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 issued by Tether, a company that utilizes blockchain technology to create a decentralized digital currency. According to Tether's initial commitment, the company strictly adheres to a 1:1 reserve guarantee, ensuring that each USDT token is backed by one 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's discuss this.
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Is USDT trading reliable?
USDT trading is reliable; from a technical perspective, USDT itself has considerable technical content, specifically through its use of the "Omni Protocol." From a value standpoint, 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 a pricing mechanism for 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 currencies, 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 premise of USDT's stable 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 act 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, and consumption, just like Bitcoin or any other digital currency.
Is USDT trading safe?
USDT trading is safe; however, although USDT has always claimed to be secure on a technical level, there have been theft incidents in the past. On November 19, 2017, Tether's official website announced that over $30 million worth of USDT was stolen. However, they have marked all of it to prevent it from entering the circulation market.
Aside from the theft incident, USDT has other risks as well.
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 Release:
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's fees or any claims or litigation costs), or any incidental, direct, indirect, general, special, punitive, exemplary, or consequential losses, goodwill or business profits, downtime, data loss, computer failures or malfunctions, or any and all other business losses directly or indirectly caused or related to.
Because Tether, the parent company of USDT, does not support public audits, there has always been a significant security risk associated with USDT. Since Tether and the exchange Bitfinex share the same management, there is a theoretical possibility of opaque operations. In addition, to address the aforementioned shortcomings 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 it is advisable to pay attention to other stablecoins.
This concludes the detailed content on whether USDT trading is reliable and whether USDT trading is safe.