When we think of cryptocurrencies, the first names that usually come to mind are Bitcoin and Ethereum. While these are certainly the sector’s most popular and most valuable assets, there are plenty of other options out there that are worth exploring.
In this guide, we’re going to analyse the stablecoin USDT. We’ll look at its price and performance according to data on Binance, and then discuss whether we think it is the go-to stable coin on the crypto market today. Read on to learn more.
What is a Stablecoin?
First things first – what is a stablecoin? You’re going to come across a lot of unfamiliar terms and strange language in the world of crypto, so it’s important you learn as much as you can and always keep yourself informed.
One term you’re certainly going to come across is stablecoin. To put it simply, stablecoins are cryptocurrencies with a value that is linked to an existing asset. Usually, stablecoins will use an established, traditional asset such as the US dollar, or sometimes things like gold and silver.
The crypto market is notoriously volatile and unpredictable. While this can be a pro for many people, it’s enough to discourage a significant number. Stablecoins, as the name might suggest, offer a great deal more stability and security when compared to other cryptocurrencies. By securing their value to an established asset, stablecoins can be more resistant to wild market movements, offering more security and solidity.
Stablecoins are backed by reserves of whatever asset they are tied to. For example, if a stablecoin is tied to the British pound, the company behind the stablecoin will need to have a large reserve of British pounds. If an investor then exchanges their crypto, this reserve can be used to plug the gap.
Stablecoins can be tied to fiat currency or even other cryptocurrency. They can also be tied to an algorithm, a process that works slightly differently. However, we’re looking at USDT, which is tied to a fiat currency.
What is USDT?
USDT is the currency unit of stablecoin Tether. Launched in 2014, USDT quickly established itself as a serious contender in the world of crypto. It’s currently the third-largest coin in the sector, with a market cap of $29.52 billion, with only Ethereum and Bitcoin ahead of it.
USDT is what’s known as a fiat stablecoin. This means that its value is tied to the value of a traditional, or fiat currency. As you might have guessed, USDT is tied to the US dollar at a ratio of 1:1. This means that every single unit of USDT is backed by $1.00.
Why Invest in USDT?
When it comes to choosing a cryptocurrency to invest in, there is a lot to think about. It’s not something to jump into without a great deal of forward planning, and you should never make a decision without carefully considering it beforehand.
When buying regular cryptocurrency, the first thing you’re going to want to look at is the price. For example, you might see that Bitcoin is trading at $28,386 and decide it’s out of your budget.
Not so when it comes to stablecoins. As USDT is tied to the US dollar, one USDT token is worth $1.00. This can make it much easier to plan your investment and ensure you are not spending beyond your means.
You might think – what’s the point? Why invest in something that will always be tied to the value of the dollar? To answer this question, it’s important you understand the kind of options and possibilities cryptocurrencies offer.
They are a highly secure technology, secured on the blockchain through cryptography. This means transactions can be conducted with a high degree of confidence, and all records are immutable, which can help prevent fraudulent activity.
In addition, cryptocurrencies are decentralised, which means they are free from long processing times and large transaction fees. If you are a business, using crypto can be a fantastic way of streamlining operations. You will not face the same wait times as you would with traditional payment methods, and even large cross-border transactions will be easy and affordable.
Is USDT the Go-To Stablecoin?
There are quite a few stablecoins out there. Many are tied to the US dollar, while others are linked to other assets, cryptocurrencies or algorithms. If you’re looking for a stablecoin to invest in, you’re going to need to do plenty of research. Compare your options and weigh up the pros and cons of each before you proceed.
USDT is a fantastic choice if you’re looking for a stablecoin. As the sector’s third-biggest asset, it has plenty of support and a large, passionate community that can help you get involved and understand how things work.
If you’re looking to explore the world of crypto while avoiding the negatives, that being the market’s volatility, investing in a stablecoin like USDT can be the perfect way to do so.
As things stand, USDT is the go-to stablecoin in the crypto market. Investing in this asset gives you the chance to enjoy the benefits of cryptocurrency while avoiding harmful market unpredictability.