USDT (Tether) is a type of Stablecoin backed by USD at a 1:1 ratio, playing an extremely important role in the cryptocurrency market and has been issued by Tether Operations Limited since 2014.
USDT not only helps minimize the risk of price fluctuations during trading but also continuously holds the crown for liquidity among Stablecoins, with a market cap of over 60 billion USD, far surpassing competitors like USDC, BUSD, and DAI.
MAIN CONTENT
USDT is the most popular Stablecoin, accounting for over 60% of the global Stablecoin market share, with a market cap of over 60 billion USD.
USDT supports multi-chain (Ethereum, Tron, Omni, EOS...) and is a tool for preserving value, supporting liquidity in all stages of the cryptocurrency market.
Despite many benefits, USDT still carries risks regarding the transparency of reserve assets and faces international legal concerns.
What is USDT?
USDT is a Stablecoin (stable value currency) backed by USD at a 1:1 ratio, issued by Tether Operations Limited since 2014 to increase liquidity and reduce price volatility in the cryptocurrency market.
Tying its value to USD helps USDT become a solid bridge enabling investors to convert actively, minimizing risks without needing to withdraw capital to traditional money.
USDT is the solution to ensure stable intrinsic value for the cryptocurrency market, trusted by millions of investors since 2014.
Paolo Ardoino – CEO of Tether, stated on the company's homepage in 2023
This is the most popular Stablecoin in the market, accounting for over 60% of the global market share, with a market cap frequently exceeding 60 billion USD (according to CoinGecko updated in June 2024), far surpassing competitors like USDC, DAI, and BUSD.
Is Tether an Altcoin?
No, Tether (USDT) is not an Altcoin but a Stablecoin designed to supplement the infrastructure and liquidity of the cryptocurrency ecosystem, not to compete with Bitcoin.
Tether's management asserts that the primary goal is to create a stable value conversion channel, supporting trading on exchanges, rather than serving as a speculative role like traditional Altcoins.
The role of USDT is to become a liquidity launchpad rather than compete directly with Bitcoin or Ethereum. This is why USDT always accompanies every phase of the cryptocurrency market's development.
Craig Sellars – Co-founder of Tether, Blockshow Asia event in 2022
As a result, USDT is seen as a stable solution to attract new investors without the fear of severe volatility like other cryptocurrencies.
What is the operational nature of Tether?
The fundamental operating nature of Tether is: investors deposit fiat money (USD, EUR...) into Tether Limited's bank account, and this organization records the corresponding amount of USDT into the investor's digital wallet.
Users freely trade Peer-to-Peer, convert, or trade through major exchanges. When needing to convert back, Tether receives USDT, burns that balance on-chain, and sends fiat money back to the customer's bank account. This process ensures transparency on the Blockchain platform, while the issuer takes responsibility for committing to the 1:1 value with USD.
The operational model of Stablecoins is seen as a 'new bridge' between the traditional financial world and digital assets, increasing flexibility and unprecedented liquidity for the entire market.
Crypto Market Structure Report - JPMorgan Chase, March 2024
The dual verification nature between USDT on-chain blocks and the amount of USD in the bank account audited periodically is the core factor reinforcing global investor confidence.
What are the important figures about USDT you need to know?
USDT holds the top position in the market in terms of market capitalization, liquidity, trading volume, and global popularity. Below are key statistics (updated according to TinTucBitcoin and CoinGecko in June 2024):
Token Name: Tether
Symbol: USDT
Website: tether.to
Explorers: Tronscan, Omniexplorer, Etherscan, Ethplorer...
Ethereum ERC20 Contract: 0xdac17f958d2ee523a2206206994597c13d831ec7
Total supply issued: nearly 64.5 billion USDT
Circulating supply: approximately 62.8 billion USDT
Daily trading volume: consistently in the top 3 markets, often exceeding 100 billion USD
In addition, USDT has global coverage, present on over 50 centralized and decentralized exchanges, with trading volumes overshadowing other Stablecoins.
What versions of USDT are there? Classification of USDT
After many years of development, USDT has been issued on a variety of different Blockchains, enhancing interoperability and reducing transaction fees. The two most important platforms are Ethereum and Tron.
What is special about USDT on Ethereum?
USDT-ERC20 is the USDT version issued on Ethereum, utilizing the advantages of Smart Contracts and the expanding Defi ecosystem. The decision to switch to Ethereum was made in September 2017, addressing issues regarding fees and speed on the Bitcoin Blockchain.
The issuance of USDT on Ethereum marked a turning point in the multi-chain Stablecoin trend, helping reduce costs and increase transaction efficiency, suitable for both institutions and individuals.
Vitalik Buterin – Founder of Ethereum, AMA Reddit May 2020
Advantages of USDT-ERC20: faster transaction speeds, easy integration across various DApps, such as Metamask, Ledger Nano, Trezor... and especially the ability to transfer on high-speed Layer 2 ecosystems.
When was USDT TRC-20 on Tron launched?
After Ethereum, the TRC-20 version of USDT on Tron was announced in April 2019, mainly to meet the demand for low-cost transactions and fast money transfers.
USDT-TRC20 currently attracts a large number of users in Asia, especially in Vietnam and South Korea, thanks to near-zero chain costs and confirmation speeds of less than 2 minutes per transaction. Currently, USDT-TRC20 accounts for a large volume of P2P transactions due to its advantage in transaction fees.
On which other Blockchain platforms is USDT available?
Supplementing multi-chain advantages, USDT has also been issued on other major platforms:
USDT-Omni: The first version, launched on October 6, 2014, on Bitcoin Blockchain's Omni Layer.
USDT-EOS: Issued on May 31, 2019, on the EOS Blockchain.
USDT-Liquid: Launched on July 29, 2019, on Liquid Network.
USDT-Solana: Launched on December 9, 2020, on Solana Blockchain.
USDT-Algorand: Issued on February 10, 2020, on Algorand.
USDT-BEP2, BEP20: Issued from September 10, 2020, on Binance Smart Chain.
Thanks to multi-chain versions, USDT has become 'cross-chain price stability', allowing flexible asset transfers between exchanges and DApp ecosystems.
Platform Metrics Feature Number of Transactions/Year 2023 Ethereum (ERC20) Average fee: 1-7 USD, confirmation time: 2-10 minutes Approximately 1.2 million orders/day Tron (TRC20) Fee <0.1 USD, confirmation under 2 minutes Over 2 million orders/day Omni (Bitcoin Layer) High fees, slowest 20,000 orders/day BEP20 (Binance Smart Chain) Fee ~0.3 USD, integrated with BNB Chain 600,000 orders/day
What is the value of Tether USDT in the cryptocurrency market?
USDT plays a special role in the cryptocurrency ecosystem: it is a bulwark against price volatility, maintains available liquidity, and serves as an indicator of cash flow in and out of the market.
The capitalization history of USDT has always followed a long-term upward trend, even when Bitcoin sharply declined (like in 2018, 2022), proving that capital remains in the market rather than fleeing, and investors stop trading rather than exit completely.
Tether acts as a 'safe haven' for investors during periods of strong volatility, reflecting both short-term and long-term confidence in the cryptocurrency ecosystem.
Bloomberg Crypto Market Analysis, November 2023
Market capitalization, inflow, and outflow indices of USDT on exchanges always serve as important references for traders, analyzing market cash flow shifts.
How to use the USDT index to assess market volatility?
Monitoring USDT indicators on exchanges (Inflow/Outflow, USDT balance on exchanges) is a tool to analyze cash flow and forecast market sentiment:
The amount of USDT on exchanges is high despite falling prices: Investors are holding money waiting to buy back at lower price levels.
The amount of USDT on exchanges is low when prices rise: New capital flows are restricted, and the ability to pump prices weakens.
USDT inflow increases: More new capital enters the market, potentially causing a short-term pump.
USDT outflow increases: Investors are withdrawing capital, making the market prone to a bear market.
Platforms like CryptoQuant, Glassnode provide transparent data to help investors update cash flow fluctuations in real time.
What internal risks of USDT should you pay attention to?
Although USDT provides stability and good liquidity, there are still many hidden risks behind the asset backing mechanism, lacking transparency regarding secured assets.
Tether's report shows that only about 24.15% of reserve assets are bonds or secured debts (high credit rating), while the remaining (over 75%) are hard-to-verify assets like Commercial Paper, trust deposits... However, information about the issuing entity of Commercial Paper is still not clearly disclosed.
The biggest risk of USDT is the lack of transparency regarding the underlying reserve assets, and the demand for regular independent audits has long been pushed by investors but has not yet been thoroughly implemented.
Analysis by Chainalysis - Market Integrity Report 2024
Additionally, FUD events and investigations by authorities in New York or Europe regarding the source of Tether's reserve assets have not found evidence of token printing, but have also not confirmed absolute financial transparency.
Therefore, although USDT maintains its number one position, systemic risks related to reserve assets and international legal regulations always keep the community vigilant. This is why exchanges recommend that investors always diversify their Stablecoin storage, avoiding absolute dependence on USDT.
Where to buy and sell USDT? A safe process for Vietnamese investors
USDT is the most popular intermediary currency on most major exchanges like Binance, Huobi, OKX, listed as a major trading pair with all types of tokens and coins.
In Vietnam, investors can buy and sell USDT directly and quickly through P2P on Remitano, Aliniex, Vicuta...
Can be exchanged OTC with verified traders from large groups like HCCapital, avoiding transactions with untrustworthy individuals.
Buy with Visa/MasterCard on international exchanges (Binance, Huobi). However, this option has very high fees and poses a risk of account freezing if misused.
Note: It is recommended to prioritize transferring USDT to a personal wallet (cold wallet, secure hot wallet) after purchase to control the Private Key and avoid risks of asset loss due to exchange hacks or collapses.
The process of buying and selling USDT should prioritize trading through major P2P exchanges with intermediary holding systems, verifying the identities of both parties and always choosing partners with a good transaction history.
Has USDT solved all the problems of the Stablecoin market?
Despite maintaining the number one position, USDT has yet to solve the problem of transparency and independent auditing of its collateral. Additionally, the emergence of new competitors like USDC, DAI, or legally advanced Stablecoin solutions like FRAX, TrueUSD is creating pressure for Tether to become more transparent in the future.
Asset transparency and transparent auditing are vital standards for any Stablecoin to maintain trust amid increasingly stringent global regulations.
Janet Yellen – U.S. Secretary of the Treasury, speaking before the U.S. Congress in January 2024
Nevertheless, USDT still dominates over 60% of the Stablecoin market share, with a widely integrated ecosystem and the strongest liquidity support network that other Stablecoins have yet to catch up with in the short term.
Key points in USDT's development and dominance journey
Since its launch in 2014, USDT has not only been the first Stablecoin but also an intermediary currency helping the cryptocurrency market reach a global scale, supporting investors through the most volatile phases ever.
Notable milestones:
2014: Launched on Omni (Bitcoin Layer), the first major commercial Stablecoin.
2017: Issued on Ethereum, paving the way for the multi-chain Stablecoin trend.
2019: Launched on Tron, exploding P2P transactions with low costs in the Asian community.
2020 – now: Continues to expand multi-chain (Solana, Algorand, BSC...), liquidity surges, maintaining the number one role on CEX and DEX.
2022 – 2024: Going through many FUD events, under investigation but still maintaining the top position, serving as an important measure of overall market cash flow.
Conclusion: USDT remains the most stable choice today but what risks need to be cautious about?
After nearly 10 years of development, USDT has become the backbone for trading and circulating value throughout the cryptocurrency market. Not only is it a 'safe haven' for investors during all fluctuations, but USDT also serves as a bridge between the traditional financial world and modern Blockchain.
However, USDT still has potential risks regarding the transparency of reserve assets and the increasing possibility of facing international legal constraints. Therefore, investors need to proactively manage risks, not concentrate all their assets in one Stablecoin, prioritize the security of personal wallets, and frequently monitor audit reports and market news to avoid losses.
Frequently asked questions about USDT
What is USDT and how is it different from Altcoins?
USDT is a Stablecoin backed by USD at a 1:1 ratio, unlike Altcoins because USDT maintains stable value, not experiencing strong fluctuations for speculation.
On which platforms is USDT issued?
USDT has been issued on multiple Blockchains such as Ethereum (ERC20), Tron (TRC20), Omni, BSC, Solana, Algorand, increasing liquidity and reducing transaction fees.
How to check if USDT is genuine and not a scam?
Only use reputable wallets, check the contract address on official explorers (Etherscan, Tronscan) before trading.
What are the reputable exchanges for buying and selling USDT in Vietnam?
Remitano, Aliniex, Vicuta are major P2P exchanges that support safe USDT trading with identity verification and intermediary holding transactions.
Should all cryptocurrency assets be stored in USDT?
It is not advisable. Investors are encouraged to diversify their storage of various Stablecoins and use personal wallets to hedge against systemic risks.
Is USDT completely safe?
USDT is not completely safe due to risks surrounding the transparency of reserve assets. Investors need to regularly update news, audit reports, and be cautious when trading.
Will USDT collapse due to global legal regulations?
Tether has undergone many investigations and still exists. However, risks related to international law may affect its ability to issue, which investors need to closely monitor.
Source: https://tintucbitcoin.com/tether-usdt-la-gi-2/
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