Tether: The Cryptocurrency that Defies Volatility

A cryptocurrency backed by a state currency

Tether, marked by its symbol USDT, is a stable cryptocurrency (stablecoin) that aims to maintain a fixed value. The fundamental idea here is to create a digital currency that combines the speed and transparency of cryptocurrencies with the stability of traditional currencies.

To do this, USDT is pegged to a fiat currency, specifically the US Dollar (USD). Thus, for each Tether in circulation, the logic is that there is a US Dollar held in reserve, thus guaranteeing its stability. In its 2024 report, Tether indicated that the tokens were backed by 90% in liquid assets and cash equivalents. This does not prevent controversies, as we will see later.

This stablecoin operates on several blockchains, including Bitcoin (via the Omni Layer protocol), Ethereum, Tron, and others. This technology allows for the creation, transfer, and redemption of Tether tokens following transparent and secure processes.

Launched in 2014 by Tether Limited, Tether was born out of a bold vision: to offer a stable alternative to volatile cryptocurrencies like Bitcoin and Ethereum. Since its inception, Tether has seen massive adoption and has become the most used stablecoin in the world, allowing one to safeguard their gains without having to convert them into fiat currency.

In 2024, Tether reached a historic market capitalization of $100 billion, highlighting its central role in the cryptocurrency ecosystem. This growth is a testament to the trust that users and investors place in Tether as a reliable and secure stablecoin.

Annonce

For investors, the advantage is to secure their assets without leaving the blockchains

One of the main benefits of Tether is its price stability, which allows users to hedge against volatility of other cryptocurrencies. This stability is particularly valuable for traders and investors looking to avoid the risks associated with price fluctuations. Moreover, Tether offers high liquidity, being widely accepted on major exchange platforms. Transactions also benefit from the security of underlying blockchains, and the regular issuing of reports on its reserves by Tether Limited ensures increased transparency.

Thus, the cryptocurrency is used as a stable reserve value in cryptocurrency portfolios and as a trading tool to take advantage of price fluctuations of other digital assets without the risks of volatility. In the field of decentralized finance (DeFi), Tether also plays a key role by providing a stable base for loans, borrowings and other financial services, as we will see.

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A tax benefit in France

In France, its use offers a significant tax advantage. As long as the earnings made on cryptocurrencies are not converted into a legal tender, such as the euro or the dollar, they are not taxed. This is not the case in all European countries, but for now, France offers this framework. Therefore, traders record their earnings by exchanging their cryptocurrencies for Tethers.

This approach allows investors to protect their gains against volatility while deferring taxation. It's particularly advantageous for those who plan to reinvest their funds in the cryptocurrency ecosystem or in blockchain-based financial products. By using Tether as an intermediary, investors can manage their portfolio with more tax flexibility.

Buying, storing and using Tethers: it's simple

Buying Tether is a relatively straightforward process. First, you need to choose a reputable exchange platform that has the permissions to operate in Europe, such as Coinhouse or Bitpanda. Then, you need to create an account and verify it by providing the necessary information. Once this step is crossed, the individual can deposit funds using available methods such as bank transfer or credit card. Then, search for Tether (USDT) and place a buying order.

To store Tethers securely, various types of wallets can be used. Hardware wallets, like Ledger or Trezor, provide optimal security. Software wallets, such as Trust Wallet or Exodus, are also popular. Finally, online wallets, although less secure, are used for their convenience.

However, note that buying USDT without trading on other cryptocurrencies is of no use, due to its parity with the dollar. In cryptocurrency trading, Tether is used as a safe haven to avoid volatility of other assets. Traders often convert their volatile assets during periods of uncertainty to preserve their capital. This also allows keeping funds available to quickly seize trading opportunities without waiting for fiat currency conversion delays.

Tether isn't the only stablecoin

There are others available on the market. EURt is an euro version of the famous USDT stablecoin, issued by Tether Limited. This stablecoin is designed to provide stability by being backed up by the euro, thus allowing users to transfer value in a fast and stable manner within the cryptocurrency ecosystem.

Other stablecoins also exist, such as USD Coin (USDC), TrueUSD (TUSD), Dai (DAI), etc. Each stablecoin has its own stability mechanisms and advantages. However, Tether remains popular due to its longstanding presence in the market and its wide adoption.

Euro-based stablecoins:

Stasis Euro (EURS) is a stablecoin issued by Stasis, backed by the euro at a 1/1 rate. Stasis prides itself on transparency and regulation, publishing regular reports on reserves and cooperating with external auditors to ensure compliance. This stablecoin is widely used in exchanges and payments within the European Union. It is also integrated into several Decentralized Finance (DeFi) platforms, where it serves as a stable basis for various financial products.

sEUR (Synthetix Euro) is a synthetic stablecoin issued by the Synthetix platform, one of the leaders in the field of decentralized finance. Unlike other stablecoins, sEUR is not directly backed by euro reserves, but relies on a system of collateralization through digital assets. It is primarily used within the Synthetix ecosystem for exchanges and synthetic derivative products. It allows users to have exposure to the euro without leaving the cryptocurrency environment.

CEUR (Celo Euro) is a stablecoin issued by the Celo network, a platform dedicated to creating an accessible and inclusive financial system. CEUR is designed to be used in mobile applications, facilitating daily transactions and payments.

A future that is playing out in decentralized finance

The decentralized finance, commonly abbreviated as DeFi, represents a set of innovative financial services built on open and public blockchain networks, primarily Ethereum.

Unlike traditional financial systems, DeFi operates without centralized intermediaries such as banks or brokers. It employs smart contracts (self-executing programs with the agreement's terms directly written into the code) to automate and secure transactions. DeFi applications span a variety of services, including lending, borrowing, asset exchanges, savings, and insurance, offering total transparency, global accessibility, and resistance to censorship. By eliminating intermediaries, DeFi aims to democratize access to financial services, reduce costs, and provide a more efficient and inclusive financial infrastructure.

In this field, Tether plays a key role by providing a stable foundation. Users can, for example, lend their Tethers and earn interest, or borrow against their Tethers to access liquidity without selling their assets.

Doubts about the transparency of dollar reserves

It's undeniable that Tether plays a crucial role in the cryptocurrency market by providing a stable alternative to volatile assets. This has a significant impact on liquidity and stability within the cryptocurrency markets, facilitating transactions and providing a stable store of value. However, this stability does not make it immune to criticism.

This stablecoin has been at the center of several controversies, particularly about the transparency of its reserves. Regulators have scrutinized Tether Limited closely to ensure that the company actually maintains the announced dollar reserves. Although Tether has issued reports to try to reassure users, questions remain about the company's full regulatory compliance.

In response to these concerns, the company has enhanced its compliance measures by partnering with Chainalysis to monitor secondary market activities and detect illicit transactions. This collaboration aims to strengthen transparency and security within the USDT ecosystem.

Thus, the future of Tether seems promising, despite the controversies. The demand for stablecoins continues to grow as more and more people look to avoid cryptocurrency volatility while taking advantage of their benefits. With the continuous expansion of the DeFi ecosystem, Tether could play an even more central role in the future. But questions, notably about regulation, persist.