Overview
Entering the cryptocurrency investment space can be done in numerous ways. One of the most common methods is using Vietnamese exchanges that support trading with the Vietnamese Dong (VND) for major cryptocurrencies like Bitcoin and Ethereum.
However, investor needs extend beyond these primary assets. The market is filled with thousands of other cryptocurrencies, collectively known as altcoins. These altcoins often experience much higher volatility than Bitcoin, presenting both greater risk and the potential for higher returns.
A significant challenge arises here: many Vietnamese exchanges don't support direct VND purchases for these altcoins. Furthermore, trading altcoins against Bitcoin (ALT/BTC pairs) introduces price uncertainty tied to Bitcoin's own fluctuations. So, how can one acquire these altcoins efficiently?
Tether (USDT) emerged as the solution. It allows investors to easily purchase altcoins on international exchanges that support ALT/USDT trading pairs. This convenience, coupled with its price stability, has cemented Tether's position as the most widely used stablecoin in the cryptocurrency market.
What is Tether (USDT)?
USDT is the ticker symbol for Tether, a stablecoin pegged to the value of the US Dollar at a 1:1 ratio.
This means if you have $1,000, you can acquire approximately 1,000 USDT. These USDT tokens then represent your fiat currency, acting as a digital dollar for direct use within the crypto ecosystem.
Using USDT is exceptionally convenient. It allows for easy conversion, seamless trading on exchanges, and rapid transfer between wallets and platforms with minimal delay.
A simple analogy is depositing money into a bank. You see a number in your account that matches your deposit. Tether operates similarly. You deposit fiat currency with an authorized issuer and receive an equivalent amount of USDT tokens.
Advantages of Tether
- Tether was the first stablecoin to be widely traded.
- It is the most extensively used stablecoin globally.
- It boasts the largest market capitalization among all stablecoins.
- It is the most widely accepted stablecoin on cryptocurrency exchanges.
- Transactions with USDT are extremely fast.
- It is supported across multiple blockchain networks.
- It serves as a safe-haven asset during periods of high market volatility.
Disadvantages of Tether
- Tether is often criticized for a lack of transparency compared to other stablecoins.
- It has faced significant legal and regulatory challenges with government authorities.
- It has been involved in several high-profile controversies and scandals.
- Its price stability is not absolute; it can experience minor fluctuations greater than some competitors.
- There are concerns about potential market manipulation or the issuance of tokens without full fiat backing.
- Its operation is not decentralized.
- USDT cannot be mined.
Classifying Tether's Supported Platforms
Tether has diversified its token support across multiple blockchain networks. To date, USDT operates on over five different major protocols, with Omni and ERC-20 being the two most common.
- USDT – Omni: The original version, built on the Bitcoin blockchain.
- USDT – ERC-20: The Ethereum-based version, enabling smart contract functionality.
- USDT – TRC-20: A version on the Tron network, known for very low transaction fees.
- Other Protocols: USDT is also available on networks like EOS and Liquid.
When transferring Tether between exchanges or wallets, it is absolutely critical to check the supported protocol. Even though they are all called USDT, tokens on different blockchains are not compatible. Sending TRC-20 USDT to an ERC-20 address will result in a permanent loss of funds.
If you are unsure, always ask for support or conduct a small test transaction first to ensure the process works correctly.
How Tether (USDT) Works
The core operational model of Tether involves a straightforward process:
- Deposit Fiat: A user deposits US dollars (or other fiat currency through a gateway) into Tether Limited's reserve.
- Issue Tokens: Tether Ltd. creates (mints) an equivalent amount of USDT tokens.
- Distribute Tokens: The newly minted USDT is distributed to the user's designated wallet address.
- Circulate: Users freely trade, transfer, and use USDT across the crypto ecosystem.
- Redeem: When a user wants to convert USDT back to fiat, they send the tokens back to Tether Ltd.
- Destroy Tokens: Tether Ltd. destroys (burns) the returned USDT tokens and releases the equivalent fiat currency from its reserves to the user.
5 Basic Use Cases for Tether USDT
- Buying Other Cryptocurrencies: This is the most common use, especially for newcomers. It allows investors to purchase altcoins that aren't paired with their local fiat currency.
- Easily Moving Assets: USDT is ideal for quickly and efficiently transferring value between different exchanges and private wallets.
- Protecting Portfolio Value: Many investors hold USDT to preserve capital during market downturns, effectively "parking" their funds in a stable asset until new opportunities arise.
- Participating in Lending: Numerous crypto platforms offer lending services where you can earn interest by lending out your USDT, similar to a savings account but often with higher yields.
- Arbitrage Trading: While designed to be stable, USDT's value can fluctuate slightly between different exchanges. Traders capitalize on these tiny price differences by buying low on one platform and selling high on another.
For those looking to leverage these use cases on a major platform, you can explore advanced trading strategies and tools to get started.
4 Stablecoins Similar to Tether
The high demand for stable assets has led to the creation of several credible alternatives to Tether. These stablecoins serve a similar purpose but often differ in their levels of transparency and regulatory compliance.
- USD Coin (USDC): A fully regulated stablecoin launched by Circle and Coinbase.
- Paxos Standard (PAX): A regulated stablecoin issued by Paxos Trust Company.
- Binance USD (BUSD): A regulated stablecoin issued by Paxos in partnership with Binance.
- TrueUSD (TUSD): Another stablecoin known for its regular attestations and transparency efforts.
Why Does the Crypto Market Need Tether?
- Legal Accessibility: In countries where cryptocurrency regulations are unclear or restrictive, using direct fiat onramps can be difficult or illegal. Stablecoins like Tether provide a workaround, allowing users to enter the crypto market without directly using a monitored banking system.
- Trading Pair Standard: The vast majority of cryptocurrency exchanges do not offer extensive fiat trading pairs. Instead, they use stablecoins like USDT as the base currency for countless trading pairs (e.g., BTC/USDT, ETH/USDT). This creates a universal pricing and trading standard across the global market.
- Price Stability and Safe Haven: The crypto market is notoriously volatile. Stablecoins offer a crucial safe haven where investors can move their funds during periods of extreme uncertainty or high volatility, protecting their gains and capital without cashing out entirely to fiat.
How to Buy Tether (USDT)
A common misconception is that you need US dollars to buy USDT. This isn't strictly true. You can use Vietnamese Dong or any other national currency, provided you use an exchange or service that supports that conversion.
The effective rate is: 1 USD ≈ 1 USDT ≈ [Current VND/USD Rate] VND
There are two primary methods to acquire USDT:
Buying Directly on an Exchange
This is the recommended method for most users. You can choose an exchange that supports a direct trading pair with your local currency.
- The process requires account registration and identity verification (KYC) to ensure security for all parties involved.
- This method is generally safer and offers more customer support.
Peer-to-Peer (P2P) Trading
This involves buying USDT directly from another individual, often facilitated by P2P platforms that provide escrow services.
- While it can offer more payment flexibility, this method carries a higher risk of fraud.
- It is crucial to only use reputable P2P platforms with strong security and dispute resolution mechanisms and to exercise extreme caution.
How to Store Tether (USDT)
As the most popular stablecoin, USDT can be stored on almost all major cryptocurrency exchanges and in a wide variety of wallets.
- On Exchanges: For beginners, storing USDT on a large, reputable exchange is often the simplest option. The exchange handles all technical aspects, and the funds are readily available for trading. However, this means you are trusting the exchange with the security of your assets.
In Personal Wallets: For larger amounts or long-term storage, moving USDT to a personal wallet is advised for enhanced security.
- Hardware Wallets (Cold Storage): Devices like Ledger or Trezor offer the highest level of security by keeping your private keys offline.
- Software Wallets (Hot Wallets): Mobile or desktop apps like Trust Wallet are convenient for smaller, more frequently used amounts.
- Web Wallets: Some services, including Tether's own, offer web-based wallet interfaces.
When storing USDT in a personal wallet, always double-check that the wallet supports the specific blockchain protocol (ERC-20, TRC-20, etc.) of your USDT tokens.
Frequently Asked Questions (FAQ)
1. Who holds the most Tether?
It's not publicly known which individual holds the most Tether. However, we can see which cryptocurrency exchange wallets hold the largest amounts of USDT, as this data is transparent on the blockchain, though it may represent funds belonging to many users.
2. Is it a good idea to invest in USDT?
"Investing" in USDT isn't about price appreciation; it's about capital preservation. It is an excellent tool for newcomers to hold value while learning about the market and for all traders to protect funds during volatility. It can also be used in lending to generate yield.
3. Who needs to use USDT?
USDT is used by a wide range of participants, from beginners making their first crypto purchases to professional traders and institutions executing complex strategies and managing risk.
4. Has Tether ever been hacked?
Yes, the Omni-layer version of Tether was hacked in November 2017, resulting in the theft of $31 million worth of USDT. Tether responded by freezing the stolen tokens and deploying a software update to prevent future attacks on the protocol. Incidents like this underscore the importance of using secure platforms. You can view real-time tools and security features on reputable exchanges to safeguard your assets.
5. How long do USDT transfers take?
Transfer times depend entirely on the blockchain network being used. ERC-20 (Ethereum) transfers can take from 5 minutes to over an hour depending on network congestion. TRC-20 (Tron) transfers are typically much faster, often completing in under a minute. Always confirm the expected processing time for your chosen network.
6. What is the safest way to buy USDT?
The safest method is to use a well-known, regulated, and reputable cryptocurrency exchange that operates in your region and requires identity verification. While fees might be slightly higher, the security and customer support provided are invaluable for protecting your investment.