Tether (USDT) is one of the most popular cryptocurrencies on the market, with trading volumes exceeding Bitcoin, Ethereum, and the like.
But why is USDT so popular, what makes it useful, and how do you make money with USDT? We have the answers.
So, How To Make Money With USDT?
You can make money with Tether (USDT) by staking it for consensus protocols, trading it for other cryptocurrencies, lending it out in an interest-bearing fund, or through arbitrage and taking advantage of the slight fluctuations in the Tether to USD price.
Due to Tether’s status as a stablecoin, the price you pay for avoiding extreme volatility is that you will never be able to generate the same potential profits as other cryptocurrencies.
Still, there are many other ways to make money with USDT. Keep reading to find out more.
Tether was created as a stablecoin, which retains its value in US Dollar reserves. Its value maintains a 1:1 ratio with the United States Dollar.
This pegging means that if you’re looking to invest in a cryptocurrency with the potential for huge profits, Tether is not going to yield the same gains as more speculative assets such as traditional crypto tokens like Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP).
However, there are still ways to make money with Tether, which has several advantages as a so-called stablecoin.
Staking is an emerging trend among crypto investors that’s both safe and simple. Without dealing with the complexities of lending, you deposit coins onto an exchange, and the staking mechanism is conducted automatically.
You can “stake” your Tether holding to earn a commission or reward of a few percent of your holdings. This staking is similar to an interest-bearing account.
Still, it uses a different mechanism – the blockchain uses it for a “consensus mechanism” knowns as Proof of Stake (PoS), used to maintain the decentralized ledger that verifies payments without a middleman.
The PoS mechanism is different from the Proof of Work (PoW) consensus mechanism used in Bitcoin and other cryptocurrencies, which is very resource heavy and eventually leads to longer transaction times.
By using Tether to conduct transactions and trades over crypto exchanges, you can avoid transaction fees and use the shortened transaction times that cryptocurrencies offer by tradition with Tether as opposed to fiat money (US Dollars).
Therefore, Tether has a lot to offer anyone making money trading other cryptocurrencies.
By purchasing Tether and keeping it in an exchange account, you can trade crypto seamlessly without converting your Dollars into crypto and withdrawing your investments by exchanging them for tether rather than selling it.
Investors earn rewards for lending their cryptocurrency holdings, such as Tether, for a return on interest. Many crypto platforms will allow you to lend your coins out at an interest rate, and some people can make as much as 25% in interest on their holdings.
Its low-risk profile makes Tether stand out as a great way to leverage staking in crypto markets. So, unlike other cryptocurrencies, because your price is all but guaranteed to remain stable, none of the interest you earn will be susceptible to being offset by a market crash.
For most cryptocurrencies, the loan amount’s value could change between the time borrowers send it and when it is received, making it unreliable and risky for borrowers and lenders. Tether’s stable price solves this problem.
While Tether is tied to the US Dollar, they cannot guarantee that the ratio will always be pegged at 1:1 due to market changes and shifts in supply and demand.
The value of Tether has dropped below and risen above $1 before, and it has dropped as low as $0.90 and as high as $1.06 at different moments in its history.
This price change means making money using a trading technique known as arbitrage is possible.
As Tether issues more USDT to maintain its peg with the US Dollar, keeping up with changes in supply and demand, the price will fluctuate slightly. If that price deviates considerably, arbitragers stand to profit from the changes.
For example, if the Tether price drops to $0.95 on an exchange, a trader can buy it on that exchange, transfer the USDT to another exchange, convert it to US Dollars at $1, and then transfer the US Dollars back to their original exchange.
This means that they will generate gross revenue of 5%, which can be a significant margin if traded in high enough quantities.
What does USDT Mean?
USDT is the code that Tether uses on cryptocurrency exchanges (like BTC for Bitcoin or ETH for Ethereum).
Tether is a type of cryptocurrency known as a “stablecoin”, meaning its value is tied to an asset with value (the Dollar) – an equivalent amount of Dollars backs each USDT in the Tether reserves.
Tether’s price is adjusted, and more coins are issued when the price rises. So Tether effectively fulfills the same function as a central bank, ensuring that USDT’s value is derived from something more than market speculation, unlike other cryptocurrencies that “mine” coins and allow the market to dictate its value.
It is always designed to be worth $ 1 USD, and its value as a stablecoin is evidenced by the volume at which it is traded and its very high market cap.
At the time of writing, Tether’s market cap is $79,531.89M, with a 24-hour trading volume of 61,611.77M.
And while its market cap is still some way off the big players in the cryptocurrency market, Bitcoin and Ethereum, it has the third-highest market cap for any cryptocurrency currently on the market.
No currency trades at higher volumes, with Tether achieving 24-hour trading volumes more than double that of Bitcoin.
Tether was created by JR Willett in 2012 when he penned a whitepaper on new currencies that use the Bitcoin protocol.
Originally named Mastercoin and operating under the Mastercoin Foundation, Tether was founded by Brock Pierce, Reeve Collins, and Craig Sellars as “RealCoin,” announced as a startup in July 2014.
The first tokens were issued on Bitcoin’s blockchain, using the Omni Layer Protocol. The coin was renamed “Tether” in November 2014. In January 2015, Tether was first featured on the cryptocurrency exchange, Bitfinex.
Its founders created Tether to become a cryptocurrency with stable valuations (stablecoin) and a viable alternative to existing cryptocurrencies like Bitcoin and Ethereum, which experienced (and continue to experience) wide swings in their prices, which diminishes confidence in the cryptocurrency industry as a whole.
Specifically, Tether is a “fiat-collateralized stablecoin” when a fiat currency (controlled by a central authority and used as legal tender) represents the current circulating coins.
In other words, every unit of the stablecoin issued is backed by the issuers’ cash reserves of Dollars, Euros, Yen, or whatever fiat currency it is pegged to.
So, if Tether is always supposed to trade at $1 per coin, why does Tether not guarantee that they will always trade it at that rate, and why does the USDT price fluctuate?
The short answer is that Tether is a derivative representing $1, but it isn’t the same as $1. This differentiation means that Tether’s price will always have a valuation off by a fraction of a cent.
In addition to this, Tether, the company, needs to derive some value from the transactions they facilitate, and, at times, the demand for Tether rises to the point where it is valued above $1.
Nonetheless, Tether’s price fluctuations are incredibly tame compared to other cryptocurrencies, so it will always be an attractive alternative to risk-averse investors.
Tether (USDT) is not the same as a US Dollar and cannot be exchanged as a means of legal tender, but it is intended to facilitate the purchase of goods by stabilizing its value by pegging it to the US Dollar – a sovereign, high-demand currency that is traded in high volumes across the globe.
So, because the US Dollar is stable, reliable, and has tangible value as one of the most in-demand fiat currencies, USDT is reliable, in demand, and holds tangible value.
Its value may fluctuate by a fraction of a cent on any given day, but it won’t fluctuate by thousands of dollars as some other cryptocurrencies have in the past.
So, a Tender is, in layman’s terms, a hybrid between the US Dollar and a cryptocurrency. It retains the Dollar’s stability but incorporates the added utility that cryptocurrencies bring in faster transactions, lower fees, and digital trustworthiness.
USDT isn’t always valued at $1 but will always be very close. In the last five years, Tether has never been worth less than $0.88 and never more than $1.20. In the last year, it hasn’t fallen below $1 and rose to $1.02 at its highest.
Tether guarantees that $ 1 USD in its reserves backs each Tether (USDT) coin.
However, Tether Limited – the Hong Kong-based company that issues Tether coins – has controversially been accused of failing to maintain adequate cash reserves, leading many to question Tether’s credibility. Tether has never admitted to or denied any wrongdoing in this regard or with other controversies and legal disputes.
This led to the major price decrease to $0.88 that USDT experienced in October 2018.
When writing, USDT (TetherUS) is trading at exactly $1 on Binance, up 0.17% over the previous 24 hours. Other stablecoins that you could invest in include True USD (TUSD), Pazos Standard (PAX), and USD Coin (USD).
Tether is built on the Ethereum blockchain, which means that the transactions on the peer-to-peer network are securely executed and verified through smart contracts that you must access via Ethereum’s platform.
This requires the sender to pay a fee in Ethereum (ETH) to confirm the transaction.
If you don’t have any Ethereum (ETH) to conduct transactions using USDT, but if you send money to someone, you can pay them in USDT and allow them to execute the transaction on the blockchain with their ETH.
Alternatively, you can create your own relay or find decentralized services such as those at GSN, where users can use Ethereum smart contracts without using ETH for transaction fees.
According to Kraken’s estimates, USDT transactions will take as little as two minutes and a maximum of 40 minutes to conduct, depending on which Tether coin you use (ERC-20, OMNI, or TRC-20). Tether USD TRC-20 has the fastest transaction time, while Tether USD OMNI has the slowest transaction time.
These times aren’t guaranteed and will vary depending on the network’s conditions.
As a stablecoin, USDT is a very safe place to store money. Tether promises that its USDT currency is backed by “actual fiat currency assets” and, unless the US dollar market crashes, your money should always be safe – in theory.
However, Tether is no stranger to controversy, and it was allegedly hacked in November 2017, with #31 million Tether coins stolen. Then, in January 2018, the company missed an audit on its reserves, parted ways with its audit firm, and was subsequently issued a subpoena by regulators due to their lack of transparency.
In 2019, Tether faced another legal dispute with New York Attorney General Letitia James, who accused iFinex Inc., Tether’s parent company, which also operates the Bitfinex exchange, of hiding up to $850 million in losses by taking at least $700 million from Tether’s reserves.
A Tether Lawyer would state that only 74% of Tether’s coins were backed by cash reserves and equivalents – not the 100% they guaranteed. Later, Tether published a breakdown of their reserves, which revealed that only 2.9% of their coins are backed by cash, and the rest was a mix of assets, such as loans and corporate bonds.
These transparency issues have led many investors to question whether or not it is safe to use USDT to store money.
Therefore, it is important to keep up to date with the latest developments with Tether Limited and consult a professional before deciding whether you should use USDT to store money.
Previously you could convert USDT into cash in a few very simple steps. To cash out in US Dollars, you would convert your USDT into BTC, ETH, LTH, or whichever cryptocurrency you prefer and then send it to a wallet like Coinbase. Then you could trade it for US Dollars or any fiat currency you prefer.
However, as USDT has gained traction, plenty of wallets have begun to support direct USD transactions, allowing you to convert them to cash.
Some USDT-supporting wallets include Tether Wallet, CryptoWallet, OmniWallet, Coinomi, Binance Wallet, and the Ledger Nano X. Tether can be stored in cold hardware wallets or hot exchange wallets.
If you’re looking to send someone USDT, you should be looking for the exchanges that offer the best exchange fees. Here are a few top exchange sites and their fees for USDT transactions.
|Exchange||Trading Fees||Withdrawal Fees|
Due to USDT being a stablecoin, its price will fluctuate much less than a traditional cryptocurrency like Bitcoin. But you may still be asking yourself why a Bitcoin trader would want to convert their BTC to USDT. There are two reasons: Stability and utility.
Firstly, you can protect your money from Bitcoin’s volatile price swings but keep it in cryptocurrency by trading it for a coin that will retain its value.
Secondly, keeping your BTC earnings in a stablecoin like USDT means that you don’t need to cash out or convert it into USDT and can re-enter the Bitcoin market without having to buy with actual US Dollars – this will save you a lot of time and money due to lower transaction fees and faster transaction times.
You can send USDT to Metamask with a very simple process.
First, log in to your Metamask Account. Second, ensure that the Binance Smart Chain has been added to your Metamask wallet. Then click “Add Token” in Metamask. Click on the “Custom Token” tab on the “Add Token” page.
Paste the code “0x55d398326f99059ff775485246999027b3197955” into the USDT contract address (and verify the code at BSCScan). If the token symbol field displays “USDT” and you’re using six token decimals, you can press “Next”.
Finally, click “Add Tokens”, specify an amount, and it will add your USDT tokens to your Metamask wallet.
The main difference between USD and USDT is that the USD is fiat money held in a bank account that can easily be withdrawn as cash and used as a means of exchange at stores, with service providers, and other merchants.
However, unlike the Dollar, which Tether issues the US government issues, USDT coins, so only various cryptocurrency exchanges will accept it.
So, even though Tether is valued 1:1 with the US Dollar, it still lacks universal acceptance as a signifier of value. Just like you wouldn’t be able to buy items at a store if you go to another country and try to pay with dollars, merchants and other recipients won’t accept the “foreign currency,” and it will have to be exchanged for legal tender.
How Can You Cash Out Your USDT To Your Bank Account?
As mentioned above, you can convert USDT to cash and add it to your bank account using various exchanges and crypto-wallets.
You can either convert your USDT directly to dollars through your wallet, or you can trade it for another cryptocurrency like Bitcoin (BTC) or Ethereum (ETH), send that crypto to your wallet that doesn’t support USDT, convert it to dollars, and send those dollars through to your bank account.
Tether (USDT) is a revolutionary cryptocurrency that can solve the price volatility issues plaguing the cryptocurrency market by pegging its value to the US Dollar. It can potentially be used as a means of exchange for goods and services due to its reliable and fairly predictable value.
However, this also means that USDT doesn’t have the same potential for huge profits as investing in other, more volatile cryptocurrencies. You will not be “going to the moon” with USDT.
Nonetheless, making money with USDT through staking, trading, lending, and arbitrage is still possible.