A beginner’s guide to buying and selling USDT in the UK.
Tether, otherwise known as USDT, is a cryptocurrency built on the bitcoin blockchain (via Omni Layer) and founded by a Hong Kong-based company, Tether Limited. Tether Limited has designed currencies which act as anchors or ‘tethers’ to fiat currencies such as the US dollar or the euro, where every tethered cryptocurrency issued in circulation is backed by a 1:1 ratio with traditional currencies held in deposit by Tether Limited. This means that the conversion rate from USDT to US dollars (USD) is one USDT to one USD.
If you’re keen to learn more about USDT, including where to buy it and things to consider before buying, keep reading our guide.
Tether controversy - January 2018
USDT was created by a company called Tether Limited and is closely affiliated with the Bitfinex exchange.There are currently over 2 billion USDT in circulation. Potential buyers should bear in mind that while the Tether company claims to have fiat currency reserves to back up all the Tethers in circulation, there is no concrete evidence of this.
Tether recently and unexpectedly discontinued its relationship with the auditors that were going to verify this claim, causing uncertainty about whether USDT is securely backed by US dollar reserves.
Even though the cryptocurrency is pegged at US$1, Tether users should note that this price stability is largely dependent on Tether Limited actually being able to support the amount of Tether currently in circulation, and that a loss of value is still possible.
- There is no concrete evidence of Tether Limited being able to support the value of USDT currently in circulation.
- There is no concrete evidence of Tether Limited not being able to support the value of USDT currently in circulation.
Where to buy USDT in the UK
Tether is widely accepted throughout the cryptocurrency world. You can find it on almost every exchange and buy it with almost every other cryptocurrency or fiat currency. You can also buy USDT with a credit card on Changelly. Exchanges which list USDT include:
According to CoinMarketCap, at the time of writing (February 2018), the highest trading volume in USDT is at OKEx and Binance.
A step-by-step guide to buying USDT
Step 1. Create an account at an exchange listing USDT
Exchanges such as Binance or EXMO list USDT. As mentioned above, Binance has one of the highest trading volumes for USDT. So let’s use Binance as an example.
Firstly, sign up for an account at Binance and follow the instructions you receive in the email they send. After that, you need to verify your identity. Don’t forget to activate two-factor authentication for an added security layer while you wait for the ID verification procedure to complete.
Alternatively, if you wish to sign up for an exchange which accepts fiat currency such as USD or EUR, you might choose EXMO. To create an account at EXMO, sign up on their website and follow the instructions you receive in an email. Once logged in, you can choose to verify your identity if you want access to a broader choice of payment options.
For EXMO, payment options which do not require verification include Perfect Money, Payeer and Money Polo. Yet certain popular fiat payment options require verification, including Neteller, wire transfer, debit card and credit card payments.
Step 2. Deposit funds into your account
Depositing on an exchange which doesn’t support fiat currencies:
Binance does not accept fiat currency deposits so you’ll need to acquire cryptocurrency which can be paired with USDT, such as bitcoin (BTC) or Ethereum (ETH). If you don’t have any BTC or ETH, follow our guide here on how to purchase one of these cryptocurrencies.
When you acquire BTC or ETH, you can deposit the cryptocurrency at Binance. To send funds to an exchange, you will normally first need to generate a wallet address for the exchange you wish to send funds to. This is a unique code consisting of several numbers and letters.
To generate this address in Binance, you would begin by moving your mouse cursor over the “Funds” button at the top menu on their website and then clicking on “Deposits” in the drop-down menu. Type BTC or ETH in the “Select Deposit Coin” box and click on either BTC or ETH, depending on the currency you want to use to buy USDT. After this, Binance will generate a deposit address for you.
Next, you will need to send the cryptocurrency bought with fiat currency to your Binance wallet address. Withdrawal methods vary by platform, however once you opt to withdraw you should be prompted to enter in the amount you wish to transfer as well as the wallet address you will be sending funds to. You would enter in your unique Binance wallet address and select to send your funds. Subsequently, you should be able to receive these funds in your Binance wallet address.
Depositing on an exchange which supports fiat currencies:
At EXMO, you can deposit US Dollars (USD), Rubles (RUB), Euros (EUR), Polish Zloty (PLN) or Ukrainian Hryvnia (UAH) through multiple payment methods.
To deposit, you need to log in to your account and click on the “Finance” button at the top menu on the website. A list of fiat and cryptocurrencies will appear with the buttons “Deposit” and “Withdraw” next to them. If you want to deposit currency such as USD, you would select USD, click “Deposit” and then choose your payment method. For detailed information on deposit fees and limits, check out our review page on EXMO.
Step 3. Buying USDT
At Binance, you can buy USDT by moving your mouse cursor over the “Exchange” button at the top menu and clicking on “Basic”. A price chart will appear. To the right side, you will notice a list of cryptocurrency pairs. Select USDT and pair it with the cryptocurrency acquired from fiat currency in Step 2. If you bought BTC, you would select a USDT/BTC pairing. To buy USDT, you need to click “Sell BTC” and enter the amount of BTC you want to sell. This will sell your BTC and you will receive USDT in return.
At EXMO, you can directly exchange fiat currencies such as USD and RUB for USDT. Choose a pairing such as USDT/USD. Click on the “Exchange” button on the top menu on the EXMO website. Select the amount of fiat currency you want to exchange for USDT and then click the “Exchange” button.
Alternatively, you can click on the “Buy & Sell” button on the top menu on the website and select your fiat currency of choice next to the price chart. Pair this fiat currency with USDT and select the “Buy USDT” tab below the price chart.
How to sell USDT
The process is similar to Step 3 above, except you could reverse the pairing order. For example, if you wanted to sell USDT in exchange for BTC, you would find a “BTC/USDT” pairing.
At Binance, you can sell USDT on the same webpage where you buy the tokens, except you need to click “Buy BTC/USDT” and enter the number of Tether you want to spend to buy bitcoin. The trading fee is 0.1%.
At EXMO, you can directly exchange USDT for USD on the same webpage where you buy them. The trading fee is 0.2%.
Which wallets can I use to hold USDT?
You can use three wallet types for storing USDT:
- Web-based wallet. Tether has its own web-based wallet.
- Mobile wallet. You can use the Freewallet app for Android.
- Desktop wallet. The OmniCore wallet is available for Windows and Linux.
- Hardware wallet. ERC20-compatible Tethers can be held in a hardware wallet via MyEtherWallet.
ERC20-compatibility and USDT storage
There are two types of Tethers, each requiring a different type of wallet. One type is ERC20-compatible. Sending the wrong type of Tethers to the wrong wallet will result in a loss of funds.What are uses of USDT?
USDT was designed so that the US dollar could be digitised and used on the blockchain by financial businesses, such as cryptocurrency exchanges, wallets, payment processors and financial services. Some of the largest cryptocurrency exchanges, such as Binance, Cryptopia, HitBTC and Poloniex, have already integrated USDT into their systems and use it as one of their primary cryptocurrencies; USDT has several pairings, meaning that it can be used to purchase several other cryptocurrencies.
USDT was conceived to give companies an alternative to the traditional processes involved in exchanging and depositing fiat currency. Its team aims to help businesses manage customers’ assets through using cryptocurrency processes while enabling them to settle fiat balances between exchanges. This means that companies can exchange cryptocurrency funds faster, bypassing the process of converting in and out fiat currencies through the banking system.
Additionally, in January 2018, Tether Limited issued USDT and EURT as Ethereum-based tokens compatible with the ERC20 standard. This innovation was designed to give the new Tether faster confirmation time and lower network fees.
Tether currencies and fiat currencies
Tether currencies are often denoted by the ₮ symbol, for example USDT can be signified as USD₮ and Tether EUR (EURT) can also be signified as EUR₮. Tether Limited states that to keep the Tether pegged to fiat currencies, the balance of fiat currencies held in their reserves will be equal or greater than the Tethers in circulation. This is called a proof-of-reserve process.
To find out more about USDT, check out our introductory guide.
Restricted states and countries
Ensure that you also bear in mind the restricted locations and key considerations outlined below. Due to regulations and government compliance, at the moment of writing (February 2018), Tether has limited availability for citizens in these locations:
- New York State
- Washington State
- Iran
- Bosnia and Herzegovina
- Yemen
What should I consider if I want to buy USDT?
If you are thinking about buying Tether or any other cryptocurrency, it’s recommended that you understand the risks involved. Here are some facts to consider if you are thinking about buying USDT:
- Supply. According to CoinMarketCap, the circulating supply of USDT at the time of writing (February 2018) was 217,140,814 USDT tokens out of a total supply of 2,280,109,970 USDT tokens. The number of tokens can increase or decrease as long as the Tether company has enough funds in their bank account to back them up.
- USDT use. USDT is mostly used on cryptocurrency exchanges to trade and buy other cryptocurrencies but the company behind Tether hopes to make USDT the virtual equivalent of USD.
- Availability. USDT is available on several crypto exchanges and can be bought with fiat currencies directly or even through a credit card.
- Risk. In their white paper, the Tether company claims there are several risks involved in the use of USDT. For example, the company could go bankrupt, their funds could be frozen, or their bank could go bankrupt. If this happens, USDT could become useless as there might be no fiat currency backing their value.
- ERC20 compatibility. In January 2018, USDT was issued by Tether Limited as an Ethereum-based token, which means it is compatible with the ERC20 standard and can be stored in wallets which support this.
- USDT stolen from Tether. In November 2017, more than 30 million tokens were stolen from the official Tether Treasury wallet.
- Bitfinex and Tether controversy.Tether Limited, the company who created USDT, is allegedly closely affiliated with the Bitfinex exchange. While Tether Limited claims that Tethers in circulation are backed up by fiat currency reserves, they discontinued relationships with auditors who were supposed to verify this claim. This incident has led to speculation and uncertainty about whether USDT is securely backed up by US dollar reserves.
- Market competition. There are other cryptocurrencies pegged to the US dollar in one way or another. The most popular of them are Steem Dollar, NuBits and BitUSD.
Once you have considered these factors and used this as a starting point for own research, you would be able to make a more informed decision about buying USDT.
