If you are interested in trading on cryptocurrency exchanges, you probably noticed USDT cryptocurrency. However, it is one thing to know that such a phenomenon exists, and quite another to understand what it is.
USDT is a cryptocurrency asset created on the basis of the Bitcoin blockchain using the Omni Layer protocol. Each such token is pegged at a value to the US dollar, which is stored on a special limited reserve balance of Tether and can be received, exchanged or spent through the platform of the same name. In this matter, this token is not different from any other cryptocurrency or the same bitcoin. In addition, users can store their Tether assets in any crypto wallet that supports the Omni Layer protocol.
USDT was specifically created to be tied to a specific fiat currency in order to facilitate international transfers and create a stable alternative to bitcoin. This was achieved by creating an alternative consensus algorithm - “Proof of reserve”. The closest analogy is the “Foreign exchange reserve”, which guarantees the value of the national fiat currency.
A special Tether confirmation system has been developed, demonstrating the number of tokens in circulation. This can be easily verified using the Bitcoin blockchain through the tools provided by the Omniexplorer.info service. And this amount is required to correspond to the total amount of US dollars held in the Tether Limited reserve account. This balance is also regularly published and audited by reputable and competent experts and financial auditors. However, ordinary users can also familiarize themselves with the state of the company's accounts, since this information, as well as financial audit reports, are in the public domain.
It is also possible that the balance of the fiat currency on the company's account exceeds the number of USDT tokens - this may become the reason for the release of new coins.
According to the developers of this cryptocurrency, they have an extremely reliable and transparent system based on the oldest and most stable blockchain, which provides its users with the opportunity to work with stable assets in the national currency.
How to work with USDT?
For those who are used to working with crypto, this is quite simple. These tokens can be used on various cryptocurrency exchanges to acquire other popular cryptocurrencies. They can also be easily transferred from an exchange wallet to any other wallet that supports the Omni Layer protocol. Tether does not receive a separate fee for these transfers, although other exchanges and crypto-wallets may require some commission for these transactions. The main source of income of the issuing company is the fee that is charged during exchange USDT for USD.
In addition, you can work with this token through the specialized Tether.to platform, which allows you to carry out transactions not only within the blockchain networks, but also make direct transfers to and from a regular bank account.
USDT is a good example of how stablecoins can also be useful and effective. Combining the advantages of cryptocurrency (transparency, anonymity, security) with the reliability of the fiat currency, greatly expands the capabilities of users. And even opens the way to cryptocurrency markets for large companies, shackled by insufficiently developed legislation relating to conventional cryptocurrencies.
CryptocurrencyAuthor: EXBASE.IO | Dec 01, 2020
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