Invest in Stablecoins
Cryptocurrency is constantly in the news as well-known financial institutions and companies add Bitcoin to their balance sheets. In recent times, the less volatile assets within cryptocurrency — stablecoins — are also making their way onto investors’ radars. The most popular stablecoin is Tether (USDT).
Tether is a blockchain-based cryptocurrency that is backed by the U.S. dollar. This means there are actual dollars kept in reserves at financial institutions serving as collateral. Stablecoins, when fully backed by the dollar, have a 1:1 relationship with USD. You can expect stablecoin prices to stay stable, as the name suggests, unlike their popular cryptocurrency counterparts, Bitcoin and Ethereum.
The stablecoin sector aims to avoid volatility and allow cryptocurrency to be a store of value rather than a risky investment. Stablecoins also provide liquidity in a volatile cryptocurrency market where it would be hard to convert back and forth between cash and a cryptocurrency like Bitcoin. The most well-known stablecoins are the USD-backed cryptocurrencies like Tether, Gemini Dollar and USD Coin. However, other stablecoins use other types of collateral. Some are backed using fiat currencies, like the euro or yen, and others are backed by commodities, such as gold and silver.
Tether may not be right as a cryptocurrency investment, but it has several other uses. Here are the most common reasons to buy it:
Purchasing other cryptocurrencies: It can take days to transfer money from a bank account to a crypto exchange. If you want to keep funds in your account to buy crypto without waiting around, you can buy Tether. Then, you just use your Tether to make the purchase.
Transferring money: If you want to send money between exchanges or crypto wallets, Tether is a good option. You could do this to transfer money between your own exchange accounts or to send money to another person. Tether doesn't charge fees for transactions between Tether wallets (although there are standard blockchain fees).
Earning interest: Some crypto exchanges pay interest if you lend your crypto, and it's possible to earn 25% interest lending out coins. The benefit of doing this with Tether is that its value shouldn't fluctuate. With most cryptocurrencies, you can earn interest, but you could still end up losing money if the price of the crypto you're lending drops.
With governments launching central bank digital currencies and moving to regulate tether, tether is unlikely to retain its market impact in the long term. However, regulation moves slowly and it is hard to estimate when such changes will take place.
If regulation is passed to limit tether’s exposure in the US, that could have ripple effects on the crypto industry if exchanges indeed use it to push crypto prices. Based on historical price movements, Tether printing and bitcoin price movements were correlated.
Hope you don’t keep your funds in Tether and avoid crypto scams. To help you avoid crypto scams, we looked at numerous other potential crypto scams from projects like Pi Network that may only waste users’ time to outrageous anonymous projects like Smart Trade Coin that collect users’ cryptoexchange passwords with promises of future wealth.