What is Tether (USDT)? How It Works and How to Buy USDT

Tether or USDT is a cryptocurrency asset that is pegged 1:1 to the US dollar. USDT falls under the category of stablecoins, which are cryptocurrencies designed to maintain a stable value relative to fiat currencies or other assets with more stable values.

As we know, one of the advantages of cryptocurrency is its ability to transfer assets more quickly, cheaply, and securely from one user to another.

The volatility of cryptocurrency assets, on the other hand, is one factor that currently limits their widespread adoption as stores of value or mediums of exchange for everyday needs. Stablecoins like USDT provide a solution to the volatility of cryptocurrency assets.

What exactly is USDT and what are its functions? We will delve further into this in the article.

What is Tether (USDT)?

As briefly explained above, Tether (USDT) is a token that has the same value as the US dollar and is built on the Ethereum blockchain, using the ERC-20 token standard.

The value of USDT is guaranteed by its issuer, Tether, to remain equal to the US dollar. Tether allocates the same amount of USD to its reserves each time it distributes new USDT tokens, ensuring that USDT is fully backed by cash and equivalent assets.

What is the purpose of stablecoins like USDT?

Due to the significant price fluctuations of cryptocurrency assets, with values sometimes swinging up to 20% in a single day, they aren't very reliable for storing value. However, USDT remains stable despite these market fluctuations.

This stability makes USDT a secure asset choice for cryptocurrency investors. They can hold their assets in USDT without needing to convert them into fiat currency, which could cause them to miss out on trading opportunities during volatile periods.

Here are some examples of how USDT is used:

Trading

The cryptocurrency market operates 24 hours a day. By converting crypto into USDT, a trader can reduce the risk of rapid price declines in cryptocurrencies. Transferring crypto such as BTC to USDT instead of to US dollars is also much faster and cheaper.

USDT provides consistent liquidity that can be transferred at the same speed and with the same level of flexibility as other crypto assets, making it easier for traders to buy and sell. Here are some examples: 

An investor wants to secure their income from bitcoin (BTC) trading profits. If they convert BTC to US dollars or other fiat currencies, the conversion may take more than a day to complete.

Meanwhile, the investor sees opportunities to acquire other crypto assets but considering the nature of cryptocurrencies that can change prices within minutes, the investor cannot immediately access their funds being converted to fiat currency thus, causing them to lose momentum.

This is why traders value stablecoins like USDT as a more convenient medium for storing value because they can be immediately exchanged back into other crypto assets, albeit with a stable value.

International payments

One advantage of Tether (USDT) is its ability to facilitate transactions with the US dollar across regions, countries, or even continents. Blockchain technology in cryptocurrencies enables international transactions to be conducted without the need for intermediaries that consume time and money, unlike using banking services or other financial service providers.

Storing assets worth dollars

People living in countries with weak or fluctuating currency values tend to keep their money in US dollars. However, this is not easy to do because they have to keep it in cash or rely on local banks that may not always facilitate this need. 

One solution is to store their assets in stablecoins like USDT, which are easily tradable and have a stable value. 

DeFi infrastructure

DeFi, or decentralized finance, is one of the increasingly popular and widely used developments in the crypto world. Many DeFi products or applications facilitate lending, provide interest, and more.

However, because DeFi applications can only interact with crypto assets, high volatility can put users of DeFi products at significant financial risk. This is because high price volatility can lead to liquidation or losses.

Tether offers a solution in the form of on-chain collateral that keeps the value stable. Tether tokens can be used as collateral to participate in the DeFi network without worrying about volatility.

How Does Tether Work

When individuals deposit their fiat currency into Tether's reserve and exchange it for USDT, Tether generates an equivalent amount of digital tokens. These USDT tokens can then be utilized for sending, storing, or trading.

For instance, if someone deposits $100 into the Tether reserve, they will receive 100 Tether tokens based on the 1-to-1 dollar ratio. When users redeem their tokens for fiat currency, the corresponding Tether coins are destroyed and taken out of circulation. Tether operates across various blockchains like many other digital currencies. 

How much USDT is currently in circulation in 2024?

Currently, there are 104.4 billion USDT in circulation, with an equivalent market capitalization of $96.8 billion. This alignment between the circulating supply and market cap arises because the value of USDT is pegged to the US dollar.

The quantity of a specific coin in circulation denotes the amount that has been mined or issued by the creators or maintainers of the currency. For example, in the case of Bitcoin, the circulating supply refers to the mined Bitcoins now held by cryptocurrency holders.

It's important to understand that market capitalization is determined by multiplying the circulating supply by the price of one coin:

Number of coins × Price of 1 coin = Market Cap

Given that one USDT equals $1, and approximately 104.4 billion are in circulation, the market cap is calculated accordingly.

Compared to other cryptocurrencies such as Bitcoin, its market cap stands at $ 1,368.11B USD, yet only 19.67 million Bitcoins are in circulation. Utilizing the formula, dividing $ 1,368.11B USD by 19.67 million yields approximately $69,536.78, which reflects the price per Bitcoin based on the market cap.

How to Buy USDT in Hata

If you're interested in purchasing USDT (Tether) on Hata.io, the process is straightforward. Here's a step-by-step guide:

1. Visit Hata.io: Begin by opening your web browser and navigating to Hata.io.

2. Sign Up or Log In: If you're new to Hata, you'll need to sign up for an account. Existing users can log in using their credentials.

3. Complete Verification: You may need to undergo a verification process to ensure security and compliance.

4. Navigate to the USDT Market: Once logged in, find the USDT market within Hata's trading platform.

5. Deposit Funds: Before you can purchase USDT, you'll need to deposit funds into your Hata account. Follow the instructions provided by Hata for depositing funds. You may deposit fiat currency (such as USD) or other cryptocurrencies. 

6. Place an Order: Once your funds are deposited and available in your Hata account, you can place an order to buy USDT. Specify the amount of USDT you wish to purchase and the price you're willing to pay per USDT.

7. Review and Confirm: Double-check your order details for accuracy, including the total amount you'll be spending. Once satisfied, confirm your order.

8. Wait for Execution: After placing your order, you'll need to wait for it to be executed. The execution time may vary depending on market conditions and the type of order you placed.

9. USDT in Your Account: Once your order is successfully executed, you'll find the purchased USDT in your Hata account balance.

10. Withdraw Your USDT (Optional): If you prefer to store your USDT in a personal wallet, you can withdraw it from your Hata account to your external wallet.

11. Security Reminder: Always prioritize the security of your Hata account. Use strong, unique passwords, enable two-factor authentication if available, and remain vigilant against phishing attempts.

That's it! You've now successfully purchased USDT on Hata.io. If you encounter any difficulties during the process, don't hesitate to reach out to Hata's customer care for assistance. Happy trading! 

FAQ: 

1. Is USDT equivalent to the dollar?

No, USDT is a digital currency that is linked to the US dollar. It is known as a stablecoin because its value is derived from the value of one dollar. Some may refer to it as the digital USD, but that is only partially accurate because the US government issues USD, but they do not own or issue USDT.

2. What is the value of USDT?

One USDT equals $1. Occasionally, the price fluctuates by $0.01 or $0.02, but it consistently remains around $1. Keep in mind that USDT is pegged to the US dollar at a 1:1 ratio.

References: 

Nadya, R. (2021). Apa itu Tether (USDT) dan Kegunaannya? Pintu. https://pintu.co.id/academy/post/apa-itu-tether-usdt-dan-kegunaannya 

Thelma, N. How Much USDT in Circulation in 2024? Presmit. https://prestmit.com/blog/how-much-usdt-is-in-circulation/ 

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