Tether: Everything to Know

Overview

Tether, also known as USDT, is a stablecoin cryptocurrency that is meant to be pegged to the U.S. dollar. The idea is for Tether and stablecoins like it to provide a stable store of value for cryptocurrency traders. One of the primary advantages of Tether is that traders using it do not have to move their funds between different cryptocurrency exchanges. Users can therefore skip the step of converting their funds into U.S. dollars, an action that is time-consuming and expensive.

Tether is designed to maintain a 1:1 ratio with the U.S. dollar. For every Tether token that is issued, an equivalent amount of U.S. dollars should be held in reserve.

A Brief History

In 2014, a group of cryptocurrency enthusiasts formed a company called Tether Limited. This company created Tether. The company wanted to establish a stablecoin pegged to the U.S. dollar. The idea was to create a cryptocurrency that would be less volatile than other cryptocurrencies. Cryptocurrencies that are not stablecoins can experience significant price swings in a short amount of time.

Initially, Tether was only available on the Bitfinex cryptocurrency exchange. It quickly gained popularity and was eventually listed on other exchanges as well. As of 2023, Tether is one of the most widely used stablecoins in the cryptocurrency world.

What is Tether?

Tether is a stablecoin pegged to the U.S. dollar. It is designed to maintain a 1:1 ratio with the U.S. dollar. Tether is built on many different blockchains including Omni, Ethereum and Avalanche. It is designed as a digital token that can be sent between users. Tether can be sent or received, as well as used to purchase goods and services. A number of merchants accept Tether.

Tether provides a stable store of value for cryptocurrency traders. There have been concerns about the legitimacy of Tether and whether it is actually backed by U.S. dollars. Some critics have accused Tether of being a "phantom" stablecoin. They question whether Tether Limited has enough U.S. dollars in reserve to back all of the Tether coins currently in circulation.

Tether has also been the subject of controversy because of its relationship with the Bitfinex cryptocurrency exchange. In 2018, it was revealed that Bitfinex had used Tether to cover up a $850 million loss. This led to concerns about the legitimacy of Bitfinex and Tether.

Getting Started

• Purchase Tether. Tether can be purchased on a variety of cryptocurrency exchanges.
• Store Tether. It can be stored in any wallet that supports the Omni protocol or other other native blockchains.
• Send or receive Tether. Tether can be sent to or received from other users.
• Use Tether to purchase goods and services. A variety of merchants accept Tether.

Unique Aspects

• Pegged to the U.S. dollar. Unlike other cryptocurrencies that can experience price swings, Tether is designed to remain stable in relation to the U.S. dollar. This makes Tether a popular choice among traders who want to move money between cryptocurrency exchanges. Tether helps them move money without being exposed to market volatility.
• Backed by real-world assets. Tether Limited holds dollars in reserve to back the value of Tether. For every Tether in circulation, Tether Limited holds a dollar in reserve. This makes Tether more stable than other cryptocurrencies that are not backed by real-world assets.
• Built on many blockchains. Tether transactions are processed on many different chains. This makes Tether more secure than other cryptocurrencies that are built on their own respective blockchains.