In today’s world, understanding the true worth of your money is essential. But what determines the value of currencies like the USD vs. USDT in today’s market? People assume that because the USDT is backed by USD, their values should be the same. However, this isn’t the case, especially in the black market.
Economics 101: How Things Get Their Value
In my SS1 Economics class, I learned that the world’s economic system is built upon the concept of determining the value of a product by its use case and acceptability. This principle shapes how goods and services are valued and exchanged.
Where can this product be used? How can it be used? Can it move freely? What are its restrictions? These are the questions that determine the value of a good, service, or currency.
Simply put, where and how you can use something affects its value. For currencies like USDT and USD, this principle holds true.
Comparing USD vs USDT: How Usefulness Changes Value
Imagine two platforms sell dollars: Platform A and B.
Platform A: Restricts what you can do with your dollar
- Doesn’t allow you to send your dollar to a domiciliary account
- Bars you from accessing a dollar card for online spending
- Doesn’t allow you to swap to local currency (NGN)
- Doesn’t allow you to cash pickup your dollar
Platform B: Gives you a lot of possibilities to spend your dollar by:
- Enabling you to send your dollar to a domiciliary account
- Issuing dollar cards for online spending
- Allowing you to swap to local currency (NGN)
- Allowing you to cash pickup your dollar
Both platforms hold the same dollar currency, but Platform B’s dollar has more value for you and the rest of the market because of its diverse use case and acceptability. Therefore, the cost of $1 on Platform A will be cheaper than the cost of $1 on Platform B.
This is why a price difference exists between USD and USDT in the black market.
How Regulations & Restrictions Affect Their Value
The Nigerian government has placed many restrictions on cryptocurrency, making it more difficult to use the USDT than the USD. Although the USD backs USDT, the restrictions mean their values differ. Even $1 in cash has a different value from $1 in a dorm account because banks make it difficult to send hard currency to other banks due to regulations and other inefficiencies.
That’s why when you want to buy dollars into a dorm account, different banks have different rates, because of use case and acceptability.
Making Your Dollar More Valuable
At Mustard.ng, we understand the importance of enhancing the value of your money. That’s why we’re rolling out more ways for you to use your dollar effectively. For example, you can now issue a Mastercard dollar card to easily spend your dollar anywhere online.
At Mustard.ng, we understand the importance of enhancing the value of your money.
Nosa Nick
Conclusion
Understanding the true value of your money empowers you to make better financial decisions. By considering the use case and acceptance of currencies like USD vs. USDT, you can ensure your money works harder for you.
