What is USDT (Tether)?
USDT (Tether) is a type of stablecoin that is pegged to the US Dollar. It is commonly known as "泰达币" in Chinese. The circulating cryptocurrency is backed by an equivalent amount of US Dollar reserves, which are stored in designated bank accounts. Therefore, USDT is called a "stablecoin," as it aims to solve the volatility issues commonly associated with other mainstream cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), which often experience price fluctuations. This makes USDT useful as a medium of exchange and a store of value, rather than being used as a speculative investment.
There are several designs for stablecoins to maintain stability, and Tether is categorized as a fiat-backed stablecoin. If 1 USDT is issued, Tether guarantees that 1 USD will be added to reserves, ensuring that USDT is tied to the US Dollar and maintains a 1:1 value ratio with it. It is specifically designed to bridge the gap between fiat currency and cryptocurrency, providing users with price stability and transparency. According to CryptoCompare data, 80% of Bitcoin transactions are conducted using USDT, and stablecoins are a major source of liquidity in the cryptocurrency market. Tether can be used for trading on many cryptocurrency exchanges, including Binance, Huobi, Bitfinex, and Kraken.
Note: In the cryptocurrency community, USDT is often abbreviated as "U". So, next time you see someone referring to "U", you’ll know what they mean!
Is USDT a Scam?
USDT (Tether) itself is not a scam, but due to its pegging to the US Dollar and frequent use in transactions, it is often exploited by fraudulent individuals. People who are unfamiliar with cryptocurrency are especially vulnerable to scams. Here are some common types of scams involving USDT:
- Fake USDT, fake exchanges, fake mobile apps
- Fake investment advice
- False promises of stable profits: such as staking, lock-in, etc.
- Airdrops of fake USDT and spreading viruses via different communication methods to steal information
- Dating app scams
- Romance scams
- OTC third-party scams when purchasing USDT
From the examples above, we can see that the scam techniques used by fraudsters are quite similar, and even if USDT is replaced by something else, the tactics remain the same. Always be vigilant when encountering related information, and remember the highest priority is to never give away your assets and avoid being "greedy" in order to keep your assets secure!
How to Buy USDT?
There are two main ways to buy USDT:
- Through cryptocurrency exchanges such as Binance, MAX, etc.
- OTC (Over-The-Counter) trading: B2C, C2C/P2P
The purchasing method may vary depending on the platform, so it is important to check the rules, buying methods, and platform security before making a purchase!
USDT Address and Network Types: ERC, TRC?
Due to the large user base, USDT is issued on various mainnets, which creates multiple network types for USDT, such as Ethereum's ERC20 USDT, Tron’s TRC20 USDT, etc. When trading, be sure to pay attention to the mainnet type.
Risks of USDT
Although USDT is pegged to the US Dollar, it is important to recognize that it is not the same as holding actual US Dollars, and it still carries certain risks. If Tether is unable to provide customers with a 1:1 exchange for US Dollars due to reasons such as insufficient reserves or regulatory issues, this could pose a risk for those holding USDT.
Is USDT Collapsing?
Despite the many rumors surrounding USDT and concerns about a potential collapse, there is currently no definitive evidence to suggest that USDT is facing an imminent collapse. If USDT were to collapse, it would trigger a major disaster in the cryptocurrency market. Of course, there’s no such thing as a cryptocurrency that’s too big to fail, so it is recommended for holders to stay updated on relevant topics.
