USDT: How to protect your assets using Tether?
Get to know Tether, the dollar backed up cryptocurrency. Understand the reasons why it has one of the largest volume in the market today and why you should store it in a wallet.
USDT is a cryptocurrency created in Bitcoin’s Blockchain through the Omni Layer Protocol. Each USDT is backed by the US Dollar from Tether Limited’s reserves. Just like any other crypto, you can send, receive, and store Tether. However, it is necessary that this wallet has the Omni Layer implemented and a BTC amount for the USDT to communicate through the Bitcoin blockchain.
The idea of Tether is to be a stable criptocurrency that works just like dollar, a kind of digital dollar. Its primary use is to provide stability in a volatile market and to provide liquidity to exchanges that can not trade in dollars and / or with banks.
In the universe of the crypto-coins, there is a class of currencies that seek to be stable surpluses of the dollar. These currencies are classified as “stable currency” there are several others besides the Tether that have this same proposal, but the USDT is the most popular.
Despite all this very positive side, there is another one that must be exposed, the risks of centralizing Tether and the possible impacts on a decentralized market. The fact that the same people who take care of Bitfinex take care of the Tether and this ends up generating a conflict of interests. And the possibility of the USDT not actually being backed in the 1:1 ratio to the US Dollar, as it is said. Although in a recent audit it has been proven that the 1:1 backup is real.
Now that you have understood what Tether is and how it works, let us explain how it can be used to defend your assets.
With 1:1 parity, in a volatile market of the cryptos, the stability / security that value will not change is essential after a trade, or a pump. Let’s imagine a situation in which the individual makes a trade and guarantees 35%, that is, of the capital that he used for the trade, now he has 35% more. If he keeps that amount in the cryptocurrency, he will be subject to the risk of devaluation, and one of the possible ways of securing the current amount is by selling and transforming into fiat currency. In this operation they may incur several fees, be it of service, transaction, of the miner, there goes, besides all the bureaucracy and delay involved. Sometimes even making it impossible for you to negotiate in the time of withdrawal and deposit. Exactly to solve this problem we have the Tether as a strong strategy of assets defense, since by eliminating all the bureaucracy and fees, you can get out of an operation and guarantee your gain or reduce your loss.
Tether is mostly stored in centralized exchanges. We know that exchange is not wallet, are liable to failures, attacks of hackers, etc. Leave your asset susceptible to risk of loss is something that should be avoided to the maximum. So it is recommended, like any other crypto, to leave your resources stored in a decentralized wallet where only you have access to the private key of that address.
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