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Season 1Episode 21:36

Is USDT a dollar? Why is it everywhere when you buy crypto?

In this lesson Understand what a stablecoin is for, what it aims to track and its risks, and know you don't always need USDT first.

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Key takeaways

  1. USDT is a stablecoin designed to stay close to one dollar, not a bank deposit.

  2. Exchanges use it to price and swap assets, so a sale often ends in USDT.

  3. "Stable" is a design goal: the price can drift and redemption has conditions.

Quick check

Which statement about USDT is true?

Try it yourself

Sort 'dollar bank deposit', 'USDT' and 'BTC' into the right categories.

Show the answer

USDT is a stablecoin, a type of crypto asset. It is not a dollar bank deposit.

Transcript

  1. Sam

    It's called Tether, so it's basically dollars in the bank, right?

  2. Nexubo

    No. USDT, or Tether, is a stablecoin. It's designed to stay close to one dollar. But it isn't the dollars in your bank account, and it isn't risk-free cash.

  3. Narrator

    Exchanges often use it to price and swap assets. You might buy bitcoin with USDT, and when you sell, you may get USDT back, not a bank transfer.

  4. Nexubo

    'Stable' is a design goal, not a guarantee. The price can drift, and issuing and redeeming come with conditions. If you hold it, learn about the issuer and the platform risks too.

  5. Sam

    So I have to buy USDT before bitcoin?

  6. Nexubo

    Not always. Which currencies and trading pairs you can use depends on your region and your platform.

  7. Narrator

    What's wrong with this sentence? A stablecoin is not a promise to protect your money. Know what it's for, and know it can be unstable.

  8. Narrator

    If your phone breaks tonight, are your coins gone too? Next: where your coins actually live.

  9. Narrator

    Understand first, then act.