Many have become interested in the difference between USD and USDT since the infamous Tether transactions occurred and the cryptocurrency token began to gain recognition.
USD is an abbreviation for the United States Dollar while USDT, on the other hand, is a symbol used to trade Tether tokens, a blockchain-based cryptocurrency, but its tokens are distributed in exchange for an equivalent amount of fiat money deposited into an established bank. The price value of a Tether token, is usually pegged to the US dollar, which is why the token is also denoted as USDT.
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Stablecoins
What Are Stablecoins?
Stablecoins and cryptocurrencies that function in many ways like digital dollars, have been introduced by the blockchain and markets. Stablecoins were created with the confirmation that they would be pegged to a fiat currency completely and that their value would fluctuate to reflect that fiat currency. USDT is an example of stablecoin (USDP).
What exactly are Tether (USDT) tokens?
Tether (USDT) tokens, are stablecoins collaterized with fiat money . They empower people with the usefulness of transacting with blockchain-based assets while curtailing price risk. Tether was originally known as “Realcoin” when it was established in July 2014 by Brock Pierce, Craig Sellars, and Reeve Collins.
What Is The Difference Between USDT And USD?
The key differences between USDT and USD can be fully understood from the points given below:
- In one sense, USD refers to money, fiat cash, or liquidity. However, the liquidity of USDT at any given time is determined by the state of the banks holding the security and Tether Limited as a sovereign entity. Therefore, liquidity is unstable.
- While USDT can be used to alter the price of Bitcoin or any other crypto token, USD cannot be used in this manner.
- Different from USD which can hardly fluctuate, the value of the Tether token, USDT, has fluctuated since it’s takeoff.
- One USD is always worth 100 cents, whereas 1 USDT can fluctuate in value depending on the value of the fiat and other market conditions against which it is traded.
- USD is represented by the symbol “$”, whereas USDT is a symbol of itself.
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Conclusively, we can say that the USD is valuable even if it is not backed by anything tangible. The banks’ promise alone makes it valuable and it has lingered in this position since history. However, since USDT has been pegged to USD, so we can say that it is backed by something tangible. Nonetheless, it is not as valuable as the USD. The decision of investing on USD or USDT must be a deliberate and well-considered one.
