Tether is the most popular stablecoin today (and one of the top 7 cryptocurrencies by market capitalization according to CoinMarketCap). We have tried to understand the secrets of the success of this cryptocurrency and its features.
What is Tether?
Tether is a pioneer in the world of stablecoins. It allows you to store cryptocurrencies with a 1:1 peg to the dollar (USDT), euro (EURT) and Chinese yuan (CNHT). Coins are issued by Tethet Limited, reserves of which back up all the issued tokens. Each of the issued coins is backed by the corresponding fiat currency. It allows Tether stablecoins to be less volatile than traditional cryptocurrencies.
Since 2014, the issuance of stablecoins has been based on the Omni Layer protocol (rebranded in 2016 to Omni). It is an open protocol that is an add-on to the Bitcoin blockchain. The Omni platform allows you to create digital assets, smart contracts and decentralized peer-to-peer exchanges.
The use of the Bitcoin network gives the Omni protocol a number of advantages, including the security and stability of the BTC network itself. All the coins that are created in Omni over the network are tokens on the Bitcoin blockchain. All the exchanges and wallets compatible with BTC are compatible with Omni tokens automatically.
Among the shortcomings of the protocol, like the Bitcoin blockchain, there are the low speed of transactions on the network (on average, one transaction is about 10 minutes), as well as high fees and block limits.
Tether and Ethereum
In February 2018, the release of Tether tokens was carried out on the Ethereum blockchain according to the ERC20 standard. This transition allowed Tether to be used in smart contracts and decentralized applications running on Ethereum. In addition, the average time on the Ethereum network is only 15 seconds, instead of 10 minutes on the BTC network. The undoubted advantage of the Ethereum network is the lower transaction fees.
Since Tether uses different protocols, users need to verify addresses when sending funds. Tokens of one standard cannot be transported to another network.
Tether and Tron
In April 2019, the company began issuing USDT on the Tron blockchain basis. Stablecoins are launched on TRC-20 basis, the technical standard used by the Tron blockchain to implement tokens, similar to and compatible with the Ethereum ERC-20 standard. The addition of a coin on the Tron blockchain was conceived to develop the ecosystem of decentralized applications (dApps) Tron.
It is possible to both buy and sell Tether of any of the 3 presented protocols on our site.
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