Why Tether Is Better Than Bitcoin
Bitcoin and Tether are two of the largest cryptocurrencies by market capitalization, with just Ethereum sitting between them. While they are both cryptocurrencies, they have some stark differences.
Bitcoin is completely decentralized, which means there is no single entity or person that controls the coin. It is at the behest of the market and suffers wild price swings as a result. Tether is issued and managed by Tether Limited, which maintains governance and control of the coin, and it is tied to the value of the dollar, which means that, regardless of market movement or other factors, a single USDT will always be worth one dollar.
Uses
There are use cases for both these common cryptos. Bitcoin’s volatility means it is beneficial for investors and traders. Without volatility, there is no room for profit. Tether’s stability also makes it useful for traders between trades. It negates the need to have to trade out of cryptocurrency and into fiat currency after every trade. This utility has seen Bitcoin to Tether being the most common trading pair on the cryptocurrency market.
Tether’s stability also makes it a viable option for those looking to maintain value or for those looking to use Tether like a traditional currency. Holders know that their $100 of USDT will always be worth $100.
This stability has seen it become a popular choice with retailers and merchants so holders can spend USDT at businesses like NordVPN, Hostinger, and Alternative Airlines. It is a widely accepted payment method at online casinos, with Tether dice and other casino games offering big potential jackpots with the privacy and anonymity of cryptocurrency.
Price Volatility
Tether (USDT) is a stablecoin that is tied to the value of the US Dollar. As such, a single USDT will always be worth a single dollar. Bitcoin, on the other hand, is a decentralized currency that is not tethered to the value of any commodity or currency. It also holds no real utility, which means its value is entirely dependent on market pressure and this causes huge volatility that can see Bitcoin prices rise or fall 10% or more in a single day. Even on a quiet day, Bitcoin can move 5%. This volatility is beneficial for traders looking to rake in quick profits, but less than beneficial for people who want stability and dependability from their finances.
Regulation
A lot of jurisdictions are on their way to regulating stablecoins, and this will likely happen before the likes of Bitcoin gain regulation. Most securities commissions have slammed cryptocurrency for its volatility, stating that investors could lose substantial sums of money as a result of dramatic price swings. Stablecoins like Tether do not suffer these wild swings, which means governments and agencies are more inclined to regulate stablecoins. Regulation brings additional protection and security for holders, which could see stablecoins like Tether become viable currencies in the future.
Unique Investment Opportunities
There are hundreds of stablecoins available today. While many are tied to the value of the dollar, some are tied to other currencies, as well as some that are tied to gold and other commodities. It is arguably easier and cheaper to trade between these stablecoins than to trade on the forex market or to invest in gold and oil. As transactions between stablecoins can be completed in a matter of seconds, without the need for brokers or traders, Tether can be invaluable to investors. Therefore, traders can develop stablecoin portfolios that are diverse and cover every corner of a solid investment strategy.
Business Benefits
For retailers and merchants, there is appeal to Tether, too. Accepting Bitcoin payments carries risks. Many merchants work on tight margins and if the value of Bitcoin drops 5% before the merchant has a chance to exchange it to fiat or another stable currency, it could put their business at risk. There are payment gateways that enable buyers to pay with Bitcoin and the cryptocurrency is immediately converted to fiat currency, but accepting Tether attracts those customers who don’t want to be exposed to the volatility of decentralized cryptocurrencies.
Interoperability
Bitcoin operates on its own network, which means it can’t operate on other blockchains. Stablecoins can achieve interoperability, which means they could, theoretically, operate on different blockchains and interact with other cryptocurrencies. This makes them especially beneficial in defi applications. However, this can be a complex procedure and it does require cooperation from the different networks.
Blockchain Benefits
Tether and other stablecoins still use blockchain technology. Payments can be sent and received anonymously with users only having to display wallet addresses. They also use the same advanced cryptographic techniques as Bitcoin so payments are secure. And, using a blockchain explorer, payments can be seen on the blockchain so Tether’s transparency is on a par with that of Bitcoin.
Future Advances
With regulation, liquidity, lack of volatility, and interoperability, it is the likes of Tether and other stablecoins that are most likely to move cryptocurrency forward. Banks are already investigating the development of their own stablecoins, while security commissions are looking to regulate them.