Tether, or USDT, is a stablecoin that links cryptocurrency to the fiat currency US dollar. It is a virtual currency backed by reserves held in foreign exchange accounts, supported by fiat currency. USDT is primarily known for being a decentralized digital currency issued by Tether based on blockchain technology. According to Tether's initial commitment, the company strictly adheres to a 1:1 reserve guarantee, ensuring that each USDT token is backed by 1 dollar, which is also the reason for USDT's price stability. So, is USDT trading reliable? Many investors want to know if USDT trading is safe. Let me explain.
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Is USDT trading reliable?
USDT trading is reliable. From a technical perspective, USDT itself has considerable technical content, specifically the "Omni Protocol" it uses. From a value perspective, it can be analyzed from three dimensions.
- Value Measurement - Intuitive Display of Coin Value
USDT can intuitively measure the fiat value of virtual coins and can also be seen as the pricing of the US dollar, which is particularly useful in coin-to-coin trading.
- Circulation Means - Exchange Intermediary for Virtual Coins
Since USDT acts as an exchange intermediary in the circulation of virtual coins, it is used to exchange various coins, successfully becoming a settlement currency in digital currency, effectively "bypassing" the rule that original digital currencies cannot be directly exchanged for fiat currency.
- Storage Means - Risk-averse Storage
Digital currencies are highly volatile; essentially, they are more like commodities than currencies. With the stability of USDT's value, as long as digital currency holders hold Tether, it serves its storage function. When the overall market trends downward, holders can immediately trade other digital currencies for USDT, allowing Tether to serve as a risk-averse measure.
Since each USDT is backed by a dollar held in reserve by Tether, these currencies can be redeemed through the Tether platform. Tether can be used for transfer, storage, payment, consumption, etc., just like Bitcoin or any other digital currency.
Is USDT trading safe?
USDT trading is safe, but although USDT has always claimed to be very secure from a technical perspective, there have been theft incidents; on November 19, 2017, Tether's official website announced that USDT worth over 30 million dollars was stolen. However, they have marked all of it to prevent it from entering the circulation market.
Aside from the theft incident, USDT actually has more risks.
Tether has mentioned on its website:
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Tether makes no representations, warranties, or guarantees to you.
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Limitation of Liability and Disclaimer:
Except as provided in these terms of service, Tether shall not be liable for any claims, demands, losses, damages, delays, accidents, costs, business interruption expenses, or any other expenses (including but not limited to attorney fees or any claims or litigation costs), or any incidental, direct, indirect, general, special, punitive, exemplary, or consequential losses, loss of goodwill or business profits, downtime, data loss, computer failure or malfunction, or any and all other business losses directly or indirectly caused or related to this.
Because Tether, the parent company of USDT, does not support public audits, USDT has always had significant security risks. Since Tether and the exchange Bitfinex share a management team, there is theoretically a possibility of opaque operations. In addition, to address the aforementioned flaws of USDT, many compliant stablecoins have emerged, and as various exchanges gradually adapt to regulations in the future, USDT's market share will continue to decrease, so everyone can pay attention to some other stablecoins.
This is the detailed content regarding the reliability of USDT trading and its safety.