Stablecoins have become a foundational piece of infrastructure for crypto trading globally. All over the world, traders use USD₮ to purchase derivative positions, store value when moving in between trading positions and transfer value between exchanges without volatility. This use case is true in countries that use the Dollar and in countries that do not! In that sense, Tether tokens represent a standard for value that transcends national borders.
As the first and largest stablecoin, USD₮ was chosen by leading exchanges to denominate derivatives contracts (which represent billions of dollars of notional value). This decision was due to USD₮’s robust liquidity and its long history of price stability. USD₮ is also the leader in stablecoin spot markets, where traders use USD₮ to denominate and trade various cryptocurrencies against.
However, the use cases for USD₮ and other Tether tokens stretch far beyond trading. USD₮ usage is growing for applications like cross border payments, remittances, and banking the unbanked globally, which is a crucial trend to watch.
Cross Border Transfers
International payments are much more complicated than most people are aware of and often carry a hefty price tag. Due to the architecture of the modern banking system, sending even small payments to another country can involve multiple parties and incur meaningful fees.
These payments can involve wire fees, forex (currency conversion) costs, and any service fees the intermediaries might charge. These fees can often be higher on a proportional basis for smaller amounts. International payments can take a number of days or even longer to complete.
USD₮ and other Tether tokens circumvent these issues by improving the settlement system, removing currency conversion fees, and settling in minutes not days. USD₮ transfers can also cost almost nothing in fees (depending on which blockchain is used for the transport layer).
USD₮ transactions have settlement finality, which means once the tokens have been received there is no way for the transfer to be reversed or for a financial institution to restrict immediate access to the funds.
This creates a seamless experience for businesses and individuals who operate overseas and USD₮ has seen significant growth as an international payment rail.
However, individuals and businesses have different needs when sending money internationally. While many of the same concerns apply to international payments as to remittances, remittances are usually for much smaller amounts where fees can constitute a disproportionate percentage of the total payment.
The most common type of remittance which is sent is one where a worker is sending money home to their family in another country. Rather than supporting workers around the world to send hard earned money home to their families in a cost effective way, most remittance businesses actually extract higher fees than necessary between wire costs, forex fees, and service fees.
USD₮ is increasingly used for remittances because it solves these key problems for workers globally. Tether tokens eliminate the need to interact with a business or third party or pay any fees except for a transparent transaction fee.
USD₮ also both eliminates the need to convert between two currencies and provides anyone the ability to hold USD₮ tokens even if they lack access to a bank account which can hold dollars. This is a crucial benefit for the unbanked globally.
Banking the Unbanked
Billions of people around the world lack access to banking infrastructure and even more only have access to limited or predatory financial services. Without access to financial infrastructure, individuals are cut off from the global economy and forced to store value in insecure or dangerous ways.
Individuals without access to robust financial infrastructure can lose their savings due to inflation, due to physical security issues with cash or due to corrupt financial service providers. USD₮ offers a solution to all three of these issues.
Inflation- The amount of people living with double or triple digit inflation around the world numbers in the billions. For individuals suffering from high levels of inflation, they lose the ability to save for their future in a reliable way. However, in order to avoid inflation, people need easy access to a more stable currency than the one which is inflating and for most living under high inflation it is a challenge to hold value in anything other than their local currency. USD₮ provides a lifeline that can be accessed by anyone with an internet connection that empowers them to store value outside of their local national currency when they so choose.
Security- For those without banking services, the only alternative is physical cash. While cash has many positive features, it requires physical storage and security. For individuals storing cash in their home, or on their person, personal security is always a risk. Even for individuals with banking access in cash dominated areas, withdrawing cash from a bank can be a physical and financial risk. USD₮ empowers users to store value in a purely digital way.
Corrupt Financial Service Providers- USD₮ empowers users by ensuring that, outside of tether.to, they don’t need to trust or rely on central intermediaries to settle a transfer.
USD₮ is the first and largest stablecoin and the most widely used stablecoin by cryptocurrency traders. With a current market cap of $82 billion USD equivalent (as of 4th April 2022), USD₮ is one of the largest and most successful financial innovations globally. Fully backed by reserves, USD₮ is utilized on every major blockchain to facilitate digital asset products, trading liquidity, and allow users to store value in a digital age.
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