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    What is Tether crypto and how does it work?

    Tether Crypto

    Tether is designed to be a “secure” digital asset with a consistent value. USDC is a stablecoin, meaning its value is tied to the price of the US dollar. Tether should constantly maintain the same value as its peg, according to the purpose.

    According to Steve Bumbera, chief operating officer of Many Worlds Token, “the concept is that 1 of these stablecoins can always be traded for $1, regardless of market conditions.”

    USD Coin (USDC), Dai (DAI), and Pax Dollar (USDP) are among Tether’s stablecoin competitors. Cryptocurrency traders use Tether to provide consistent, dependable liquidity so they can enter and exit other cryptocurrency deals without risking unpredictably high losses (or gains) due to price fluctuations.

    At the time of writing, they had a 24-hour trading volume of $89 billion. Tether is now the most liquid cryptocurrency, outperforming even crypto market heavyweights Bitcoin (BTC) and Ethereum (ETH) (ETH). It’s also one of the top three most valuable cryptos in terms of market capitalization.

    How does Tether work?

    Tether issues the corresponding digital amount in tokens when a customer puts fiat currency into Tether’s reserve and sells fiat to purchase USDT. After then, the USDT can be transmitted, saved, or swapped.

    If a user puts $100 in the Tether reserve, they will receive 100 tokens, based on a one-to-one dollar parity. When users redeem Tether tokens for fiat currency, the coins are destroyed and removed from circulation.

    Tether, like many other digital currencies, flows between blockchains. These tokens are available on a variety of blockchains, including the original Omni on the Bitcoin platform, Liquid, Ethereum (ETH), and TRON (TRX), among others.

    How is the stablecoin backed?

    Tether has some extra questions involving liquidity issues and whether its reserves are adequate to fund the number of USDT tokens in circulation, despite stablecoins being a popular choice among crypto traders.

    Tether’s website claimed in 2019 that the stablecoin was supported by traditional currency reserves and cash equivalents (and sometimes other assets from affiliated entities).

    That’s a little more information than what’s being cited now. “All Tether tokens are pegged at 1-to-1 with a matching fiat currency and are backed 100 percent by Tether’s reserves,” according to Tether’s website today. Tether’s history of being honest about how the coin is supported, according to Adam Carlton, CEO of crypto wallet Pink Panda, hasn’t always been obvious or consistent.

    “It has a shady legal history, and its real reserves are still a mystery,” Carlton notes, “and are thought to be largely made up of undisclosed sources of commercial paper.

    Other cryptocurrency specialists believe it’s widely acknowledged that this stablecoin isn’t “completely” collateralized in the crypto market and that it was a contentious subject more than a year ago.

    “Markets have worked through that concept of comfort – it’s quite evident Tether isn’t backed by dollars,” says James Putra, vice president of product strategy at TradeStation Crypto.

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