Trading Tether

Tether was launched in July of 2014 under the name RealCoin, but changed its name to Tether in November later that year. 

Tether consists of a blockchain-enabled platform that facilitates using cryptocurrencies pegged to traditional or fiat currencies, which are often known as “stablecoins” due to their inherent stability versus their fiat counterparts. This structure also allows for fiat currency equivalent cryptocurrencies to be used like other digital currencies.

This project’s open-source software interfaces with blockchains to provide a platform for issuing and redeeming stable cryptocurrency tokens known as “tethers”. One example is the USDâ‚® cryptocurrency that is pegged to the U.S. dollar in a one to one ratio using fiat currency reserves as backing for the digital token. The equivalent tether coin for the euro is EURâ‚®, which is pegged to the euro at a one to one ratio also.

This setup allows users to make transactions using fiat currency equivalents without experiencing the inherent volatility and other challenges often associated with unpegged and unbacked cryptocurrencies. Another benefit to tether’s stable coins is that they can boost the efficiency of making cross-border payments via the secure, quick and inexpensive blockchain technology.

Tethers use Ethereum’s blockchain technology with the Omni Layer protocol, and they therefore exist as ERC20 tokens that can be transmitted to any Ethereum address. This also means tethers can be used in Ethereum decentralised applications and smart contracts.

The currencies existing on Tether’s platform are backed 100 percent (or more) by fiat currency reserves placed in banks by Tether Limited, the company responsible for managing those reserves. Tethers can be redeemed and exchanged for fiat currency under Tether’s service terms, although Tether Ltd. pointedly does not guarantee any right of redemption or the ability to exchange Tether tokens for fiat currency. 

Tether provides a transparency page with daily updates showing the number of tethers in circulation for USDâ‚® and EURâ‚®. The reserve value of each currency held against the tether coins, which are U.S. dollars and euros respectively, can also be seen.

Tether can be obtained via two different transport protocols, specifically Ethereum and Bitcoin. Therefore, users need to check the destination address carefully when sending tether coins to other addresses and make sure to choose either the Bitcoin or Ethereum format, as appropriate. 

Rather than using a cryptocurrency exchange for transaction purposes, it is typically more secure to go through one of the regulated online brokerfirms that allow transactions in tether’s digital currencies. 

How to not get Scammed when Using Tether

Virtually any activity taking place over the Internet has scams to beware of. Be especially cautious of firms asking for a start-up fee to exchange tether tokens for money, especially since tether tokens can be redeemed for their pegged fiat currency.

Also remain skeptical of investment schemes that claim the value of assets can be quickly increased, since that is rarely the case. Additional scams to be vigilant for include fake crypt exchanges and cloud mining operations.

Another trick to watch out for that is commonly attempted via social media and email is phishing. This typically involves a scammer impersonating a known brand to obtain currency wallet access, so avoid making financial arrangements using direct messages or clicking on links from such messages to provide personal information.

When it comes to cryptocurrency exchanges, they have historically been at the risk of being hacked. A classic example was Mt. Gox, one of the biggest bitcoin exchanges that lost 850,000 bitcoins in a reported 2014 hacking incident. Without client fund protection, most of that exchange’s clients still have not gotten their coins back. And while creditors will probably receive fiat currency compensation for their lost coins at low 2014 prices, they will lose out on the more recent dramatic appreciation of bitcoins that they could have profited from.

If possible, it therefore makes sense to choose a regulated broker to obtain any tether or other cryptocurrency tokens through. AvaTrade is an example of a regulated broker that is based in Ireland and therefore subject to following strict EU regulations. It also happens to be a subsidiary of a larger company with a market capitalisation of $17 billion. Another example is eToro, which is also based and regulated in Europe under the Markets in Financial Instruments Directive (MiFID).

In general, regulated brokers provide greater security and peace of mind for cryptocurrency investors and traders. The process of making transactions in tether tokens via these brokers is quite straightforward.

Trading Tether through AvaTrade

Among the many regulated online brokers, AvaTrade provides an especially friendly user interface by supporting the popular MetaTrader4 (MT4) trading platform from MetaQuotes. 

This platform is suitable for traders of varying experience levels and it can be used on the web or downloaded to desktops, tablets or smartphones. MT4 also offers a customisable interface with advanced charting functionality that allows traders to perform technical analysis on the market. AvaTrade also has a straightforward account sign up process and lets traders make transactions in thousands of additional assets besides cryptocurrencies like tether.

The value of tether is quite stable relative to its pegged currency, so it tends not to fluctuate very much. It does however enable traders to move from one volatile cryptocurrency like bitcoin to another pegged one like USDâ‚® or EURâ‚®. This allows traders to stabilise the value of their token holdings relative to a major fiat currency without having to actually hold fiat currency.

Even though USDâ‚® and EURâ‚® are quite stable relative to their pegged currencies, all crypto currency trades have associated risks. Despite those pegs, the price of tether coins can rise and fall depending on various factors.

Key Influences on Tether’s Value

Tether coins are designed to be especially stable digital currencies relative to their pegged fiat currency. This is done by holding fiat currency reserves greater than or equal to the amount of outstanding tether coins.  Tether coins are therefore not generally used for investment or trading purposes, but more often for transaction purposes.

Their stability also means that the usual principles of how supply and demand affect price do not really operate in the market for tether coins. Nevertheless, while the value of the USDâ‚® coin is quite stable in U.S. dollar terms, it can rise and fall relative to the EU’s euro, for example, as the EUR/USD exchange rate fluctuates. 

Furthermore, due to its fiat currency reserve backing, Tether coins are less susceptible to government regulation issues affecting its value, although persons based in some jurisdictions cannot use the Tether platform. These include residents of Cuba, North Korea, Iran, Syria, Pakistan, Venezuela and Crimea.

In addition, U.S. persons cannot use the Tether platform unless they are Eligible Contract Participants (ECPs) which includes corporations with total assets over $10,000,000 that are incorporated outside of the United States and its territories. Tether coins can also be subject to scrutiny and even litigation over the value and security of their currencies’ bank reserves and the assets used to back the digital currencies. 

That being said, a controversy arose over the fact that while Tether coins were supposed to be backed by one unit of fiat currency, that was changed on March 14, 2019. On this date, security of the coin was changed to also include loans made to affiliated firms, like the Bitfinex exchange, which is also owned by Tether’s Hong Kong based parent iFinex Inc. and which Tether coins trade on.

The New York Attorney General also filed a lawsuit in 2019 claiming this switch was done to cover up $850 million dollars in funds that had allegedly been missing from Tether’s reserve accounts since mid-2018. 

USDT Brokers

Tether is a cryptocurrency which claims to be backed by the US Dollar, meaning for every one Tether there is, they hold $1 USD in their reserves. Every Tether is backed 1 to 1, so the price of one Tether remains the same as one US Dollar. Therefore, Tether is a stable cryptocurrency and is essentially digital US Dollars operating on secure and transparent blockchain technology. Tether has received some flack in the past about whether they were really backed 1 to 1 by the US Dollar. However, these allegations were put to rest on June 20, 2018, as the company published the results from a professional audit, proving transparency. This was a big deal, as Tether is the most widely integrated crypto to fiat currency today. Tether is integrated on the most exchanges and is used widely by cryptocurrency traders. As well, Tether is gaining more and more popularity among traditional online businesses like online trading brokerages.

The “$” Symbol and Tether

Most cryptocurrencies like Tether are still relatively new and do not yet have an official symbol or sign used to represent their currency. However, each cryptocurrency has a logo that’s used to differentiate and identify the crypto. Tethers logo, which will likely become their sign is a “T” with a halo or ring around the center of it. The logo is nice and simple and could easily become the cryptocurrency’s sign. Another method used to identify and represent Tether is its ticker or code, (USDT). This is what’s most commonly used to represent cryptocurrencies like Tether. As for denominations of Tether, there is no official name or set number of denominations like there is for the US Dollar.

Exchanging Tether

Tether is awidely exchanged cryptocurrency and accounts for around 17 percent of all daily crypto trading volume and has a market cap of $2.6 billion. Cryptocurrency traders use Tether to trade in and out of cryptocurrencies like Bitcoin, Ethereum, and so on. They do this because Tether is much easier, cheaper, and more convenient than exchanging crypto into USD. Also, when exchanging their crypto into Tether, the value is protected because Tether is a stable coin backed 1 to 1 by the US Dollar. The most common Tether cryptocurrency pairs include BTC/USDT, ETH/USDT, EOS/USDT, TRON/USDT, and the list goes on. Tether is used for exchanging a wide variety of cryptocurrencies and can be exchanged into US Dollars on a 1 to 1 ratio.

Banking with Tether

Tether is not stored in a traditional bank account, instead people store tether in a cryptocurrency wallet or on a cryptocurrency exchange. Banking with Tether presents numerous benefits over the traditional banking system. Users can send Tether to one another for free using their Tether.to wallets, as well as cash their Tether in for fiat currency. Any exchange or trading brokerage accepting Tether allows for fast and secure deposits and withdrawals over the blockchain for far less fees than traditional payment methods. Therefore, banking with Tether can be a very lucrative alternative for traders if it’s accepted at the brokerage or exchange they use.