Tether is a stablecoin that’s pegged to the US dollar. Stablecoins offer more stability than cryptocurrencies such as Bitcoin and Ether as they are pegged to fiat currencies. While the relatively low volatility of stablecoins makes them safer long-term investment options than Bitcoin and other volatile cryptos, there are certain things Tether investors need to be worried about as well.
There are multiple things to love about Tether. For starters, it’s a risk management tool that can come in quite handy for crypto traders. Anytime the crypto market shows volatility, traders can quickly convert their cryptos into Tether (USDT). Even though Tether has competition in the form of a number of other stablecoins, it’s the largest stablecoin and also boasts of the most trading pairs.
The interest rates are high as well. In early 2021, investors could earn interests over 14 percent per annum on their USDT deposits. Right now, the interest rate has come down to 10.5 percent, but it’s still a lot more than what you would get from fixed deposits at banks.
Tether and other stablecoins are ‘centralized’ as well, and there are certain security features that are uncommon when it comes to cryptos such as Bitcoin and Ether. If your account is hacked, you can trigger a ‘5-day hold’ as well.
However, the major worry regarding Tether is the speculation that its real purpose is to keep Bitcoin’s price high. If Tether goes bust, it can have a ripple effect on the entire crypto ecosystem and erase billions of dollars in the total market capitalization of crypto assets.