{"id":6582,"date":"2022-09-24T14:34:14","date_gmt":"2022-09-24T11:34:14","guid":{"rendered":"https:\/\/godex.io\/blog\/?p=6582"},"modified":"2022-11-11T16:21:36","modified_gmt":"2022-11-11T14:21:36","slug":"is-tether-usdt-safe-all-you-need-to-know-about-usdt","status":"publish","type":"post","link":"https:\/\/godex.io\/blog\/is-tether-usdt-safe-all-you-need-to-know-about-usdt","title":{"rendered":"Is Tether (USDT) Safe? All you need to know about USDT"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_25_1 counter-hierarchy counter-decimal ez-toc-grey\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" style=\"display: none;\"><label for=\"item\" aria-label=\"Table of Content\"><i class=\"ez-toc-glyphicon ez-toc-icon-toggle\"><\/i><\/label><input type=\"checkbox\" id=\"item\"><\/a><\/span><\/div>\n<nav><ul class=\"ez-toc-list ez-toc-list-level-1\"><li class=\"ez-toc-page-1 ez-toc-heading-level-1\"><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/godex.io\/blog\/is-tether-usdt-safe-all-you-need-to-know-about-usdt\/#what_is_tether\" title=\"What Is Tether?\">What Is Tether?<\/a><ul class=\"ez-toc-list-level-2\"><li class=\"ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/godex.io\/blog\/is-tether-usdt-safe-all-you-need-to-know-about-usdt\/#how_does_usdt_work\" title=\"How Does USDT Work?\">How Does USDT Work?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/godex.io\/blog\/is-tether-usdt-safe-all-you-need-to-know-about-usdt\/#tether_is_it_just_stablecoin\" title=\"Tether: Is It Just Stablecoin?\">Tether: Is It Just Stablecoin?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/godex.io\/blog\/is-tether-usdt-safe-all-you-need-to-know-about-usdt\/#the_different_tether_versions\" title=\"The Different Tether Versions\">The Different Tether Versions<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/godex.io\/blog\/is-tether-usdt-safe-all-you-need-to-know-about-usdt\/#is_usdt_coin_safe\" title=\"Is USDT Coin Safe?\">Is USDT Coin Safe?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/godex.io\/blog\/is-tether-usdt-safe-all-you-need-to-know-about-usdt\/#tether_is_a_good_investment\" title=\"Tether is a Good Investment?\u00a0\">Tether is a Good Investment?\u00a0<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/godex.io\/blog\/is-tether-usdt-safe-all-you-need-to-know-about-usdt\/#should_you_use_tether\" title=\"Should You Use Tether?\">Should You Use Tether?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/godex.io\/blog\/is-tether-usdt-safe-all-you-need-to-know-about-usdt\/#can_usdt_ever_crash\" title=\"Can USDT ever Crash?\">Can USDT ever Crash?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/godex.io\/blog\/is-tether-usdt-safe-all-you-need-to-know-about-usdt\/#summary\" title=\"Summary\">Summary<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/godex.io\/blog\/is-tether-usdt-safe-all-you-need-to-know-about-usdt\/#the_different_tether_versions-2\" title=\"The Different Tether Versions\">The Different Tether Versions<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"what_is_tether\"><\/span><span style=\"font-weight: 400;\">What Is Tether?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><span style=\"font-weight: 400;\">In the coin rankings, only Bitcoin and Ethereum managed to get ahead of Tether. It has a market capitalization of over $65 billion and an intraday trading volume across exchanges of around $56 billion. The numbers and rank, of course, indicate the interest of traders in USDT. But despite that, not everything is so good with such a popular token, the credibility of which has recently been greatly shaken. But first things first.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"how_does_usdt_work\"><\/span><span style=\"font-weight: 400;\">How Does USDT Work?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Although <a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/tether.to\/\">Tether<\/a> is a crypto asset, it is nevertheless very different from coins like Bitcoin and Ethereum. While other crypto assets are virtually unbacked, resulting in increased volatility, Tether is one of the stablecoins, which means that it is pegged to a fiat currency, in this case the US dollar.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For those who are used to investing in tangible fiat currency and are afraid to invest in digital currency for fear of losing everything if the asset depreciates, Tether may seem like a great alternative. And it\u2019s true, because it actually plays the role of a dollar on a blockchain.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Tether is pegged to a dollar 1:1 and is always redeemable for a dollar. In practice, this means that a new USDT coin can only be minted by adding <\/span><span style=\"font-weight: 400;\">\u00a0$1<\/span><span style=\"font-weight: 400;\"> to a special bank account. This principle of operation helps Tether to maintain a stable price, which can only be affected by inflation.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"tether_is_it_just_stablecoin\"><\/span><span style=\"font-weight: 400;\">Tether: Is It Just Stablecoin?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Tether is one of the representatives of stablecoins. Yet, in terms of market cap, it is the biggest one. Most Bitcoin transactions involve Tether. This means the failure of an asset like Tether, which is ranked third in the crypto ranking, will shake the entire digital market.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"the_different_tether_versions\"><\/span><span style=\"font-weight: 400;\">The Different Tether Versions<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Tether is a coin that performs well on multiple blockchains. The most requested versions are USDT ERC20 for the Ethereum blockchain and TRC20 for the Tron blockchain.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The difference between these versions is related to the properties underlying a blockchain that hosts Tether. Often these include: security, speed and cost of transactions, as well as earning opportunities.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Most investors prefer the Ethereum network to store their Tethers as they can be useful in DeFi for passive income. Traders are more likely to favor the TRC20 version, as the Tron network has a high transaction speed &#8211; often less than a minute.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The version of USDT for Bitcoin Omni is considered the most secure and immutable. Although, in fact, the biggest risk has nothing to do with the version of Tether that an investor owns.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"is_usdt_coin_safe\"><\/span><span style=\"font-weight: 400;\">Is USDT Coin Safe?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">It is fair to say that no crypto can be considered 100% safe. Tether is no exception. However, something happened that undermined the credibility of the digital asset and disappointed investors, who sincerely believed that the stability of the USDT coin was backed by a hard and indestructible currency.<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\"><b>Is Tether really fully backed by dollars?<\/b><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Recall that each <a target=\"_blank\" rel=\u201dnofollow,noopener\u201d href=\"https:\/\/godex.io\/coin\/usdt\">USDT coin<\/a> is supposed to be backed by $1. How disappointed the community was when the attestation exposed that only a few percent of Tether was backed by cash, actual dollars. While the largest share is guaranteed by mysterious commercial papers that the company&#8217;s management doesn&#8217;t want to talk about. It is only known that commercial paper is a type of short-term loan that is provided to corporations.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What did Tether do to allay the concerns? Hardly nothing. They changed their language from &#8220;100% backed one-to-one by USD&#8221; to &#8220;100% backed one-to-one by our reserves&#8221;. But \u201creserves\u201d are not completely US dollars, right? The public had many questions for Tether.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">CNBC TechCheck\u2019s Deirdre\u00a0 Bosa interviewed Tether\u2019s CTO Paolo Ardoino and General Counsel Stuart Hoegner, giving them a chance to redeem themselves by lifting the curtain of secrecy hanging over the reserves issue. But, alas, all they appealed to was a market capitalization growth value of over 3,000% and 24-hour trading on the exchanges which dwarfs the competition. Also, they noticed that no one has ever been denied a withdrawal from Tether.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Regarding questions about commercial paper, they were adamant, saying only that they respect the confidentiality of their banking partners and do not disclose them. Even the interviewer&#8217;s request to tell at least something about the papers, without disclosing the partners, was ignored.<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\"><b>What can go wrong?<\/b><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">To begin with, it is necessary to understand that Tether is essentially a bank. It collects \u201creal\u201d (fiat) dollars from people, which form its assets, and in return issues USDT (\u201cdigital\u201d dollars), which are its liabilities.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To earn profit, Tether does not just hold dollars, but invests them in various \u201cprofitable\u201d assets. Income generation is usually associated with taking risks. For example, sometimes, issued loans cease to be repaid, and the volume of liabilities begins to exceed the volume of available assets.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With real banks, which are very tightly regulated by the government, this situation becomes common knowledge rather quickly. This usually causes the so-called bank run, when everyone is trying to get their money out of this bank as quickly as possible &#8211; after all, it is clear that if there are not enough assets for everyone, then by all means you must not be \u201cthe last guy who came for money\u201d.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But Tether is not a real bank! Nobody regulates it, and it is not obliged to issue these detailed reports. Instead, it publishes a rather vague \u201creserves report\u201d quarterly, which is not fully audited but limited to an offshore auditor.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To sum up the saddest scenario, if all USDT investors suddenly want to withdraw their money, most likely not everyone will manage to do it, due to the fact that a large part of the stablecoins is backed by some papers, not a dollar.<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\"><b>Fraud Suspicion and Investigations<\/b><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Tether&#8217;s ambiguity and lack of frankness has led the government to \u201ctake an interest\u201d in the company. In July 2021, the US Department of Justice began an audit of the company&#8217;s management, and another US agency, the Commodity Futures Trading Commission, fined Tether $41 million in October 2021 for false information about the security of the token.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some companies have also emerged offering rewards of up to $1 million for stablecoin collateral data.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A Bloomberg investigation exposed that the billions of dollars in Tether&#8217;s reserves are short-term loans to large Chinese companies.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Given the above, everyone must decide for themselves whether USDT is safe.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"tether_is_a_good_investment\"><\/span><span style=\"font-weight: 400;\">Tether is a Good Investment?\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">This is a difficult question, as it all depends on your goals and, as strange as it sounds, good luck. One can safely conclude that Tether is not the best crypto for long-term investment.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Firstly, a stablecoin is unlikely to make a profit, as it can be with a regular high-volatility crypto. Therefore, it is hardly reasonable to invest in it in order to earn on the difference in the exchange rate.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Secondly, at the moment there are a number of factors in the market that significantly increase the likelihood of problems for Tether if bad assets are hidden inside their opaque balance sheet.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Given the size of the company, including market cap and trading volumes, Tether is unlikely to collapse tomorrow, but it is better not to hold any significant USDT amounts in your portfolio. For these purposes, there are other more reliable, though not so widespread, stablecoins.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"should_you_use_tether\"><\/span><span style=\"font-weight: 400;\">Should You Use Tether?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The USDT stablecoin can be used for a quick intraday trade, or for short-term exchange operations. Whereas, the arguments not to use it as a long-term investment are more than enough.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"can_usdt_ever_crash\"><\/span><span style=\"font-weight: 400;\">Can USDT ever Crash?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Yes, USDT can crash like any other crypto asset. If the assets backing the Tether turn out to be unreliable and the borrowers refuse to repay the loan, this is a very plausible scenario.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, given the size of the company and the fact that Tether has managed to become one of the top three cryptocurrencies even with a small hole in the balance sheet, the crash is unlikely to happen quickly.<\/span><\/p>\n<p>&nbsp;<\/p>\n\n\t<div class='traid_link'>\n\t\t<div class='traid_link-info'>\n\t\t\t<p class='traid_link-header'>Get <\/p>\n\t\t\t<p class='traid_link-text'>Start a Cryptocurrency exchange. Try our crypto exchange platform<\/p>\n\t\t<\/div>\n\t\t<a target='_blank' href='https:\/\/godex.io\/exchange\/btc-to-usdt'>Exchange ><\/a>\n\t<\/div>\n\t\n<h2><span class=\"ez-toc-section\" id=\"summary\"><\/span><span style=\"font-weight: 400;\">Summary<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">USDT is a truly unique asset and a perfect option for digital commerce. Tether is the leader among other stablecoins, and of all the cryptocurrencies, only Bitcoin and Ethereum have surpassed it.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The key issue of the project is its lack of frankness and transparency. We do not know and do not fully understand what is happening inside its balance sheet, and the unwillingness of the company&#8217;s management to shed light on this issue further discourages investing in this stablecoin.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We can only hope for the long-awaited promise of a full-fledged independent audit of the company. In the meantime, Tether is only safe for short-term transactions.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"the_different_tether_versions-2\"><\/span><span style=\"font-weight: 400;\">The Different Tether Versions<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Tether is a coin that performs well on multiple blockchains. The most requested versions are USDT ERC20 for the Ethereum blockchain and TRC20 for the Tron blockchain.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Table of Contents What Is Tether?How Does USDT Work?Tether: Is It Just Stablecoin?The Different Tether VersionsIs USDT Coin Safe?Tether is a Good Investment?\u00a0Should You Use Tether?Can USDT ever Crash?SummaryThe Different Tether Versions What Is Tether? In the coin rankings, only Bitcoin and Ethereum managed to get ahead of Tether. It has a market capitalization of [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":6583,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[132,133],"tags":[505,1698,1894],"yst_prominent_words":[],"class_list":["post-6582","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto-currencies","category-crypto-talks","tag-cryptocurrency","tag-tether","tag-usdt"],"lang":"en","translations":{"en":6582},"pll_sync_post":[],"_links":{"self":[{"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/posts\/6582","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/comments?post=6582"}],"version-history":[{"count":2,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/posts\/6582\/revisions"}],"predecessor-version":[{"id":6773,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/posts\/6582\/revisions\/6773"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/media\/6583"}],"wp:attachment":[{"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/media?parent=6582"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/categories?post=6582"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/tags?post=6582"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/godex.io\/blog\/wp-json\/wp\/v2\/yst_prominent_words?post=6582"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}