What Is Tether and How Does It Work? Is it really stable? Is Tether a scam?
Hundreds of thousands of people have been asking these questions all over the Internet so I decided to answer all of your questions in this article. If you don’t find an answer, you can always ask me anything in the comments below and I’ll be more than happy to help you out.
Name: Tether (USDT)
Short Review: Tether is one of the most popular stablecoins in the cryptocurrency world. It keeps its value as close $1 as possible. It provides several benefits for cryptocurrency investors and traders but we need to remember that there are also a few risks.
Therefore, I don’t recommend holding Tether tokens for a long term in your crypto wallet. I recommend diversifying your crypto portfolio on coins that have a good long-term potential for growth like Bankera or Friendz.
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Is Tether Legit? – Video Review of Tether
What Is Tether And How Does It Work?
Tether is probably the most popular stablecoin in the cryptocurrency world. Being a stablecoin means that it’s supposed to keep always the same value which is $1. In the other words, Tether price is designed to have the same value as USD. When you give them one $1, they give you one Tether token.
Tether differs from other cryptocurrencies in a way that it’s a centralized company. Most other cryptocurrencies (excluding Ripple) are decentralized. The company says that they have enough dollars to back up the whole Tether market cap. They say it’s 100% backed. However, there has been some controversy about this that I’ll discuss further.
Benefits of Tether
First, let’s talk about the benefits of Tether and then I’ll discuss a few risk and challenges.
When a bear market is coming, many people would prefer changing their cryptocurrencies into fiat currencies because they are more stable (bear market means that the prices go down).
However, in many countries, you need to pay taxes when you exchange your cryptocurrencies into fiat currencies with profits. For example, in Finland (my home country) people need to pay 30-33% taxes on their profits. If you made $10,000, profits, and exchange your cryptocurrencies back to euros, you would need to pay $3,000 taxes.
Now Tether provides a wonderful option. When you exchange your
2.Tether keeps you safe when you want to quit the market for a while
When following cryptocurrencies, have you ever felt that some coin has grown a bit too much? Or there has been a long bull market (prices going up) for so long time that soon prices must go down again?
Then you would probably like to take your money out of the market for a while and buy back when everything is on the bottom. Of course, nobody can know for sure when we’re at the top and when we’re at the bottom but we can always make predictions and do our best to maximize the profits in the market.
3.Tether can make trading more practical
Several big crypto exchanges including Binance and Bittrex use Tether (USDT). Traders can easily change their cryptocurrencies from one to another by using Tether in the middle. You can’t usually exchange two rare alt coins between each other.
Let’s say that you would like to change your Tron coins into Cardano. You first need to change Tron into BTC, ETH or USDT and then some of those coins into Cardano. With USDT it can be pretty easy and there isn’t volatility between the trades.
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Risks And Challenges of Tether
Many people have recently been pointing out the flaws and challenges of Tether. Let me explain the reasons for people’s concerns.
1.Does Tether really have all the money?
As I explained above, Tether promises that all funds that they receive, are 100% backed up by their own dollars. However, there aren’t guarantees whether they really have it or not
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Tether shows on their website dollar and euro amount that they have but who can confirm that they really have what they are saying?
The problem arises, for example, when most people who own Tether would sell their funds. Would 90% Tether owners sell their tokens? Well, it’s possible even though it’s unlikely to happen. But we must admit that in theory, it’s possible if something unexpected happens.
Some people have been asking what would happen if everybody who owns Tether would sell their tokens at the same time. Would the whole crypto market crash? Recently I read an article how a crypto “expert” how Tether can crash the whole crypto market.
In my opinion, this is not a possible scenario at all. Tether market cap is usually way less than 0,5% of the total market cap of cryptocurrencies. How could it crash the market? The crash of Bitcoin or Ethereum would certainly cause effects to the whole market but I think that the Tether crash wouldn’t be so significant. There are some other stablecoins anyway.
3.Controversy with Bitfinex
In February 2018 there has been quite a lot of controversy around Bitfinex and Tether. People have been asking whether those two are the same thing because they seem to have connections between each other. I don’t know all the details of this issue but I know it’s one reason why Tether raises concerns among crypto investors.
My Personal Thoughts on Tether
I believe in the bright future of cryptocurrencies. They would bring numerous benefits for humans that I’ve discussed in my other articles and YouTube videos. Therefore, I think that all improvements and even attempts for improvements are good because they move the overall development forward little by little.
In my opinion, it’s good to have options like Tether. It gives more options and opportunities for the whole cryptocurrency world. I believe that each step we take with cryptocurrencies is a step closer to a world where we rather use cryptocurrencies rather than government money like $, € or £.
Conclusion – Is Tether Worth Buying?
Holding Tether itself doesn’t make you any profit. It just keeps your crypto balance stable compared to USD. But as we know, the value of USD or any other fiat currency usually goes down over the time course. Especially compared to the cryptocurrencies, fiat currencies are losing their value all the time. Therefore, holding Tether is only a temporary situation. You don’t want to hold them for a very long time, in my opinion.
In addition, I see Tether riskier than USD in some aspects. The price of USD stays pretty much the same even though it slightly goes down but at least you have the money (usually) that you put to your bank account. Cryptocurrencies are still very unregulated and there’s some risk of holding Tether. Have they backed up the whole market cap? What if people sell their Tether tokens? etc.
That being said, you can benefit from Tether if you are able to predict market crashes and rises. When the bear market starts, you sell your Bitcoins, Ethereums, and others into Tether and when we have hit the bottom, you buy cryptos back again. You avoid taxes and another extra hassle that comes with fiat currencies.
Before we wrap up, I would like to remind that any investing involves risk. You can either win more money or lose money. You should always be careful and stay up to date when it comes to cryptocurrencies. I enjoy investing in cryptocurrencies for several reasons but I also like building more stable income streams.
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What do you think about Tether?
Is it worth buying or not?
Is Tether reliable or not?
Let’s discuss in the comments below! 🙂
(Disclaimer: The above references an opinion and is for information purposes only. It is not intended to be investment advice.)
Well, because it’s a bitcoin thing risk is always there. We should keep in our mind that every day bitcoin value varies. It affects current events and weather as well. Some people already knew on how to play with these games and they are aware when to buy and when to sell.
Yeah, one strategy is to play the trading game like you explained. Another strategy is just to buy and hold for long term. I usually research a coin and hold it at least for 6 months before taking the profits.
That is interesting that it keeps it’s value as close to $1 as possible, but that also makes me have a lot more questions than some of the other services. It just opens up a lot of speculation, but that is not to say that it is anything negative but just that I should probably work more to understand it a little bit.
Yeah, its purpose is to be a stablecoin so the price would always remain the same.
There are risks in investing to cryptocurrency but with deep research and studies, you can be rest assured that your money will be in good hands. I think Bitcoin is now the reliable cryptocurrency to be invested.
Study and research lowers your risk but profits are never 100% sure. There is a risk involved with any kind of investing. That being said, I strongly believe that cryptocurrencies give the best return on investment at the moment and that’s why I’m heavily involved with them.
Yes, you are all right that it is very risky to invest money into cryptocurrency but believe me it is in good hands. BUT NOT ALL OF THE cryptocurrency sites are legit. There is some company that after you invest it will disappear so you have to be choosy when it comes to finding a good and best company like this the tether. Since it have been reviewed in this site I can say that it is legit. Thanks to Roope for sharing this to us.
Is it really worth it to take the risk of investing into cryptocurrency? I mean, the fact that you put so much money into something like the cryptocurrency that is not even legally monetize is a huge risk it self. I know that in order for you to be successful you have to take the risk but would it be more logical if at least there is an assurance that the money you invested will produce real profit?
I see cryptocurrencies as a new technological innovation like the Internet was some time ago. There are so many benefits with the cryptocurrencies compared to our current monetary system that I don’t see any good reason why we wouldn’t see a mass adoption in the future.
Yes, there aren’t guarantees with almost any kind of investing but cryptocurrencies have given the best returns over the past years and I believe they will keep on giving in the future. My prediction is that after 10-20 years most people will be paying with cryptocurrencies at the supermarket.
Hello, is there a way to buy Tether with USD or I should have another Crypto for it?
Yes, I believe you can buy it with USD but what’s the point? Why would you buy it with USD?
In my opinion it is really hard to trust a Cryptocurrency. It gave us big amount of money and that is one big reason to have doubt about it. It is up to you if you are willing to sacrifice your money in a not so sure result. Just put some money you can afford to lose if you are going to try one. This post is so informative about Cryptocurrency and Tether. It will help a lot of new comer in that environment.
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In my opinion, I think this is very risk. Especially if you are not a good earner or don’t have a wealthy life. However, If you really want to earn a lot of money you have to take the risk. Even when you establish a business you will take a risk. So in short everything that involve in making a big money you have to invest and take the risk.
But I don’t see any negative side of tether all you need is to trust them. But just be aware. Don’t invest too big amount of money in here. Just try it at first so if you already earned so maybe that is the time for you to invest more because you already have an assurance.
I think you misunderstood the idea of Tether. It’s not an investment that would make profits to you. You don’t want to buy Tether with fiat currencies like dollar, euro or anything else because it doesn’t make sense.
It’s good for trading cryptocurrencies or taking your funds out during the bear market.
Let me know if you don’t understand and I’ll explain more.
Im so sorry sir. I thought tether is an investment site. As you said, tether is for trading crytocurrencies. So it means you cant invest money or double your money in Tether? I’am so sorry for being slow be seriously I wanna know and learn about tether.
I recommend that you read the article again and watch the video because I answer to your questions there 😉
But you can’t double your money with Tether. It’s a cryptocurrency that is supposed to be always $1. Not more or less than that.
What? Sorry roope but I dont get it. Kindly understand me Im sorry. Did I just understand it right? For example, I invested 1 dollar so it will only stay 1 dollar? or I will get a percentage from them? Or I have to work for them so they will add up my money?
Yes, you only get $1 for $1. So, you are not supposed to earn or money for holding it on Tether. That’s why it doesn’t make any sense to buy Tether with USD. You would only want to buy it when you are transfering money between different cryptocurrencies.
Roope kiuttu has provided some extraordinary and useful information about tether, which is one of the popular crypto currencies. This information was very useful for me to know more about tether and to know how it works and it’s pros and cons.
I’m glad to hear that you found it helpful Anoop. What do you think about Tether?
I have never heard of stablecoin or Teether. I find this concept very interesting, maintaining the same value. This might be possible because they are centralized currency just like dollars, pounds, yet etc. I will have to read more on this to learn better, However, I do not like ti concept of centralized crypto currency because there is a high chance of being scammed.
In my opinion, the risk of getting scammed is pretty small in the case of Tether. However, as I mentioned in the review, there has been some controversy so I can’t guarantee for 100% sure of course.
Anyhow, I think that it’s great that we have stablecoin projects like Tether, Dai and others.
In my opinion, the stability in the price of Tether is what makes it a good investment, personally I don’t fancy when the value of my investment depreciate, I would accept its appreciation but once it can appreciate, it means it’s definitely going to depreciate as well.
Also who doesn’t like to avoid paying taxes? I would take on any scheme that would afford me the chance not to pay any taxes and if Tether is the option, then investing in it looks like a good plan.
Holding Tether is somewhat similar same like holding dollars. The value goes time over the time course. That’s why it’s only good for temporary holding. Then you should use it for buying something else that goes up in value.
I see, you are of the opinion that Tether is best held on to for a temporal basis and then used to buy something else that is likely to increase in value over time, and my bet would be to get it invested in bitcoin no matter how little. Bitcoin will always go up in value is what I have come to understand, even with the last fall in its worth, it’s already going up again.
Yeah, Bitcoin is considered being as the most stable cryptocurrency because it’s the oldest one and they have the largest user base. However, it will be interesting to see which cryptocurrency will be the winner. I prefer allocating my funds to many different ones.
Allocating your funds to several cryptocurrency is risky in my opinion but hey it takes taking risk before one can be successful. I do take small risks with the limited fund at my disposal but I can’t get all of them invested in lots of Alt currency like you do, if anything goes wrong, it would seriously affect me.
Why do you think allocating money to many cryptocurrencies is risky? Usually, people do allocation in order to minimize risk. Holding assets in one cryptocurrency or stock is considered risky because then you are solely dependent on them. If it crashes, all your money is gone. But if you allocate, it doesn’t matter if one of them crashes.
Oh now I understand what you meant by saying allocating one’s fund in several cryptocurrency instead of just one, and it’s for safety purposes should one crashes, the investor would have a line of life on the other ones. This is a very good one, I misunderstood what you meant my having the funds allocated instead of having it all invested in just one cryptocurrency.
Ah okay good 🙂
I don’t think the benefits of buying Tether is way big when compared to the risk involved. One core risk that I wouldn’t take is buying a coin that is centralized considering the fact that many of my past experiences with some ponzi schemes then owned by few persons.
However, the power given to one to back out of trading when we feel like is something that is good and the reason that the value is stable per dollar is another good news especially when we want to trade them with other coins. However,, I wouldn’t be buying this coin at the moment for there are other interesting prospects out there.
Thanks for sharing your thoughts Henry.
Yes, Sir Roope that’s my thoughts. However that doesn’t mean that Tether won’t get higher in the future but the ability to make the decision to trade on some coins and leave the others can be said to be when one is trying to be disciplined.
Why would Tether go higher? At least its purpose is to stay at $1. They try their best that it wouldn’t go higher.
I do agree with you on this, I don’t see Tether passing the $1 mile because it’s not its business mission statement. It’s strive is to keep a stable worth at $1 which would be the same in all market.