With a market cap of over $60 billion, Tether is currently the third largest cryptocurrency. It is still far behind the market leaders Bitcoin and Ethereum, but well ahead of several popular coins, including:
It is also easy to find as you can buy it from most of the leading cryptocurrency apps and exchanges.
Unlike other cryptocurrencies, the price of Tether usually remains stable at $1. This means that investing in Tether is not like investing in a regular cryptocurrency.
Tether is a stablecoin pegged to the US dollar
A stablecoin is a cryptocurrency pegged to another asset. Many stablecoins, including Tether, are pegged to the US dollar. It is supposed to be of equal value, with 1 Tether being worth $1.
Because Tether’s price is designed to reflect the dollar, it’s not the type of cryptocurrency you buy and hold in the hope that the price will rise.
It can be used to buy cryptocurrencies, transfer money, or earn interest.
Tether may not be suitable as a cryptocurrency investment, but it has several other uses. Here are the most common reasons for buying it:
- Buying other cryptocurrencies: Transferring money from a bank account to a crypto exchange can take several days. If you want to keep funds in your account in order to buy cryptocurrency without waiting, you can buy Tether. You then simply use your Tether to make a purchase.
- Money transfer: If you want to send money between exchanges or crypto wallets,Tether is a good option. You can use it to transfer money between your own exchange accounts or send money to another person. Tether does not charge any fees for transactions between Tether wallets (although there are standard blockchain fees).
- Earning Interest: Some crypto exchanges pay interest if you lend your cryptocurrency, and you can earn 25% interest by lending coins. The advantage of Tether is that its value should not fluctuate. With most cryptocurrencies, you can earn interest, but you can still lose money if the price of the cryptocurrency you are lending drops.
Tether may seem safe as it is a stablecoin, but there are reasons to be wary of it. The company that produces it, Tether Limited, does not have the best reputation.
The main problem is its reliability. Tether Limited previously claimed that each Tether was backed by $1. Later it turned out that it was a lie. In March 2021, Tether Limited published information about its reserves, which showed that only 2.9% of Tether was backed by cash.