Any border in one way or another stimulates the search for effective ways of interacting with both sides. Of course, none of the solutions is either perfect or universal and always attracts the attention of both supporters and critics.
In the cryptocurrency market, stablecoins have become such a solution. They serve as a link between traditional finance and blockchain. The most famous and popular stablecoin USDT was launched in 2015 and became the ancestor of a specific group of assets – fiat-backed cryptocurrencies. The value of the coin is equal to the value of the dollar, and the stability of the exchange rate is maintained by keeping real money in the account of Tether Limited, the issuing company.
At the time of writing, the market capitalization of the coin is $69,540,146,599, which provides the asset with the third place in the ranking of the most capitalized cryptocurrencies. According to this indicator, USDT is second only to Bitcoin and Ethereum, but surpasses them in terms of trading volumes.
Almost all crypto exchanges have trading pairs with USDT, similar to how all government currencies and other traditional assets form trading pairs with USDT. The role of the global reserve currency is performed by USD, and USDT occupies the same niche in the digital asset market. It is rather difficult to find a site where direct conversion of USD to BMON is available, however, even little-known tokens can be bought using USDT.
Disputes about the prospects of USDT began almost immediately after its launch and have not subsided to this day. Crypto enthusiasts consider it too centralized and too regulated. Adherents of the traditional financial system similarly accuse the token of opacity.
Concerns about the possible imminent collapse of the coin are expressed on both sides. However, it is thanks to USDT that the cryptocurrency market has quite tangible liquidity and a convenient tool for hedging. Instead of comparing EGLD vs SOL, choosing a more reliable asset, it is much easier to profitably close a position or minimize losses using USDT.
A stable coin value is important both for the DeFi ecosystem and for everyday use. Pegging to the dollar greatly simplifies both the understanding and use of cryptocurrencies, and this helps to attract new users.
As long as the dollar is in demand in traditional markets, nothing threatens Tether. The cryptocurrency market is still very young and its capitalization is still comparable to the capitalization of top American companies. Cryptocurrencies will not disappear anywhere, and until they become a self-sufficient system, it is necessary
However, one more point should be taken into account. A year ago, USDT was the only stablecoin in the top 10 most capitalized cryptocurrencies. To date, places of honor in it have been occupied by its closest competitors, BUSD and USDS. Historically, younger stablecoins take market share from the first stablecoin, but it remains the global reserve currency of the digital market for now.
Some experts suggest that in the end, in addition to the protocols of the minutes of the meeting of the US Federal Open Market Committee and the speeches of the head of the Fed, the world will closely follow similar events involving Tether Limited.
And yet, no asset can be risk-free in principle, and stablecoins are no exception. Since the issuance and stability of stablecoins is carried out by private companies, the reputation of the coin and its future fate largely depend on the issuer.
When it comes to diversifying your investment portfolio, remember that exactly the same applies to stablecoins. Keeping part of your savings in USDT and part in BUSD, USDS or DAI is a perfectly reasonable solution.