What is USDT on Binance? A Must-Read for Beginners

If you are just getting started with cryptocurrency, you will frequently see the term "USDT". When trading on Binance, USDT is almost unavoidable. Many beginners do not understand what USDT actually is, and why they cannot directly use fiat currency to buy Bitcoin, but have to buy USDT first. Today, let's explain this clearly. First, visit the Binance Official Website to check out USDT-related trading pairs, and download the Binance Official App to experience buying and selling USDT directly. For Apple users installing the app, please refer to the iOS Installation Guide.

What Exactly is USDT

The full name of USDT is Tether. It is a stablecoin, which means its price is pegged to the US dollar—1 USDT is always equal (or approximately equal) to 1 US dollar.

You can understand USDT as "dollar vouchers" in the cryptocurrency world. Just as you need to buy tokens at an amusement park to play the rides, USDT is the most universal "token" in the crypto space.

Why Do We Need USDT

1. Bridge Role: Most exchanges do not allow you to buy Bitcoin directly with certain fiat currencies. You need to convert your fiat into USDT first, and then use USDT to buy Bitcoin or other cryptocurrencies.
2. Hedging Tool: When you think the market is going to drop, you can convert your crypto holdings into USDT because the price of USDT hardly fluctuates.
3. Pricing Unit: The prices of most cryptocurrencies are quoted in USDT, just like goods are priced in fiat currencies.
4. Cross-Platform Compatibility: USDT can be used on all major exchanges, and transferring it is very convenient.

The Relationship Between USDT and the US Dollar

USDT is issued by Tether Limited, which promises that for every USDT issued, an equivalent amount of US dollars (or equivalent assets) is deposited in a bank as a reserve. This is why 1 USDT ≈ 1 USD.

However, in actual trading, the price of USDT may fluctuate slightly. Sometimes it is $0.999, and other times it is $1.001. But this fluctuation is extremely small and can generally be ignored.

How to Buy USDT on Binance

Method 1: P2P Trading (Highly Recommended)

P2P (Peer to Peer) is the most commonly used method for many users to buy USDT.

Specific steps:

1. Open the Binance App.
2. Tap "Trade" at the bottom and select "P2P".
3. Select "Buy" and choose USDT as the currency.
4. Choose your payment method (e.g., Bank Transfer, local e-wallets).
5. Enter the amount you want to buy.
6. The system will automatically match you with merchants.
7. Choose a merchant with good reviews and a high completion rate.
8. After placing the order, make the payment according to the receiving information provided by the merchant.
9. Click "Transferred, notify seller" after completing the payment.
10. Once the merchant confirms, the USDT will automatically arrive in your Binance account.

The entire process usually takes 5 to 15 minutes to complete.

Method 2: Quick Buy with Bank Card

Binance also supports the function of buying USDT directly with some bank cards:

1. Go to the "Buy Crypto" page.
2. Select USDT.
3. Choose to pay with a bank card.
4. Enter the amount.
5. Complete the payment.

This method is faster, but there might be higher exchange rate differences and fees.

Method 3: Deposit from Another Wallet

If you already have USDT elsewhere, you can transfer it directly to your Binance account:

1. In the Binance App, go to "Wallets" → "Deposit".
2. Select the crypto USDT.
3. Choose the network (TRC20 has the lowest fees, BEP20 is also very cheap).
4. Copy the deposit address.
5. Initiate a transfer to this address from another platform or wallet.
6. Wait for block confirmations, and it will arrive automatically.

What is USDT Used For

Use 1: Buying Other Cryptocurrencies

The most primary use is using USDT to buy other coins. In Binance's spot trading, a vast number of coins have USDT trading pairs:

• BTC/USDT (Buy Bitcoin with USDT)
• ETH/USDT (Buy Ethereum with USDT)
• BNB/USDT (Buy BNB with USDT)
• SOL/USDT (Buy Solana with USDT)

The operation is simple: select the USDT trading pair for the coin you want to buy, enter the buy amount and price, and place the order.

Use 2: Hedging and Preserving Value

When you judge that the market is going to drop, you can sell your crypto holdings for USDT. Since the price of USDT is essentially equal to 1 USD, the value of your assets is locked and won't shrink with a market crash.

Once you judge the market has bottomed out, you can use USDT to buy them back.

Use 3: Margin for Futures Trading

When trading futures, USDT is the most commonly used margin. USDⓈ-M Futures use USDT as the settlement unit.

Use 4: Earning Interest

You can deposit idle USDT into Binance's Earn products to generate interest. Although the interest rate might not be extremely high, since the USDT price is stable, it's equivalent to earning a "risk-free" interest income.

Use 5: Transfers

Using USDT to transfer funds to friends or business partners is very convenient. Choosing the TRC20 or BEP20 network means very low fees (often under $1), fast arrival times (a few minutes), and no geographical restrictions.

Different Networks of USDT

This is where beginners easily get confused. The same USDT can run on different blockchain networks:

ERC20 (Ethereum Network)

• The earliest USDT network
• High security
• Expensive transfer fees (a few dollars to tens of dollars)
• Slow arrival speed (a few minutes to tens of minutes)

TRC20 (Tron Network)

• Cheap transfer fees (around 1 USDT)
• Fast arrival speed (a few seconds to a few minutes)
• One of the most frequently used networks
• Most P2P withdrawals use TRC20

BEP20 (BNB Chain Network)

• Binance's own blockchain network
• Very cheap transfer fees
• Fast arrival speed
• The most convenient to use internally on Binance

Which Network to Choose

Important rule: The sending and receiving networks MUST be identical!

If you are withdrawing USDT from Binance to another platform and you select the TRC20 network, the receiving address on the other side must also be TRC20. If the networks do not match, the assets may be permanently lost.

For daily use, TRC20 or BEP20 is recommended due to low fees and fast speeds.

Differences Between USDT and Other Stablecoins

Besides USDT, Binance has other stablecoins:

For beginners, using USDT is enough, as its liquidity and acceptance are the highest.

Things to Note When Using USDT

Note 1: Choose the Right Network

This cannot be overemphasized. When transferring, you must confirm that the sending network and receiving network are the same. If you make a mistake, assets may be lost and cannot be recovered.

Note 2: Watch Out for USDT Price Fluctuations

Although USDT is called a stablecoin, it may briefly depeg (deviate from $1) during extreme market conditions. In 2022, there was an instance where USDT briefly dropped to $0.95. Although it quickly recovered, if you bought or sold heavily at that time, you might have been affected.

Note 3: Prevent Scams in P2P Trading

When buying USDT through P2P, pay attention to:

• Choose verified merchants
• Never complete transactions outside the Binance platform
• Only release crypto after confirming receipt of payment
• Do not blindly trust the temptation of "low off-platform prices"

Note 4: Sources of Large Amounts of USDT

If your account suddenly receives a large amount of USDT, do not rush to trade or withdraw it. This might involve money laundering or other illegal activities, which could lead to your account being frozen. USDT of unknown origin must be handled carefully.

FAQ

Will USDT go to zero?

In theory, there is a risk, but the probability is very low. USDT is issued by Tether and is backed by US dollar asset reserves. If Tether goes bankrupt or has a major scandal, the price of USDT could be affected. But as the stablecoin with the largest market cap, this risk currently appears quite small.

Is it legal to buy USDT?

In many jurisdictions, personal trading of cryptocurrencies is not illegal. Some countries may ban cryptocurrency-related business operations (such as opening exchanges or issuing tokens), but personal holding and trading of crypto is not explicitly prohibited by law. However, if it involves money laundering, fraud, or other illegal activities, it is certainly illegal. Check your local regulations.

Can USDT be directly withdrawn as fiat currency?

It cannot be directly withdrawn to a bank account in many regions. You typically need to use Binance's P2P feature to sell USDT to other users, and the counterparty will transfer fiat currency to you via bank transfer or other payment methods.

Is holding USDT the same as holding US dollars?

No. USDT is just a crypto token pegged to the US dollar, not actual US dollars. They have similar value, but their nature is different. USDT carries issuer risk, while the US dollar is backed by national credit.

Why is the price of USDT sometimes not exactly $1?

Because USDT is freely traded in the market, supply and demand relationships will cause slight price fluctuations. When panic causes massive sell-offs, USDT might drop below $1; when a large amount of funds floods into the crypto market to buy USDT, the price might be slightly above $1.

Is it safe to keep USDT on Binance?

Binance has a SAFU (Secure Asset Fund for Users) and a Proof of Reserves system to protect user assets. It is safe for short-term holding and trading use. If you are holding a large amount of USDT for the long term, you can consider diversifying and storing it across different platforms or wallets.