You can now purchase crypto on BlockTrades using the two most popular USD Tether coins, USDT_OMNI and USDT_ERC20. USDT_OMNI is an omni-based coin that operates on top of the Bitcoin network. USDT_ERC20 is an ethereum-based token (an ERC-20 token).
What is USD Tether (USDT)?
USD Tether is a stable-coin whose value is tied to the US dollar via backing by the company Tether Limited. The CEO of Tether Ltd is also the CEO of BitFinex and BitFinex is one of the main exchanges where USDT is traded, so you will often find articles that reference BitFinex as well as Tether Ltd, when USDT is discussed.
USDT controversies, Tether Ltd, and BitFinex
Over the years, there have been many controversies surrounding Tether. Generally these controversies tend to revolved around the claim that the amount of USDT in circulation is higher than the amount of liquid assets that Tether Ltd has to back them, and an associated claim that this unbacked USDT has been used to manipulate the cryptocurrency market to inflate the price of bitcoin.
The most notable such claim is a suit filed by the New York Attorney General’s office. However, it is worth pointing out that in the NY AG’s suit, it appears that the amount they are claiming isn’t backed is a result of those funds having been frozen by various governments (most notably, the US government). So, as far as I can understand the case (bear in mind, I’m just reading public articles about it), the NYAG filed a suit against Tether for not fully backing USDT coins, and at least one of the reasons the coins are not fully backed is because some of the funds are temporarily frozen by the US government itself. To me, that’s just a bit strange. It’s also not clear to me if those funds are just frozen or have been permanently seized, which leaves one to wonder if just because funds are frozen, they can no longer be considered to back an obligation.
There’s even a relatively recent article on coindesk now about a new private class-action lawsuit being launched against Tether and Bitfinex: https://cointelegraph.com/news/how-severe-is-roche-freedmans-lawsuit-against-tether-and-bitfinex Yes, shocking news, there are plenty of lawyers out there that are happy to file class action lawsuits to enrich their own pockets, especially when they have little to lose except their time. Uh wait, I mean to help the “little guy” by virtuously contributing their own valuable time for a small chance of a future return on their invested time (now this paragraph is hopefully “lawyer approved”).
Anyways, the takeaway from the above is that there certainly is some risk in long term holding of USDT as its value is maintained by a reliance on the ability of Tether Ltd to back the coins with fiat currency and you should probably manage your holdings accordingly. Nonetheless, I’ve found it can be useful as a means of holding coins with a stable USD value over the short term, especially if you’re dealing with centralized exchanges, so we’ve decided to add it to our list of supported coins, despite the controversies associated with Tether Ltd.
A small note on transaction fees for USDT coins
USD Tether can be transferred along multiple blockchains. That’s why there are multiple coin types: USDT_Omni (these coins are transmitted on the bitcoin blockchain), USDT_ERC20 (these coins are transmitted on the ethereum blockchain, and even USDT_TRON (transmitted on the Tron blockchain). The coins on all three of these blockchains are backed by the same value, so they can be considered the same for valuation purposes.
But it is useful to note that the transaction fees vary a lot across these networks. For example, a USDT_OMNI transaction costs about 2x a regular bitcoin transaction (it is 2x because there is additional information required by the OMNI coin protocol that needs to be included in the bitcoin transaction), so it normally costs significantly more to send USDT_OMNI than USDT_ERC20.