If you’re researching Bitcoin alternatives, you may have already heard of Tether, an altcoin that appeared on the market in 2015. Tether is a type of cryptocurrency called a “stablecoin,” which means that it’s pegged to the U.S. dollar.
Unlike Bitcoin, Tether is backed by a reserve, providing fewer price fluctuations than competing cryptos. Tether recently made headlines by announcing that its coin has partnered with both Bitfinex (a Hong Kong based cryptocurrency trading platform) and Poloniex Exchange (a USD-backed cryptocurrency exchange platform) to further Tether’s development.
Tether’s 2018 alleged price manipulation: read before you invest
In June of 2018, University of Texas finance professor John Griffin and undergraduate student Amin Shams published a research paper in the journal Social Sciences Research Network expressing concern that the price of Bitcoin has Kong-based by large industry players rather than genuine demand from buyers.
Researchers analyzed transactions made on the Bitfinex platform (largely considered to be the least regulated cryptocurrency exchange platform) and found patterns indicating that high-volume buyers were using Tether (a partner of Bitfinex) to buy large amounts of competing currencies to drive up demand. The publication of this research led to leaders behind both Bitfinex and Tether to be subpoenaed by the federal government of the United States and the price of Tether to temporarily plummet.
“There were obviously tremendous price increases last year, and this paper indicates that manipulation played a large part in those price increases,” Mr. Griffin said.
Tether and Bitfinex executives have vehemently denied any sort of price inflation or tampering: “Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of bitcoin or any other coin/token on Bitfinex.”
The cryptocurrency has taken improved steps in recent months to increase the transparency of Tether’s value, including publishing daily proof of funding and regular professional audits. As of publication, the potential case alleging price inflation remains open by the U.S. Commodity Futures Trading Commission.
How to buy Tether
Step 1: Create an account with EXMO
If you’ve never purchased a cryptocurrency before, you’ll first need to create an account on EXMO, an exchange that allows you to use USD, EUR, or your currency of choice to purchase cryptocurrencies.
Visit EXMO’s website, click on the “sign up” button on the top right-hand corner of the homepage, and follow the instructions to create an account. Once logged into your account, you will be asked to verify your identity. Though EXMO does support a few payment methods without verification (including Money Polo and Perfect Money transfers), direct deposit using a credit card, debit card, or bank deposit will require verification.
Tether is also supported by the Binance exchange—however, because Binance does not support the conversion of fiat currency (backed currencies like USD) to crypto directly, we recommend EXMO for first-time buyers. If you already have a Binance account and Bitcoin or another altcoin to support conversion, go ahead and skip to step 3.
Step 2: Deposit funds into your EXMO account
After you’ve verified your account, you can deposit funds into your EXMO holdings. Log into your account and click on the “Finance” tab at the top of the page.
You’ll see a list of fiat currency options appear, with buttons labeled “deposit” and “withdraw” next to them. Click on the “deposit” button next to your held currency and initiate a transfer of funds into your EXMO account.
Step 3: Create a Tether wallet
Though nothing stops you from keeping your cryptocurrencies held in your EXMO or Binance account, this is generally considered to be less safe than holding your cryptos in an encoded wallet. Wallets like MyEtherWallet and OmniWallet can support Tether and provide an increased layer of security in the event that EXMO or Binance suffers a security breach.
Tether previously supported an official Tether wallet, but following a hack in 2017, the feature was taken offline. To be notified when Tether wallets become available again, you can sign up for its mailing list.
Step 4: Convert funds to Tether
To convert your funds to Tether in EXMO, click on the “exchange” tab and search for Tether’s ticker, “USDT.” Enter the amount of currency you’d like to exchange into Tether and click the “exchange” button to initiate the exchange.
If you’re using Binance, you can convert your held cryptocurrency into Tether by clicking on the “exchange” tab and searching for a conversion chart tracking the price of USDT against your held cryptocurrency. You’ll technically be selling your held currency, so search for a pair listing your held crypto first; for example, if you were looking to convert Bitcoin to Tether, you’d search for the chart titled “BTC/USDT.”
After you’ve located the current price, click “sell [held cryptocurrency ticker],” and indicate the amount of currency you’re looking to sell. Proceed with the transaction. You will soon see your base cryptocurrency deducted from your account and Tether in its place.
Step 5: Withdraw your Tether to your virtual wallet
If you choose to hold your Tether in an encrypted wallet, click on the “withdraw” tab on your exchange platform of choice. Open your wallet and search for the wallet’s address—it should be a long string of numbers and letters. Copy and paste your wallet address into the destination on the withdraw page of your exchange service and initiate the exchange. Depending on the number of people using the exchange at any given day, it may take anywhere from a few minutes to a few hours for your Tether to appear in your wallet. If you are using a physical USB wallet, make sure you leave the device plugged in until the transfer has been completed.
It’s important to note that Tether only operates within territories that do not regulate the sale and transfer of online currencies. Tether has limited availability in the following areas: New York and Washington states, along with the countries of Iran, Yemen, Afghanistan, Ethiopia, the Syrian Arab Republic and Bosnia. If you are located in one of these areas, consider investing in one of Benzinga’s top-rated altcoins instead.