Tether, mostly known as USDT, is a stablecoin crypto project that issues coins pegged to the U.S. dollar. So if you invest in Tether it’s like when you just hold digital dollars. But since Tether is traded on crypto exchanges, its value will be determined primarily by the balance of supply and demand (and indeed, USDT is sometimes traded not at $1, but in the range of $0.99-1.01 or even wider), as you can see on the chart above.
USDT is the oldest stablecoin, a currency that is supposed to mirror some non-virtual asset, like dollars or euros. In fact, they are called digital dollars and even act as a dollar replacement on many popular exchanges. According to their site, every USDT in circulation is backed by actual U.S. dollars (tell me the U.S. dollar is backed by something, ha-ha) held in reserve by Tether Limited, registered in Hong Kong. This ensures that each USDT always has an equivalent value to one U.S. dollar.
There is a very interesting story behind it, so read this before you invest in UDST.
In the last few years more people have been creating crypto wallets and diversifying their portfolios by investing in Tether and other crypto assets. Some are buying the most popular two: Bitcoin and Ethereum. But the problem with them is their volatility. You could have invested $1,000 in 2020 and would have got $5,000 in 2021, or if you had invested in Bitcoin in November 2021, now you would have had 3 times less. So a very risky and unpredictable way of saving.
For cryptocurrency investors, USDT can be used as a way to hedge against volatility or store value in cryptocurrency when prices are down, because USDT is a ‘stablecoin’ and tied to the dollar. When cryptocurrency prices are going up, investors can use USDT to buy more cryptocurrency without having to first convert their dollars into crypto.
Due to the current bearish trend, we can see that more people invest in Tether now to buy the dips on the biggest coins.
Since its inception, Tether has proudly declared on its website that each issued Tether is backed by a real crunchy dollar, securely lying in a bank account. But in 2019, the New York prosecutor's office concluded that this claim was not true and obliged Tether Limited to provide a full financial statement with auditors’ confirmation.
Tether have been promising to share the results of the audit since 2017, but so far they somehow failed to do so. Instead, they publish quarterly "consolidated statements of reserves" with an independent accountant's report, which is not at all the same.
I would really think twice before asking “Where can I invest in Tether,” because the whole backup thing is questionable. Unfortunately, there are not many alternatives to Tether investment to hold money from crypto volatility, but there are some. One way is to not put all eggs in one basket and also buy USDC. They are also pegged to the U.S. dollar but backed up by different projects. It’s very unlikely that all of them will become a scam in one day.
There is no best way to invest in Tether, just make sure you are doing it on a trustworthy exchange or in Gainy. Also if you want to invest in Tether today, don’t hold them long because, just like regular currency, it is subject to inflation.