For those who are new to cryptocurrency trading, you will often see expressions such as BTC/USDT, ETH/USDT, etc., or when using some cryptocurrency-related financial products, you will also see the requirement to use USDT for deposits, transactions, etc. As its price is the same as the US dollar(USD), USDT is often mistaken for the USD.
Difference between USD and USDT
USD stands for the United States Dollar, which is the official currency of the U.S, and is one of the most used currencies in the world. USDT (USD Tether), on the other hand, is a cryptocurrency stablecoin created by a blockchain-based company called Tether, whose price is pegged to the fiat US dollar. USDT can be interpreted as a crypto version of the fiat US dollar. USDT was first issued on the Bitcoin blockchain based on the Omni Layer protocol, and has since been expanded to meet the needs of the usage scenarios for various mainstream blockchain networks such as Ethereum, Tron, Solana and so on.
Features of USDT
USDT, as a cryptocurrency with price-anchored attributes, retains the characteristics of cryptocurrencies such as Bitcoin, and also maintains a peg to the U.S. dollar price. It is also because of the stability of USDT's price that it is more suitable for daily payments. Individuals, merchants, and businesses value asset stability, and cryptocurrencies such as BTC and ETH are not yet widely used in everyday payments due to their volatile prices. Recognized stable currencies perform well in maintaining the peg and are suitable for daily use.
In addition, with the characteristics of the blockchain, the threshold for using stablecoins is also relatively low, requiring only a few simple steps to create a wallet and use the blockchain network to send or receive stablecoins to or from anyone, and its advantages are even more obvious in some international transfers. Regular international transfers usually require high fees and long processing by both the sender and receiver banks, which can take anywhere from one to seven days. Whereas sending with the help of blockchain requires the user to pay network fees (depending on the network traffic) and can be done in as little as a few minutes.
Usage of USDT in Exchanges
Currently, USDT is one of the most commonly used cryptocurrencies on exchanges, and many cryptocurrency exchanges, including Bitunix, offer spot trading pairs settled in USDT, which can be used as an intermediary currency for buying and selling cryptocurrencies such as BTC and ETH.
In cryptocurrency derivative products, such as perpetual futures contracts, there are also products that use USDT as a margin, which are also known as USDT-M perpetual futures. By using USDT as margin, you can hold a contract for a specific cryptocurrency of a certain value without having to buy and hold the corresponding cryptocurrency.