What is Tether
There are hundreds of different cryptocurrencies now available on the market each with different unique specialty and characteristics and Tether is one of the cryptocurrency that stood out amongst other crypto. Tether is a cryptocurrency which was designed to mirror the value of United State Dollar. The purpose for this was to establish a non-volatile and stable cryptocurrency which can be used and spent like digital dollar.
A cryptocurrency can be classified as a “stable coin” if they serve its purpose as a non-volatile conventional dollar substitute. Tether is now the most widely used stable coin and even successfully make its way to become dollar replacement in a lot of the popular exchanges. According to the information from the Tether’s site, Tether operates in a way that converts a national’s cash into digital currency to anchor the value of the crypto coin to the price of respective national currencies such as EURO, USD and Chinese Yen. The information in the site also point out that every Tether coin available in the market is supposed to be backed up by USD in the reserve in a 1 to 1 ratio in contrast to other crypto coin which is rather untethered. In an Ideal situation, Tether should be able to trade at $1 in all exchanges and able to be used as a dollar substitute. In reality however, minor fluctuations tend to be observed on the price of the coin.
The primary use of Tether is to provide some stability to the hugely volatile crypto space and also provide liquidity to exchanges and banks which are unable to deal in dollars. A very good example for this will be the industry-leading but somewhat controversial exchange which is Bitfinex. A huge advantage of using Tether is that since there are a lot of exchanges which offers Tether as trading pairs, buying crypto coins with another coin that mirrors USD was made possible and this is exceptionally beneficial when buying a volatile coin such as Bitcoin.
To know more about Tether, here is a PDF file of the tether whitepaper attached at the bottom of the site.