Since the launch of bitcoin (BTC) in 2009, one of the biggest concerns in the cryptocurrency ecosystem has been price volatility. Despite the launch of hundreds of crypto coins after Bitcoin, these didn’t bring stability to the cryptocurrency market. That was until the launch of Tether USDT, a stablecoin, in 2014.
Unlike traditional cryptocurrencies based on supply and demand on a decentralized network, stablecoins such as Tether USDT are backed by fiat currency, including the EUR, USD, GBP, or Yen.
If you are in cryptocurrency trading, stability in price and valuation are among the biggest considerations in your trades. Many new traders don’t know whether to stick with Bitcoin or jump ship to Tether USDT. This guide to Tether seeks to assess the pros and cons of both crypto coins to help you make a solid decision.
Bitcoin (BTC) in Brief
Bitcoin (BTC) is the pioneering cryptocurrency and the brainchild of the mysterious Satoshi Nakamoto. It was the first peer-to-peer decentralized currency in the world. BTC is revolutionary and a game-changer in the financial industry.
Today, BTC boasts a market capitalization of $117.81 billion and commands a price of $8,637 per coin as of May 5th, 2020. The idea behind Bitcoin is to ease financial transactions by removing middlemen that otherwise control and regulate fiat currencies. It has become the most popular digital currency and as a speculative asset.
One of the major benefits of BTC is its high potential. While BTC has experienced spiraling price fluctuations, its value continues rising. When trading, you’ll also find BTC has more trading pairs in any exchange compared to newer coins. Now that the crypto market is synchronized with bitcoin, traders experience fewer stop-losses.
However, BTC has some drawbacks, the biggest being volatility. For instance, in March 2020, bitcoin’s 30-day volatility reached 167.24%, the highest in six years. You might make good returns when prices rise, but a downward trend will offset all your gains in one fell swoop.
Tether USDT in Brief
Tether USDT is a stablecoin with backed 1:1 by the US dollar. It is issued through Bitcoin’s Omni Layer Protocol by Tether Limited, the company behind its development. The crypto coin leverages scientific and academic research to overcome challenges experienced by other cryptocurrencies.
Every Tether coin is physically backed by one dollar which protects people from the volatility of cryptocurrencies. Tether USDT makes transactions faster, simpler, and cheaper. You don’t have to go through tedious fiat bank transactions when trading in cryptocurrencies.
Tether Limited is supposed to hold a reserve of fiat or other assets equivalent to all digital coins in circulation. The stablecoin’s market capitalization as of May 2020 stands at $7.82B. It tripled in value by $2 billion from March 2020 to May 2020.
There are many reasons to use Tether USDT as your base currency. Today, Tether USDT is the most popular pair for Bitcoin and also across the board. Using a stable crypto coin backed by fiat makes it easier to pinpoint movement in the asset’s value. You can thus use the USDT to make your trading strategy work.
Another advantage is that during a downtrend, Tether USDT will preserve its value. When cryptocurrency markets crash, you’ll not lose because your coin’s value is backed by fiat currency.
One of the biggest downsides of Tether USDT is the central control by Tether Limited. Auditing of Tether USDT and the reserves held by the company has raised controversy. The audit would determine the real value of this stablecoin by determining the reserves held by Tether Limited. If you are after a decentralized cryptocurrency, the idea of a company controlling the system might turn you off.
Bitcoin (BTC) or Tether USDT for your base currency? You should make your decision after weighing the pros and cons of these two popular crypto coins. You have to consider available pairs to trade with, volatility and liquidity. While most people want to buy bitcoin in the cryptocurrency market, it’s also advisable to look at the benefits of Tether USDT and assess its growing popularity in trading.