Quick Facts

Approximate Market Cap$81,000,515,625
Year Established2014
FounderBrock Pierce, Craig Sellars, Reeve Collins
Symbol/AbbreviationUSDT
UtilityStablecoin

One of Bitcoin’s disadvantages is its high volatility. The idea of having a stable digital currency existed for a long time. So, the real challenge was to create a cryptocurrency that is free of this unwanted feature.

Stablecoin is a cryptocurrency designed with the aim of minimizing price volatility.

The first stablecoins appeared in 2014. Their market  has grown rapidly since 2018. This market is however dominated by one single stablecoin called Tether.

What is Tether – Definition

Tether (USDT) is a stablecoin. A foundation called Tether Limited launched Tether in 2014 under the name RealCoin. Later they rebranded the coin’s name into Tether.

Tether introduced a fairly simple concept. This concept allowed the creation of a crypto asset that maintains a stable price.

 All circulating tether crypto coins are always secured by an equal amount of fiat currency. This includes the dollar, the euro, or the Japanese yen. For every USDT issued, the Tether foundation kept $1 USD in reserve. This kept the USDT price stabilized at around $1 USD.

Crypto investors use Tether to avoid the volatility of other cryptocurrencies. They also use Tether to keep the value within the crypto market.

Pros and Cons

Pros

  • Low transaction fees
  • Stable price
  • Easy to integrate

Cons

  • Identity confirmation required
  • Vulnerable to financial risks
  • Controlled by a company

The History

Tether appeared in 2014. Its trading started in 2015. Following the success of Tether, other stablecoins began to emerge.

Tether was initially released on the Bitcoin blockchain using the Omni protocol.  By the beginning of 2018, Tether began to expand to other networks.

In addition to the Omni version, Tether was also launched on the Ethereum blockchain in 2017. In 2019 Tether launched another version on Tron.

The idea behind Tether was to become a bridge between fiat currencies and cryptocurrencies.  Being the most traded crypto, today, it changed the way users look at cryptocurrencies.

How Tether Works

Unlike the high volatility in Bitcoin’s price, Tether keeps the crypto valuation stable. That is why Tether isn’t used as a medium of speculative investments. Its biggest use is as a medium of exchange and as a mode of storage of value.

Tether is a digital token backed by fiat currency. It allows users to exchange value in a decentralized manner while using a basic accounting unit.

One of the key drivers for Tether’s growth was its distribution through crypto exchanges.  As of December 2019, there are more than 4.1 billion Tether tokens in circulation.  Tether is still by far the most actively traded stablecoin.

Tether is often used by traders as a replacement for dollars. Instead of sending money through banks, it may be easily traded between exchanges or users. Tether is simple to purchase and trade. It is available everywhere people can buy cryptocurrencies. Tether is commonly utilized for storing funds on exchanges when traders believe the market is very volatile.

Advantages & Disadvantages

Advantages

Minimal Costs

When compared to other solutions, Tether offers extremely low fees.

Insignificant price volatility 

Tether’s currency reserves guarantee that one Tether is always worth one USD.

Simple integration

Tether is compatible with businesses, exchanges, and wallets that accept Bitcoin or any other cryptocurrency.

Disadvantages

Requires Third Party

Tether Limited and its cash reserves are entirely controlled, permissioned and trust reliant.

Deanonymization

Users can deposit and withdraw Tether anonymously. Yet, any buy or sale of Tether for fiat money needs account confirmation and authentication.

Lower return on investment. 

Investors are looking for better returns and may turn to alternative ways of gaining financial benefit.

Tether in the Global Crypto Market

The largest global stablecoin is Tether. It is also the stablecoin with the biggest trading volume in the whole crypto market.

In the crypto community, Tether is generally acknowledged. It appears on most exchanges.

There is no hard cap on the overall supply of USDT. Its release is only constrained by Tether’s own regulations. There are about 14.4 billion USDT tokens currently circulating. According to Tether, they are covered by $14.6 billion in assets.

FAQ

Who can use Tether?

Tether allows businesses to effortlessly use fiat currencies on blockchains, including exchanges, wallets, payment systems, finance, and ATMs. Individuals can also use tether-enabled platforms to transact with Tether tokens.

What real-world currencies does Tether support?

Tether initially supports US Dollars (USD), Euros (EUR), and the offshore Chinese yuan (CNH).

Is it safe to put savings in Tether?

Tether and other stablecoins are far riskier investments than a bank account. Tether is not FDIC-insured, therefore if the organization behind it collapses, the savings become unprotected.