Is USDT Safe? A Detailed Guide on USDT Investment

Is USDT Safe A Detailed Guide on USDT Investment

Cryptocurrency has been conquering the market for recent years. The number of coins is thriving, and the opportunities their owners have are growing. However, before purchasing a coin, it is worth discovering what exactly it is and which nuances a buyer needs to know. Some coins are best for the ‘buy and keep’ strategy, whereas others are preferable for short-term investments.

Tether is one of the coins that can be bought far and wide, with exchanges offering swaps like USDT to LTC, ETH to USDT, BTC to USDT, and plenty of others. If you are wondering whether the USDT coin is safe and how successful having or trading USDT can be, this article will shed light on it.

What Is Tether (USDT)?

Tether is known as one of the most used and favorable cryptocurrencies in the world. Additionally, it is the first-largest stablecoin by market capitalization. USDT kept gaining market share and got the support of CEXs. This resulted in Tether remaining the dominant stablecoin, with over 75% of the market share belonging to it right now, according to CoinGecko.

A new USDT can be coined exclusively when 1 dollar is added. This means that there is no other way around. In its nature, Tether is different from coins such as Ethereum, Bitcoin, or Litecoin. For instance, its price is tied to the cost of USD and is stable, while the values of other coins can fluctuate from one extreme to another.

Another potential issue is how stable USDT reserves are. In this case, Tether didn’t meet the goal of being fully backed up by dollars.

For now, just 3,9% of the cryptocurrency is officially supported by fiat money. The other 65,4% is granted by corresponding papers. What makes many people doubt if buying USDT is a good idea is that the papers backing the cryptocurrency are actually short-term loans issued for corporations.

At the same time, Tether doesn’t offer open information about borrowers or loan types. There is no information about if Tether can access this money. This raises questions like ‘Is USDT safe?’ and makes the customer trust wiggle.

On the other hand, Tether keeps its right not to disclose any information about its papers. To add, here are some facts that speak in favor of Tether’s security:

  • The company has never refused a single customer the redemption of the coins.
  • They provide the info about the origin of papers.
  • The coin developer is aiming for financial audits shortly

Tether is also involved in many trading cases, including more than 50% of Bitcoin swaps worldwide. In addition, the company presented two subsequent reports, in 2018 and 2019, stating the full backing up of coins by dollars and providing facts. Some argue that this question should remain open due to insufficient proof.

All in all, one must see both the risks and benefits of purchasing the coin and consider different scenarios. Take your risk tolerance and willingness to explore the unknown sphere of crypto into account too.

What Is Safer: USDT or USD?

Undoubtedly, fiat currency is something we are all used to and doesn’t seem to pose threats. In the case of the US dollar, we know that the US government supports it and hence, is viewed as stable.

When it comes to digital currency with its value pegged in USD, we are sure its value doesn’t ‘jump’. It stays at the exact value of the dollar. How stable this reserve is, however, is often a mystery. At the same time, USDT is a much more stable investment when compared to other crypto tokens. Moreover, having a virtual asset like this and using it in other crypto transactions is quite convenient.

As a matter of fact, Tether is still going to play a big role in the cryptocurrency’s future. Other dollar-pegged stablecoins might increase in popularity and value, too, but it takes analysis to determine which will be better to own.