If you want to learn how to buy Tether (USDT), you’ve come to the right place. Unlike Bitcoin or Ethereum, where day-to-day changes in price are expected, Tether is a stablecoin that aims to hold a near-constant value.
While Tether does experience some bumps here and there, most holders aren’t looking for price appreciation. As the name suggests, the virtue of a stablecoin is stability rather than price gains.
Tether Is a Stablecoin. What Is a Stablecoin?
Headlines about cryptocurrency typically describe wild price movements. But that’s not typically true of Tether, which is designed to have a stable value thanks to its U.S. dollar peg.
Stablecoins like Tether maintain their constant value because they are backed by a fund of collateral assets. In the world of crypto, USDT is referred to as a “collateralized stablecoin.”
Raymond Hsu, co-founder and CEO of Cabital, says Tether’s stable value offers certain advantages.
“Stablecoins are a great way for investors with moderate risk appetites to diversify their investment portfolio and profit from the crypto market, without the volatility risks associated with typical cryptocurrencies,” he says.
Though a stablecoin pegged to the US dollar may not be as advantageous to Canadian crypto investors at first blush, thanks to the currency exchange fees they’ll have to pay anyway to convert their Canadian dollars to American. Like it or not, the global crypto market operates with the U.S. dollar as the dominant fiat currency for exchange, so Tether can act as a good barometer of stability.
Tether is not completely free of risk, however. For instance, in May 2022, Tether lost its $1 peg amid the TerraUSD (UST) stablecoin crash, dropping as low as $0.9485 before recovering to its intended one-to-one peg with the U.S. dollar.
While a few cents might not seem like much, this momentary price fluctuation demonstrated that even stablecoins aren’t a sure thing in cryptoworld.
Tether also presents risks because of a lack of regulation, says Brian Gallagher, co-founder of Partisia Blockchain. Gallagher points out that there’s no public auditing to check whether the reserves for Tether can fully back the $75.6 billion in USDT in circulation.
If it were to be revealed that the Tether treasury only has $5 billion in reserves, that would mean there’s a discrepancy between what is circulating around blockchains as USDT, compared with the real amount in U.S. dollars and assets backing Tether, he says.
A similar situation already came to fruition. An October 2021 announcement by the Commodity Futures Trading Commission declared that Tether would pay a $41 million fine for misleading claims that the U.S. dollar fully backed it.
The commission found that between June 1, 2016, to February 25, 2019, “Tether misrepresented to customers and the market that Tether maintained sufficient U.S. dollar reserves to back every USDT in circulation with the ‘equivalent amount of corresponding fiat currency.’
Despite the controversy, Tether has regained its dollar peg and still endures as the leading stablecoin with one of the largest market caps.
Where Can I Buy Tether?
You can buy Tether on most of the best cryptocurrency exchanges.
Suppose you want to pair your Tether holdings with other cryptocurrencies. In that case, it’s easy to do. Most centralized exchanges and many decentralized exchanges allow users to pair Tether with other cryptocurrencies.
While Tether doesn’t truly “pair” to other cryptocurrencies since it’s a stablecoin pegged to the U.S. dollar, it remains a popular way to purchase crypto as a way of being liquid in the markets.
Kaiko, a digital assets provider, found in October 2021 that nearly half of Bitcoin trades are executed using Tether.
Here are a few exchanges where you can easily convert your Tether into Bitcoin (BTC) and Ethereum (ETH), along with multiple other popular cryptocurrencies:
How To Buy Tether
If you decide that Tether holdings make sense for your financial goals, you can buy Tether in a mere three steps:
1. Choose Your Crypto Exchange
Buying Tether begins with choosing a cryptocurrency exchange. An exchange allows you to buy and sell cryptocurrencies. In the case of Tether, you’ll be able to use Canadian dollar deposits to purchase Tether coins. However, depending on the exchange and the amount of Tether you plan to buy, you may be charged conversion fees when placing your order. Here are a few crypto exchanges that offer Tether:
Crypto exchanges vary in both complexity and fees. So before committing to one to make your Tether purchase, be sure to compare multiple exchanges.
2. Buy Tether
After selecting your exchange, you can make your opening deposit. Several Canadian banks don’t allow crypto purchases with their products, so check with your bank first. While Tether is a stablecoin designed not to be as volatile as cryptocurrencies like Bitcoin, your purchase could lose value.
Placing a crypto trade is easy when you’re ready to buy Tether. Just initiate a “buy” transaction using Tether’s ticker symbol—USDT—and the dollar amount you want to purchase. Once the transaction is finalized, you’re now the proud owner of Tether.
3. Store Your Tether
Finding the most secure storage for your crypto is important. Since cryptocurrency exchanges are not backed by protections like the Canada Deposit Insurance Corp. (CDIC), your crypto is at risk if theft or hacking occurs. You could even lose your investment if you forget or lose the codes to access your account. There are several types of crypto wallets you can use to store your Tether, with varying levels of risk:
- Hardware Wallets. If you want to store Tether offline, you can use a hardware wallet. For example, Ledger and Prokey are hardware wallets that support Tether.
- Paper Wallets. These crypto wallets contain two key pairs—a public and a private key and two different QR codes—all printed on paper. This mode of storage is often referred to as noncustodial cold storage.
- Software Wallets. You can also download software to your computer or mobile device to store your crypto. For example, Exodus is a mobile wallet where you can store your USDT.
- Crypto Exchanges. Several exchanges offering USDT offer customers a built-in wallet for storing their USDT holdings. Binance and Kraken offer wallets for their customers.
What Can You Purchase With Tether?
When you own Tether, you can use it to purchase a wide variety of cryptocurrencies. To do so, just find and exchange USDT with the cryptocurrency you want to purchase.
According to Coinsbee, you can cash in your stash of Tether for gift cards at popular e-commerce shops, such as Walmart and Amazon.
You can also earn interest on your Tether holdings, just like you would at a bank. Specialty online cryptocurrency savings accounts let you deposit USDT and earn interest rates considerably higher than most online banks. You can use a site like Bitcompare to find the best rates.
Should You Buy Tether?
Tether could be a good buy for specific crypto investors. It’s an ideal choice for liquidity when looking for a way of getting in and out of other cryptocurrency trades.
Some crypto experts like Najah Roberts, CEO and founder of Crypto Blockchain Plug, remain cautious of Tether because of its treasury strength.
Investors seeking alternatives to Tether can look at other collateralized-based stablecoins, such as USD Coin (USDC), Dai (DAI) and Pax Dollar (USDP), to name a few. If you’d prefer to buy a stablecoin tied to the Canadian dollar, QCAD is worth considering.