Tether, undoubtedly one of the major players in the crypto realm, has gained immense popularity as a stablecoin issuer. USDT, backed by Tether, started its journey as an ERC-20 currency, and now stands tall as the third largest coin by market cap, boasting an impressive valuation of $83,776,303,192. At the time of writing, one USDT is valued at $0.99, with concerns about its peg lingering in the minds of some crypto enthusiasts for quite some time.
In my opinion, Tether is simply too massive to crumble. Over the past year, it has raked in a staggering $830 million in earnings, solidifying its position as a robust and enduring entity—unlike LUNA's UST, which has faced challenges. It's no surprise that many of us cherish USDT, especially those who rely on crypto as their main source of income, as it serves as a reliable hedge in uncertain times.
I asked the following questions at meet-ups in Kenya and Nigeria:
Who gets paid in crypto?
-> 80% of people raised their hand
Who gets paid in local currency?
-> 5% of people raised their hand
Who prefers crypto (btc, eth, et al) over stable coins?
-> 2-5 people raised their hand
Who prefers stable coins (USDT, not USDC) over crypto assets?
-> 95% of people raised their hands
Who is using binance p2p market place?
-> everyone raised this hands
Conclusion: Locals want access to US dollars and the crypto rails provide a very convenient / easy path to access it.
source
I find this tweet of Patrick McCorry to be quite enlightening for the question regarding whether Tether has any usability other than acting as a safe haven against "turmoiled times in crypto". For someone who's only holding a bunch of BTC, ETH, or whatever, and doesn't plan on dumping his coins any time soon, a stablecoin such as USDT doesn't make much sense.
The crypto world is a diverse landscape, encompassing individuals from various backgrounds, each with distinct expectations and interactions with blockchain technology and cryptocurrencies. However, not everyone can handle the rollercoaster of volatility, especially those on the thinner end of the social classes. In developing countries like Kenya and Nigeria, where earning even a few dollars a day from crypto-related tasks could mean making a living, the unpredictability of crypto's dollar valuations becomes an insurmountable risk.
For these individuals, stability is paramount, which is why many opt for the safe haven of stablecoins like USDT. Holding the exact coins they earn is not a viable option, considering the constant market fluctuations. Unlike someone with a steady traditional income, those who rely on crypto as their primary source of funds face a different reality.
This is where stablecoins come to the rescue, filling a crucial need in the crypto ecosystem. I personally don't believe that Bitcoin or Ethereum have a future as exchange or payment currencies; however, I strongly believe in the mass adoption of stablecoins like USDT for this purpose. Volatility breeds uncertainty, and living with such uncertainty can be incredibly risky, akin to driving with the gas light on.
The soaring demand for stablecoins is evident when we observe HBD savings, where many are staking their HBD to earn rewards. During bull markets, it may not be wise to stick solely to stablecoins, as they offer stability, not growth. As mentioned in my last post, the next couple of years in crypto hold the promise of insane returns for early investors, but we must prepare for the inevitable downturn in the market by having stablecoins at our disposal.
If we want to leverage crypto as a medium of exchange, stablecoins are essential. I doubt anyone would spend their hard-earned BTC on everyday items like pancakes or condoms. For such transactions, stablecoins like BUSD or USDT make much more sense. What do you think?
Thanks for your attention,
Adrian