It’s a known fact that inflation is one of the major macroeconomic problems of any economy in the world, but is there any way USDT trading can help stop that? Let’s find out.
Nigeria was once named the third fastest-growing economy in the world due to its initial rapid economic growth and stability. In the past six years, Nigeria fell off from this expectation and glory projected by world economists due to many financial challenges which invaded the country unawares.
The inflation rate in Nigeria grew from a single-digit rate to a double rate, tripling the prices of goods and services and weakening the local currency, Naira, in the Forex market.
The Naira has become so volatile and worthless compared to the past years due to inflation. Investors have lost faith in the currency as it loses its value daily. On the other hand, the central bank has made strict foreign exchange policies to control inflation, creating a scarcity of dollars.
How can people protect their Naira against this severe inflation by using the dollar while navigating the scarcity of the dollar in the country?
The best way is to trade and invest in Tether (USDT).
This article discusses the meaning of USDT and how USDT trading can help control inflation in Nigeria.
What Is Tether USDT?
Tether (USDT) is a type of cryptocurrency popularly known as stablecoins. Apart from USDT, other types of stablecoins are USDC and Binance USD.
The value of stablecoins was pegged to a 1:1 ratio of fiat currency, especially the US Dollar. This means that if a user has 1 USDT in his wallet, he can convert the USDT into the actual value of 1 dollar.
You can make transactions with USDT depending on your location and the company you’re dealing with. Some foreign companies accept USDT as a payment method.
How USDT Can Help Control Inflation
Inflation is caused by the weakness and volatility of the local currency compared to other currencies in the Forex market, which makes it less appealing. As the local currency begins to lose value, it also loses its purchasing power and prices of goods and services begin to rise.
People will seek alternatives to protect money from losing value as the currency loses value. Hence, many prefer to save in stronger currencies like the dollar.
Since the value of USDT is pegged to the value of the US dollar, it is only best for people to invest their volatile fiat currency like Naira in a more stable one in the form of USDT. They can sell it whenever they want and get back their Naira at the current dollar rate.
This also helps to navigate the centralized financial institutions and banks, giving people complete control of their money.
USDT transaction is also faster and less expensive, unlike in the centralized financial setting where regular foreign currency transfer takes days and charges can be as high as 10%.
There are many assets investors can choose to save their money in, but USDT is a better option because it is more stable than other volatile instruments like stock, crypto assets etc.
Is It Safe To Keep Naira Investment In USDT?
Of course, it is safe to save Naira in USDT, especially for risk-averse investors who want to invest in cryptocurrency yet can’t withstand the harsh waves of volatility.
However, there are some factors you should be aware of before investing in USDT.
- Stablecoins were made stable and not volatile like other cryptocurrencies; hence, their prices do not change significantly. By investing in USDT, the profits will not be as stunning as other cryptocurrencies.
- Holding stablecoins like USDT for long may yield interest but hold for so long may be a riskier form of saving since the native currency may have gained more value than it had when it was invested.
- You can lend and stake USDT to generate more profits for yourself. You can get paid by betting your stablecoins and earn interest when you lend stablecoins to borrowers.
- Tether (USDT) is the most popular stablecoin, and it has grown by 0.16% in 2022 and by 0.42% over the past three years.
Risks Associated With Holding USDT
Stablecoins like USDT are a part of the general cryptocurrency market, which is relatively unregulated, there may be dangers and risks attached to them, and many controversies have surrounded them.
- It is still not proven that these stablecoin suppliers have enough liquidity to maintain the 1:1 fiat ratio during a crisis. However, stablecoin providers are only required to maintain liquidity reserves equivalent to the market value of their stablecoins. It then fluctuates according to the forces of demand and supply; hence, there’s no automatic 1:1 ratio.
- In the case of a global economic crisis leading to a worldwide recession and high inflation, many people will pull their investments out of riskier assets and bonds, making their value fall and the dollar more appealing.
When investors may also panic and decide to change their USDT to dollars, it will become difficult for the stablecoin providers to repay everyone at a 1:1 ratio.
This will significantly affect the global financial system and the crypto market.
How To Sell USDT In Nigeria
There are many platforms where you can sell USDT in Nigeria but the best and recommended platform to do that is Prestmit.
Prestmit is an online digital asset trading platform that allows users to trade their digital assets seamlessly at the best rates.
Prestmit offers users a unique trading experience on the platform and some fantastic features that will aid their trades.
With the Prestmit app, you can sell your USDT in minutes and get paid instantly.
How Much Is $100 USDT In Nigeria?
Since USDT is equivalent to USD on a 1:1 ratio, we can say that a $100 USDT equals $100. Though there may be variations, they are always smaller than 0.1%.
However, according to the Prestmit calculator, $100 USDT in Nigeria is 70,000 at the rate of 700.
Conclusion
The inflation rate in Nigeria is alarming, and people seem to have lost faith in the Naira. This pushes them to seek alternative ways to protect their money from losing value to extreme inflation.
USDT investment and trading have become very appealing to achieving this since it claims to have a 1:1 ratio with the dollar.
