The use of cryptocurrencies in business transactions and asset securement is gaining more and more prominence day after day. There are literally hundr
The use of cryptocurrencies in business transactions and asset securement is gaining more and more prominence day after day. There are literally hundreds of cryptocurrencies nowadays and though each has its own unique service features, they all operate with similar underlying principles.
In case you’re not so familiar with this concept, let me explain. A cryptocurrency is a form of digital asset, that can be used as a viable means of exchange, especially online. Most people love trading in cryptocurrencies because they’re not regulated or controlled by policies of national governments, hence some level of “freedom” exists.
As stated earlier, there are many cryptocurrencies available and although bitcoin is arguably the most popular, it is not the only efficient digital currency. Tether is another cryptocurrency rising through the ranks in prominence and acceptability (although it is built solidly on bitcoin blockchain). Tether was originally known as altcoin, until the company rebranded in 2014.
One rather unique feature of Tether is that (like the name suggests), it serves as a link or tie that connects digital currency to fiat (real-world) currencies like USD. So, in the strictest terms, Tether in itself is not exactly a “new” kind of digital currency, but only operates with the existing currencies on blockchain.
In essence, Tether operates in bitcoin currency but is not limited to the strict bitcoin to bitcoin transfers. The service currently supports 3 fiat currencies, which are the U.S. Dollars (USD), Euros (EUR) and the Japanese Yen (JPY), but the USD is predictably the more prominent option.
How Exactly Does This Help?
Transactions in fiat currencies can get very cumbersome, slow and expensive, depending on the prevailing exchange rate and transaction charges. This is one of the initial motivations behind the usage of cryptocurrencies in the first place. Basically, once your transaction currency goes digital, there’s an increased stability and speed, as large transactions can be completed in a matter of minutes, without the corresponding load of paperwork witnessed in fiat currencies. The only downside to this is that you cannot perform “cross-platform-currency” transactions, meaning you cannot transfer your bitcoin currency (for instance) to your client’s account in USD, neither can you fund or pay your service provider, in bitcoin via bank transfer or in USD. This is where tether comes in.
Tether offers its own “intermediary currency,” that allows you to now conveniently transact in “cross-platform-currency.” Tether offers Tether-USD which has the same value as fiat USD. What this means is that you can then perform whatever transaction you wish to carry out in USD as Tether-USD, without having to convert to Bitcoin first or worry about exchange rates. In simpler terms, you can see the Tether-USD as a “chameleon” currency, capable of taking the shape of bitcoin or USD whenever required. In essence, you can now withdraw your bitcoin funds in USD, without having to face the rigor of conversions or exchange rates.
Though the transactions come with charge (which is less than 1%), the Tether cross-currency feature is still well worth trying out and it may very well be the next step in digital currency evolution.