Arsablog

What is Tether and how is it different from dollars?

تتر (Tether) چیست و چه فرقی با دلار دارد؟

Tether (USDT) is a digital currency whose value is equal to one US dollar. This digital currency, which is backed by the dollar, is designed to protect investors against the extreme fluctuations of the digital currency market. The main difference between Tether and dollars is that it is transferred digitally and very quickly and easily.

In this article, we answer these questions:

  • What is Tether?
  • Why is the price of Tether always fixed?
  • How does Tether work?
  • How to buy Tether in Iran?
  • What are the best Tether wallets?
  • Why is the price of Tether different from the dollar in Iran?

What is Tether?

Tether logo
Tether logo

Tether or USDT is a digital currency backed by the US dollar; Therefore, the price of one unit of USDT is almost always equal to one US dollar.

In fact, Tether is a stable digital currency (Stablecoin). The price of stablecoins depends on the value of their underlying assets and will rise or fall with them.

Apart from Tether, many other stable digital currencies with dollar backing have been launched in the market; But USDT currently has the largest market and at the time of writing, according to CoinMarketCap data With a market value of more than 66 billion dollars, after Bitcoin and Ethereum, it has strongly relied on the third position of the digital currency market.

What is the use of Tether?

Tether has two main uses:

  • Surviving the extreme fluctuations of the digital currency market
  • Easy transfer of money to exchanges and wallets in dollars

Let’s say you bought one bitcoin for $8,000. A little later, the price reaches $10,000. In this case, you will convert your bitcoins to Tether very quickly and easily and save 10,000 USDT units.

Then, the price of Bitcoin falls to $6,000; But your capital is still worth $10,000 and you can buy more bitcoins at lower prices.

In addition, you can easily store this digital currency in digital wallets on your mobile phone or computer or wallets in exchanges. Sending and receiving USDT is as simple and fast as sending an email. These features have made this digital currency very popular for traders.

Now this digital currency is transferred on blockchains such as Bitcoin, Ethereum, Tron, Solana, Polygon, Olench, Elgorand and many other blockchains. This shows that Tether is very easy to access and can be stored on a variety of wallets such as Ethereum, Tron, Solana, and Olench.

What company is behind Tether?

iFinex is the owner of Tether organization and operator of Bitfinex digital currency exchange. In fact, new USDT units are first released and circulated on the Bitfinex exchange.

Tether was first released in 2014 under the name “Realcoin” and after a short time its name was changed. In 2019, the company released another stable digital currency called Tether Gold, which is backed by gold.

How does Tether work and why is its price always fixed?

As a rule, for every unit of USDT that is produced, one US dollar is held in bank reserves, which acts as the backing of this digital currency.

This means that if 4,000,000 units of USDT have been marketed, 4,000,000 dollars must be kept in the bank’s treasury so that its price will always be equal to one dollar.

Needless to say, there is doubt in the digital currency community about this issue, and some accuse this digital currency of not having enough support.

Ifinx company produces new USDT units on demand and in different time periods and imports them to the Bitfinx exchange, and then traders and market makers take them to other exchanges and wallets, and this kind of Tether circulates.

This image has an empty alt attribute;  Its file name is 1-Tether.jpg
Tether ecosystem at a glance (Designer: Farshad Motkalami © Erzdigital)

Another important point is that USDT transactions are decentralized and are carried out on large blockchains; But the distribution of its units It is completely focused And it cannot be called a decentralized digital currency.

By visiting block explorer websites like Etrascanyou can see the number of available USDT units and the status of transactions and its addresses.

Buying Tether in Iran

What is Tether and how is it different from dollars?
Designer: Farshad Motkalami © Erzdigital

The best way to buy Tether is to visit digital currency exchange websites. Users living in Iran usually use one of the following two methods to buy this digital currency from an online exchange:

  • Direct purchase from Iranian websites with Rial and bank card
  • Convert Bitcoin or other digital currencies to Tether in foreign exchanges such as Kocoin

By searching for the word “buy Tether” in Google, you will find Iranian websites offering this digital currency. After registering and authenticating on one of these websites, you can directly buy with your bank card.

Some investors and traders also use the second method; It means converting Bitcoin or other digital currencies to USDT in international exchanges, which of course has risks due to sanctions.

USDT wallets

USDT units are non-physical and digital; So, you need digital wallets to store them. As we said, this currency is one of the few digital currencies that has good accessibility and is stored and transferred on dozens of wallets (software or hardware).

In fact, Tether is a token that has been released on many blockchains, and to store it, it is enough to use the wallets of the host blockchain. For example, to store USDT, you can use Ethereum, Tron, Solana, Ollench, and other wallets that host Tether on the blockchain.

Due to the high fees of Ethereum, at the time of writing this article, most digital currency exchanges in Iran are selling Tethertrony; Because its transfer fee is lower.

do not forget:

when picking USDT From the exchange, note the wallet address and make sure you receive Tether on the correct address. For example, on an exchange that sells TetherTrony, you need to give the TetherTrony address (TRC-20) when withdrawing, not, say, an Ethereum address.

The most popular wallet available for storing USDT is Trust Wallet, which supports most blockchains of this digital currency and has an easy user interface. See the list of the best Tether wallets in the table below:

name type download link
Trust Wallet (multi-chain, Ethereum, Tron, etc.) Software/Mobile Download
MyEtherWallet (Ethereum) software/web access
Metamsk wallet (Ethereum, Olench, etc.) Software/browser add-on Download
Exodus wallet (multi-chain) Software/mobile and desktop Download
Ledger wallet (multi-chain) hardware physical
Trezor wallet (multi-chain) hardware physical
Phantom Wallet (Solana) Software/browser add-on Download

Do not forget to make a backup copy of the digital currency wallet before using it. Wallets usually show the user a set of 12 English words for backup, which should be written down in a safe place.

In case of deletion of wallet or any other problem, user can recover their assets again. If you don’t back up your wallet, your funds will be lost forever if your wallet is deleted or your device is stolen or damaged.

The difference in the price of paper dollars and Tether in Iran

For several reasons, sometimes in Iran the price of Tether differs slightly from the price of the dollar:

Digital currency market fluctuations and price chat

Since paper dollars and Tether are traded on separate platforms and markets, when the volatility in the digital currency market increases, increased demand can cause price changes compared to the free dollar.

For example, when the price of Bitcoin suddenly drops in exchanges, it may be that by selling more Bitcoin and converting it to USDT, the demand for it will increase and its price will increase compared to the free dollar. Such a situation creates a gap or gap between this digital currency and the paper dollar, which, of course, disappears after a while.

Extreme fluctuations of Rial and price gap

In periods when the value of the rial experiences severe fluctuations, similar to what we said earlier, it happens; That is, the price of one of the currencies increases first and a price gap is created until both markets reach equilibrium again.

Exchange fees and policies

Small exchanges that have lower trading volume may offer it at a higher price according to their policies and to compensate for liquidity.

Also, in exchanges where the exchange itself is the party to the account and is not an intermediary, the exchange may sell this digital currency more expensively to compensate for losses or more profit.

In Iran, usually (but not always) the price of USDT is higher than the price of paper dollars. For example, if the dollar price in the open market is 44,800 Tomans, each USDT unit is traded at 45,000 Tomans in online exchanges.

Answers to some frequently asked questions

What is Tether?

Tether (USDT) is a digital currency whose value is equal to one US dollar.

Why is the price of Tether always fixed?

For every unit that is produced from this digital currency, one US dollar is kept in bank reserves, which acts as the backing of this digital currency.

What are the best wallets to store USDT?

Dozens of software and hardware wallets support this digital currency. The best free software wallets include TrustWallet and Metamask. Ledger and Trezor wallets are also among the top two hardware wallets to store USDT.

What is the use of Tether?

It has two main uses: surviving the extreme fluctuations of the digital currency market and easily transferring money to exchanges and wallets in dollars.

Why is the price of Tether different from the paper dollar?

Since the paper dollar and Tether are traded in different markets, when the fluctuations of Rial or digital currencies increase, the price of one increases and a price gap is created. Also, small exchanges may sell Tether at a higher price to compensate for liquidity.

source

Leave a Reply

Your email address will not be published.