This blog is to help you understand what tether is and how it works. Please do not use this as financial advice. Always do your own research before making investment decisions.
The bulls have made a brief return and you are finally seeing some nice profits. You know at some point the market is going to make a correction and you don’t want to lose the profits that you have made, what do you do next?
Surprisingly, I have found that a lot of people are not aware of what Tether is or how it works. Tether is a cryptocurrency that exists on the blockchain through the Omni Protocol. Unlike cryptocurrencies that increase and decrease based on value, Tether is holds a conversion rate of 1 Tether to 1 USD, meaning that Tether holds their value at 1:1 to the underlying assets. Despite the markets movement, Tether does not go up or down, so if you were to put $100 into Tether and the market drops 100 billion dollars, your Tether value remains the same. This also means that if market increases 100 billion dollars and your funds are still in Tether, your value remains the same. It essentially is stored at the value you enter per dollar.
Now that you know what Tether is, how can it help you in your trade? We talked about those hard earned profits earlier, so now we have an option on what to do with it. You can always send your profits to an exchange like Coinbase and cash out to USD, but then you have to wait for the transfers and if you need the money back immediately for another trade, you are stuck waiting on the bank and Coinbase to process your transactions, not to mention the fees incurred. This is where Tether plays a nice role. You can convert your altcoins to Bitcoin and then sell your Bitcoin to Tether, thus locking in your profits and keeping them safe from corrections or downward movements. (Again, remember that this also prevents you from gaining any profits if the price decides to move up on the coins you converted from.) Here is some of Tethers exchange partners:
So how do we do this? It’s actually very easy. We’ll use Binance to explain the process. You have $1000 in Icon $ICX. You had originally invested $500 and it has now doubles and you are ready to take the money out and hold it safely. You put your sell order in and your $ICX is now $1000 worth of Bitcoin. This is where a lot of people who did not know about Tether finish. They leave it in Bitcoin and now are letting $BTC’s price movements affect their profits. A big drop from $BTC and they see their profits disappear. Here is how to fix that: While in your $BTC trade, just go to sell, set the amount you want to sell for and how much. That’s it. Once $BTC reaches the sell price, it automatically converts it into Tether USDT. You can check your wallet and it will show the Tether value in US dollars.
Now that is in your wallet, it will stay there, tethered at 1:1 until you are ready to buy back in. When you are ready to make a purchase, you can go to any of the USDT coins to make a purchase with Tether (Pictured below.) Just go to one of these coins and buy them like you would with any token you usually buy with Bitcoin. Your Tether will now convert to one of these currencies and you are ready to trade again.
Now for the disclaimer: There has been rumors that Tether does not have all of the funds (USD printed dollars) in holding to cover their Tether tokens. This has been an ongoing rumor since late 2017 but wasn’t brought to light til the market reached its apex in January 2018. The relationship with the auditor and Tether was severed at one point, causing concern that if everyone wanted to cash out their Tether at once, there would not be enough funds to cover this. There are also rumors that Tether severed the relationship with the auditors because they wanted personal information regarding transactions of customers and Tether did not want to release it. Whichever is true, remember that almost everything we do in cryptocurrency is not regulated. There are risks with anything so you must do your due diligence and decide what is best for you.