Tether Cryptocurrency – What Is It and How Does it Work?
Simply defined, Tether is a form of cryptocurrency that is meant to act as an exact replicate to the dollar (U.S.). The idea of Tether primarily stemmed from the idea of creating a type of cryptocurrency that can be used as a “digital” U.S. dollar. Cryptocurrency that is created to be a stable mirror of the American dollar is considered to be a “stable coin” and with that being said, Tether is one of the most popular stable coins currently on the market.
How Does Tether Work?
Tether works by converting cash into a digital currency in order to “tether” the amount of the coin according to the price of certain national currencies (i.e. Yen, the Euro, or American dollar). The main purpose of Tether is to provide a certain level of stability and security in a world where cryptocurrency is a bit volatile in some people’s opinions.
What Sets Tether Apart from Others?
There are several features that set Tether apart from their competitors, with the features below being some of the main contributors to Tether being the hottest thing out there in the world of cryptocurrency:
- Security– Tether is secure in that the “dollars” are kept in a type of a reserve in a 1:1 ratio, which is a major selling point for those who are looking into cryptocurrency. What this means is that Tether trades at exactly one dollar which, in an ideal world, allows it to be used in place of the actual dollar (these prices can fluctuate sometimes).
- Stability– it is said that Tether offers a level of stability unlike any other by holding a steady value of the dollar (100% backed by the USD)
- Multiple Keys- with Bitcoin, there was simply one public key and one private key; Tether differs from this by having multiple keys which can be used depending on your preferences
- Confidentiality-Tether is beneficial by effectively shielding all receiving and sending addresses, in addition to the amounts that are being transferred; users are relatively reassured that their transactions are safe and private; however, there are some issues with that which are mentioned
The key points above are just some of the few things that make Tether stand out and there are certainly a host of other features that are laid out on their website.
Is Tether Right For You and How Do You Know?
The answer to this is simple- properly do your research. Unfortunately, as with anything, there is a downside and there have been some negative reports in regards to Tether, mainly which it is not necessarily a 1:1 ratio with the currency that has currently been claimed by them. Also, even though Tether uses blockchain, they are not a decentralized network, which poses a bit of a problem since a lot of networks out there are turning more to decentralized networks for the sake of their users and to gain more accessibility, which is a huge bonus to some individuals.
The best advice is to thoroughly do your research and decide what is best based on your preferences and what you are hoping to accomplish.