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How to Buy Tether (USDT)

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What is Tether?

Tether coin USDT

Tether is a blockchain-based cryptocurrency in a class known as stablecoins. The coins of this cryptocurrency in circulation are backed by an equal amount of traditional fiat currencies, such as the Japanese yen (JPY), the U.S dollar (USD), or the euro (EUR) that are held in a designated bank account. USDT is the native token of the Tether network.

The primary aim of stablecoins is to keep the valuation of cryptocurrencies stable, as opposed to the volatility in the prices of other cryptos like Bitcoin and Ethereum. As such, USDT being stable allows it to be used as a medium of exchange and also as a store of value rather than being used as a speculative asset.

Tether came into the crypto space in July 2014 and was known at that time as RealCoin. It was rebranded as Tether in November that year. Tether Ltd is the parent company behind this stablecoin, and it is responsible for maintaining the reserve amount of fiat currencies. Despite being created in July 2014, this stablecoin only started being traded on cryptocurrency exchanges in February 2015.

As a stablecoin, USDT is pegged against the dollar and maintains a 1:1 with the currency in terms of value. This means that one USDT is equal to one dollar. This helps bridge the gap between fiat currencies and cryptos, offering transparency, stability, and lower transaction fees to users.

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Where to Buy Tether?

Buy USDT

USDT is one of the largest cryptocurrencies and the biggest stablecoin, which means it is available on virtually all crypto exchanges. However, as investors and traders, it is best to buy Tether from reputable platforms since they have liquidity, are secure, and are always available to provide excellent services to their customers. You have the choice to invest in or trade Tether on crypto exchanges or online brokers.

Why Buy USDT from Brokers

broker trading crypto

One of the best places to buy USDT is from online cryptocurrency brokers. Brokerage platforms offer numerous advantages to their users. They include:

Security

The cryptocurrency trading environment is one of the most targeted by hackers. However, when you buy Tether from brokers, you are doing so with adequate security in place. Brokers put in place strict security measures such as SSL certificate, 2FA, and more on their platforms. This is to ensure the safety of your funds and personal data.

Fewer Expenses

When you buy USDT from brokers, you tend to spend less. This is because you are not actually purchasing the stablecoin but instead, you are making a prediction on the price movement of the asset. This eliminates the need to spend hundreds of dollars on buying a digital wallet and storing the cryptocurrency for future use. This is referred to as crypto CFD (contracts for differences) trading.

Regulated Environment

Brokers are usually licensed and regulated trading platforms. They operate under the purviews of the law and ensure that the traders do the same. As such, brokers abide by regulations, such as the AML (anti-money laundering) and KYC (know your customer) policies that help keep the platforms secure. They are also covered by insurance, which makes it easy for the traders to recoup their money in case something happens to the platform.

Liquidity

Brokers usually have a large liquidity pool, making them excellent platforms to buy and sell USDT. Since brokers are professional platforms, they work with large liquidity to ensure that every trader and investor can trade the cryptos they wish to.

Effective Trading Tools

Most brokerage platforms offer excellent investment and trading tools to their users. The tools are designed to make it easy to buy, sell, and trade the various cryptocurrencies on their platforms and to conduct accurate market analysis.

ProsCons
  • Spend less on storage and other fees
  • Adequate security and insurance of funds
  • Easy to use platforms
  • Large liquidity pool
  • Secure banking options
  • Access to educational resources
  • Professional customer support
  • You do not get to hold the real coins – Only CFD trading is available
  • Not all brokers offer Tether

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Buy Tether (USDT) from Exchanges

cryptocurrencies exchanges

Cryptocurrency exchanges are another way to buy and sell USDT as they are considered the first entry point into the crypto market. Cryptocurrency exchanges are trading platforms that list the coins and allow people to buy, sell, and trade them with relative ease. You should buy Tether from crypto exchanges because of these reasons:

Liquidity

Cryptocurrency exchanges have the most extensive liquidity of Tether, making it easy to access the stablecoin. This is because crypto projects are listed on cryptocurrency exchanges first before any other platform. Hence, you can buy USDT from crypto exchanges with ease.

24/7 Market Availability

Unlike most brokerage platforms, cryptocurrency exchanges operate 24/7, just like the crypto market. Hence, you can buy Tether coins with ease at any time of the day and on any day of the week.

ProsCons
  • Operate at all hours of the day and week
  • Offer a large liquidity pool for traders
  • Provide exciting trading and investment tools
  • Instant settling – buy and sell instantly
  • Modern and secure interfaces
  • They are not as secure as brokerage platforms
  • You will spend more on the storage of the coins

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Amongst the crypto exchanges, two of them lead the way in terms of Tether features.

Coinbase

This is one of the largest crypto exchanges in the world. It operates a very regulated and tight platform as it supports only a few cryptocurrencies including Bitcoin, Ethereum and more. Today, more than 35 million people in over 100 countries use Coinbase to buy, sell, store, use and earn cryptocurrency.

Bitpanda

Bitpanda is another popular cryptocurrency exchange. The Austrian-based crypto exchange platform rolled out support for USDT in July 2020. It now allows Bitpanda to buy, sell, deposit, send and swap this stablecoin.

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The Disadvantages of Buying Tether

Although Tether is one of the most popular stablecoins in the crypto space, it is a very controversial cryptocurrency. The stablecoin is operated by the owners of Bitfinex, another popular crypto exchange. In November 2017, Tether was hacked, and the actors stole $31 million worth of USDT tokens. This took place after a hard fork took place.

In January 2018, the company was hit with another controversy as it became evident that the necessary audit to ensure that its real-world reserve is maintained, did not take place. Instead, Tether announced that it was not going to work with the audit firm again.

The controversy surrounding Tether and Bitfinex does not end there. The two entities were accused of manipulating the price and trading volume of Bitcoin, leading to its run to the $20,000 mark in 2017. Finance professors John Griffin and Amin Shams, instructors at the University of Texas and the Ohio State University, studied the transaction history between Bitcoin and Tether. They found that the trading volume was artificially inflated to ensure that the price of Bitcoin would r rise. Tether inflated the price of Bitcoin when it started to move lower, with their action allegedly leading the price of Bitcoin to reach the $20,000 mark towards the end of 2017.

In April 2019, the Attorney General of New York, Letitia James, accused the parent company of Tether and Bitfinex, iFinex of hiding a loss of roughly $850 million of corporate funds and co-mingled client funds from its investors. According to court filings, the funds were paid to a Panamanian entity called Crypto Capital Corp, and it was done without any contract or agreement. Crypto Capital Corp was given the money to handle customers’ withdrawal requests. To hide the gap for the missing funds, Bitfinex allegedly withdrew around $700 million from Tether’s cash reserves. Bitfinex and Tether have been facing several lawsuits from the authorities and private individuals over the past three years. Based on all of this, this could them one of the most untrusted cryptocurrency entities in the trading space.

Conclusion

Despite the numerous controversies surrounding Tether, it is the third-largest cryptocurrency by market cap. With a market cap of over $9 billion, it is by far one of the most valuable stablecoin in the world. A large percentage of Bitcoin and other cryptocurrencies are still traded with the USDT coin. Hence, it remains very valuable in the crypto space.

The rising competition from the likes of USD Coin (USDC), Paxos Standard (PAX), TrueUSD (TUSD), and DAI and the lack of trust for USDT will make it tougher for it to remain the leading stablecoin in the sector in the future. As Tether and Bitfinex continue to face more lawsuits, it would most likely affect the performance of the USDT coin in the future. Only time will tell what the outcome will be

Despite this, the performance of USDT will not impact the general cryptocurrency market. The crypto space has been gaining traction over the past few months despite the coronavirus effect on the global financial markets. An increasing number of institutional investors and retail traders are trading and investing in cryptos, which shows that the future of the crypto market looks very bright. Your time to get in on this trading action is now.

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Dov Herman