What is USDT and How Does It Work? A Guide for Beginners

Almost all the largest exchange services have a USDT market. If you have paid your attention to the assets you already know, the time has come to learn something new and find an additional way to earn on cryptocurrency. USDT is also a crypto-asset launched on the basis of Bitcoin’s blockchain. The main thing that differs USDT from other currencies is that this digital asset is tied to US dollar. It can be bought, spent, stored and transmitted in any way, just like any coin. There are special wallets that support USDT such as Ambisafe, Omni Wallet and Holy Transaction.

USDT is known as a Tether currency, because the dollars that support this asset are stored within the Tether’s network. It was created to help users perform international transactions in a safe and stable manner. The instability of Bitcoin and other altcoins is a well-known problem every investor knows. This traces numerous risks because cryptocurrency is not supported by anything but users’ enthusiasm. When the enthusiasm goes low, the price falls, too. At the same time, USDT depends on the dollar rate, which makes a good alternative for other cryptos.

The operational methods used by USDT are Proof of Reserves Process and Proof of Solvency. The first one allows users to see how many USDT is in circulation right now. They have an access to the Bitcoin’s blockchain and can analyze it with the help of special tools (they are available at Omnichest.info). The USD reserves are presented by the company owners and evaluated by the professional auditors. Tether is responsible for the correspondence between the amount of available USDT and the amount of reserved dollars to let users purchase and transfer the currency freely.

Tether has a special transparency page on their website. On this page, they publish the information about the balance on their bank account. At the same time, auditors evaluate the given information and check for validity. To sum up, we have a transparent and reliable financial system backed up by US dollar and operated by means of the Bitcoin’s blockchain. Sounds really great, isn’t it? But let’s find out more and talk about some pitfalls in the end.

How do you use USDT?

Using USDT is pretty simple. As a rule, you can use it on the exchanges to pay for cryptocurrency like Bitcoin, Litecoin, Ethereum, and other. You can transfer USDT from the exchange to your personal wallet and store it. Mind that despite the fact that Tether doesn’t have any fees for transactions, the exchange website may still have them. USDT can be also converted to dollars on the Tether platform (conversion a small commission).

What are the advantages of USDT?

There are some major advantages that USDT can provide:

  • Transparence

Tether guarantees that the reserve of dollars that back up USDT is verified and regulated all the time. The information can be accessed by any user at any time. The transactions made in the network are stored in the blockchain and can be tracked as well.

  • Stability

Pegging to the dollar makes USDT very attractive for those users who want to enjoy all advantages of cryptocurrency and stay safe from their high volatility.

  • Low fees

When you are transferring USDT from one Tether account to another or between any two wallets based on the blockchain, there is no need to pay any additional fees. The only operation that requires commission is converting USDT to dollars and vice versa.

Are there any pitfalls?

There is one thing users should pay special attention to before they start purchasing USDT. You may visit the official website of Tether and take a look at the page called “Terms of Service”. If you read them carefully, you will see that the company claims that they are not responsible for any loses you can face when trading or buying USDT. Despite the fact that the company claims USDT to be supported by dollars from their reserves, they inform users that they do not guarantee redemption of USDT and are not formally liable to do this. In 2017, the number of USDT has grown very fast and reached the amount of more than $100,000,000. It is not very clear what kind of funding was that and where did it actually come from.


The offers and advantages provided by USDT and Tether seem really profitable. However, you should remember that cryptocurrency is a speculative instrument and any operations with digital money always include risks. Nobody can predict the future performance and the successful past performance doesn’t guarantee that it will repeat the same way next time. Always check the nature of the company and product you choose and make sure that you know all ins and outs before you start cooperating with them. Good luck with your investments!

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