What is Tether and how does it work?

Tether is a stablecoin or stablecoin, although at the same time it is also a cryptocurrency. What makes this digital currency different from other currencies like bitcoin or ethereum is that its mission is to replicate the price of the dollar, which means that one USDT, the name of the token, will always be equivalent to one dollar. Thus, usdt cryptocurrency is a digital currency that is intended for mass use, or perhaps it is more like what we know about ordinary money or fiat money, that is, it is a currency that is not intended for investment, but for its use.

This means that it lacks volatility, or rather, it has the same volatility as the US dollar. As for how it works, the company behind it is known as Tether and the token is known as USDT. Roughly speaking, it uses an algorithm to ensure that the price of each of these tokens is the same as the price of a dollar. That is, if we were to buy $1,000 in US dollars, it would always be the same value as $1,000.

With all this on the table, it should also be added that the algorithm used is the same as that of bitcoin. Although, yes, we must clearly understand that this digital currency is very different from the rest. Being a stablecoin, it is not mined. It's just that more coins are created and their price varies depending on the US dollar. With all the pros and cons that this entails, such as the fact that it is not a currency to keep up with the inflation that is happening in the United States.

Now the utility of the USDT is its main attraction. It is one of the most widely used currencies, sometimes even surpassing bitcoin. The reason is that it has the advantages of being a cryptocurrency and is equivalent to a dollar. If, for example, we want to invest in cryptocurrencies, but do not want to invest all the capital or are waiting for a better market moment, it may be a good idea to have a certain amount of USDT in our portfolio so that when the right moment comes, it will be much faster to buy cryptocurrencies, because we already we will be inside the exchange.

Tether is also used for international transfers. Under the current monetary system, the transfer time exceeds 4 days, and sometimes even a week. In addition, the fees for this operation are high. However, with Tether, we would transfer the same amount of dollars, but in a matter of minutes and with almost no fees. This is where the attraction of forex lies.

It is also more affordable for those who want to have access to the price of a dollar. For example, in the case of a country suffering from high or hyperinflation, as in the case of Argentina, owning dollars is always something precious. However, sometimes it is more difficult or you have to resort to a parallel market to exchange Argentine coins for US dollars. With USDT, it's more affordable.

Cons of Tether

However, it should also be noted that this currency has been controversial since its inception. Problems were found in its verifications, problems when verifying accounts, people and organizations that used this platform to hide their tracks, and other types of problems that have always raised doubts about Tether.

From an investor's perspective, Tether will not be seen as an asset as it will not be revalued as such. It will fluctuate just like the US dollar.