half of Bitcoin trades were executed using Tether in October 2021.
How to Buy Tether
1. Choose a Crypto Exchange
To buy Tether, investors must first choose a cryptocurrency exchange. A crypto exchange is a platform that allows investors to buy and sell cryptocurrencies. There are various crypto exchanges available, each with different levels of complexity and fees. It is important to compare multiple exchanges before making a decision.
2. Buy Tether
Once an investor has selected an exchange, they can make an opening deposit. Although Tether is a stablecoin aimed at being less volatile than other cryptocurrencies, purchases can still lose value and may be volatile. To buy Tether, investors can initiate a “buy” transaction using Tether’s ticker symbol, USDT, and the dollar amount they wish to purchase. Once the transaction is completed, they become the proud owner of Tether.
3. Store Tether
There are several types of crypto wallets available for investors to store their Tether. These include hardware wallets, paper wallets, software wallets, and built-in wallets offered by some exchanges. Hardware wallets, such as Ledger and Prokey, allow investors to store Tether offline. Paper wallets contain two key pairs and two different QR codes, all printed on paper, and are often referred to as noncustodial cold storage. Software wallets can be downloaded to computers or mobile devices to store crypto.
In conclusion, buying Tether involves choosing a crypto exchange, making an opening deposit, and initiating a “buy” transaction. After purchasing Tether, investors can store it in a variety of ways, including hardware wallets, paper wallets, software wallets, or built-in wallets offered by some exchanges. It is important to compare multiple exchanges before making a decision and to consider the various types of wallets available for storing Tether.
What Can You Purchase with Tether?
Investors who own Tether can use it to purchase a wide range of cryptocurrencies. To do so, they simply need to exchange USDT with the cryptocurrency they want to buy. Additionally, Tether holders can cash in their USDT for gift cards at popular e-commerce shops such as Walmart and Amazon, according to Coinsbee. Furthermore, investors can earn interest on their Tether holdings just like a bank. Various online cryptocurrency savings accounts allow investors to deposit USDT and earn interest rates that are considerably higher than most online banks. Bitcompare is a useful site for finding the best rates.
Should Investors Buy Tether?
Tether is a suitable option for investors looking for liquidity when entering and exiting other cryptocurrency trades. However, some experts, like Najah Roberts, CEO and founder of Crypto Blockchain Plug, remain cautious of Tether due to its treasury strength. Investors who are wary of Tether may want to consider other collateralised-based stablecoins, such as USD Coin (USDC) and Dai (DAI). It is important to note that cryptocurrency is unregulated in the UK, and the Financial Conduct Authority has warned investors of the risks involved, including the possibility of losing all their money with no chance of compensation.
Overall, Tether may be a good buy for some specific crypto investors, but it is important to carefully consider all options and the potential risks before making any investment decisions.