About Tether (USDT)
Tether (USDT) is the largest stable-value cryptocurrency, pegged to the price of the US dollar. This value mirroring is achieved by maintaining a sum of US dollars in reserves equal to the number of USDT in circulation. According to Tether, when new USDT tokens are issued, the same amount of fiat US Dollar are allocated to their reserves, ensuring that all USDT is backed by cash and cash equivalents. It provides a simple way to transact via a US dollar equivalent.
Using Tether (USDT) price information
Tether (USDT) plays a significant role in cryptocurrency trading due to its stable value pegged to the US dollar. It acts as a stable intermediary currency for trading between other cryptocurrencies. This eliminates the need to convert directly between potentially volatile pairs, minimising the potential losses from price fluctuations.
Frequently asked questions
How is the price of Tether determined?
The price of Tether is determined by its peg to the US dollar. Tether operates as a stablecoin aiming to maintain a value of approximately $1.
Tether Limited is the company that introduced Tether (USD₮ or USDT), an asset-backed cryptocurrency stablecoin, in 2014. It is owned by the Hong Kong-based company iFinex Inc.
Each token backed by an equivalent number of US dollars held in reserve. This backing ensures stability and allows users to exchange Tether for US dollars at a 1:1 ratio.
Market dynamics and demand can cause minor fluctuations, but the Tether Treasury’s commitment to the peg serves as the primary mechanism for establishing and stabilising the price of Tether.
How is the value of Tether maintained at a 1:1 ratio with the US Dollar, and what mechanisms ensure its stability?
Tether maintains a 1:1 peg with the US dollar through three key mechanisms:
- Tether Limited claims to hold enough US dollar reserves to back each Tether token in circulation ensuring that it can be redeemed for its equivalent value.
- Tether tokens are created or burned based on user deposits or redemptions of US dollars, adjusting the token supply to match market demand.
- Market participants can take advantage of price deviations through arbitrage, buying Tether at a lower price and redeeming it for US dollars which stabilises the price around $1.
Where can Tether be bought?
Tether can be bought at BTC Markets, the most trusted cryptocurrency exchange in Australia. It serves a vast community of over 352,000 traders and offers unrivalled market liquidity in over 30 markets. With a dedicated support team, it offers a seamless trading experience to all investors.
What makes Tether valuable?
Tether is a valuable cryptocurrency since:
- It is stable as it is designed to maintain a 1:1 peg with the US dollar.
- It is widely accepted and traded across various cryptocurrency exchanges ensuring high liquidity.
- It provides a bridge between traditional fiat currencies and the cryptocurrency market, facilitating easy transactions.
- It has lower volatility.
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