What Is Tether(USDT)? In Simple Terms

Tether is a type of cryptocurrency known as a stablecoin. Stablecoins are designed to be pegged to a fiat currency, such as the US dollar. Tether is one of the most popular stablecoins, and its price is always equal to one US dollar. One of the goals of Tether is to protect investors from the volatility of the cryptocurrency market.

One of the challenges of investing and trading in cryptocurrencies is the extreme price volatility, which is caused by a variety of factors. This volatility can lead to market stress, and traders often convert their holdings to Tether to protect their capital from losses. Tether has lower volatility than most other cryptocurrencies, and its price is relatively stable.

Cryptocurrencies are a type of digital money that operates on the blockchain technology. Tether was originally launched on the Bitcoin blockchain, but it is now also available on other blockchains, such as Ethereum and Tron.

What Is Tether (USDT) ?

Tether, the symbol of USDT (United States Department of the Treasury), is a stablecoin, which means that it is designed to maintain a stable value relative to a fiat currency, such as the U.S. dollar.

Tether claims that it holds one U.S. dollar in reserve for every Tether token in circulation. This means that Tether is backed by real dollars, and its value is therefore directly linked to the value of the U.S. dollar. As a result, it experiences very low price fluctuations.

USDT stands as the world’s first and most popular stablecoin, ranking among the top five crypto currencies globally. Initially launched as Realcoin in July 2014, it later rebranded as Tether(USDT) in November of the same year.

Tether tokens can be pegged to a variety of currencies, but the most common is USDT, which is backed by the US dollar. Other Tether tokens include EURT (backed by the euro), CNHT (backed by the Chinese yuan), and XAUT (Tether Gold) backed by one ounce of gold.

Who Created Tether (USDT) ?

 Tether tokens are issued by Tether Limited, a company based in the British Virgin Islands. Tether’s website states that it is registered in Hong Kong and operates through various offices in the United States. The primary company behind Tether and the Bitfinex exchange is iFinex. (Bitfinex is a crypto currency exchange based in Hong Kong and ranks among the world’s largest crypto currency exchanges).

Ludovicus van der Velde serves as the CEO of the Bitfinex and Tether, with Philip Potter being the chief strategist for both companies. The whitepaper for Tether mentions Brock Pierce, Reeve Collins, and Craig Sellars as its founders. In 2014, they embarked on their project with the aim of offering a stable coin linked to the US dollar.

  • Brock Pierce, a former Hollywood actor, entrepreneur, and cryptocurrency industry figure, was selected as the Bitcoin Foundation’s executive director in May 2014. Additionally, he is the owner of Bitfinex and Tether Limited.
  • Reeve Collins, an entrepreneur and former CEO active in online advertising and marketing, previously founded and served as CEO of vAtomic Systems.
  • Craig Sellars, a software engineer and blockchain specialist, is one of the founders of the Omni Layer protocol, a second-layer protocol on the Bitcoin blockchain.

The Purpose of Tether (USDT)

The Purpose of Tether USDT

 The primary purpose of Tether is to mitigate price fluctuations in the digital currency market. The presence of price fluctuations in this market exposes some traders and investors to high risks in their transactions. Consequently, some of them may quickly sell their digital currencies to avoid losses resulting from significant price decreases.

The stability of the price and value of this coin has also attracted the attention of many traders and investors. Because in countries where the inflation of their local currency is very high, if the price of the dollar changes due to inflation or other factors, then the price of this currency will also change. Therefore, if someone invests in Tether, they are safe from losing their capital.

Tether Limited claims that Tether can be used to store, send, and receive digital tokens on a peer-to-peer basis, globally, quickly, and securely. Holding customer assets in Tether means that exchanges can reduce transaction fees until a customer is ready to withdraw their funds in the form of dollars. Tether can then be exchanged for those dollars. Traders also use USDT to preserve their profits during market volatility and to transfer money from one platform to another.

How Does Tether (USDT) Work?

Tether was initially distributed on Omni Layer, a platform on the Bitcoin blockchain, but was later released on several other blockchains, including Bitcoin, Ethereum, Tron, Solana, and Algorand.

Unlike many digital currencies, the value of USDT is not dependent on its supply and demand in the market. Instead, its price is solely determined by the value of the US dollar. Tether serves as an intermediary between fiat currencies and cryptocurrencies, providing a stable, transparent, and low-cost transaction platform for its users.

The claim of USDT’s value being equal to 1 US dollar is a subject of debate, as the US dollar itself no longer has a specific backing and has not been tied to gold since 1971. In fact, the value of the US dollar relies on the economic, political, and military power of the United States, as well as its global acceptance as a currency for international transactions.

Tether is currently one of the most popular cryptocurrencies in the crypto market. However, to date, Tether Limited has not provided any guarantee for the right to redeem or exchange this digital currency for real money.

Applications of Tether

Tether is one of the most important and widely used digital currencies in the market. It provides greater flexibility for investors and is used as an alternative to the US dollar in many popular exchanges.

As Tether is another blockchain asset, converting from Bitcoin or any other cryptocurrency to USDT allows for easy trading between cryptocurrencies with minimal price differences, offering protection against market fluctuations.

Like most cryptocurrencies, Tether can be used in international trading systems. It can be sent around the world without having to pay additional transfer fees. The point is that sending Tether is as easy as Bitcoin globally.

Types of Tether Networks

Types of Tether Networks

Tether was initially introduced on the Bitcoin blockchain using the Omni layer but is now less frequently used due to its slower speed and higher fees. However, other versions have been introduced as ERC20 tokens (using the Ethereum blockchain) and TRC20 tokens (using the Tron blockchain).

This means that there are three types of Tether with different storage methods. The only difference between them is related to the speed of transfer and transaction fees, as each blockchain has higher speed or lower fees depending on its features.

When you want to transfer your Tether to a cryptocurrency wallet, you first need to determine the type of Tether; because different types of this currency are not compatible with each other. If you deposit to the wrong wallet, you will lose your funds.

How Much USDT Is in Circulation?

Tether, an algorithmic stablecoin with a market capitalization of over $80 billion and the ticker symbol USDT, has approximately 83 billion Tether tokens (USDT) in circulation, which number may increase or decrease depending on demand and market volatility.

How Is Tether Network Security Ensured?

Tether network security relies on several factors:

  • Blockchain: The security of the Bitcoin blockchain, which is the foundation of the Tether network, is very high and uses the Proof of Work algorithm to maintain consensus and prevent attacks.
  • Tether Reserves: Tether claims to hold one US dollar in reserves for every USDT token in circulation. It regularly publishes financial reports on its website and undergoes periodic audits. The security of Tether tokens depends on the accuracy and transparency of these reserves.


In conclusion, Tether has emerged as a significant player in the realm of digital currencies, providing price stability and protection against market fluctuations to users in the digital currency market. Since its introduction in 2014, USDT has captured the attention of many market participants and, at one point, accounted for over 99% of the total stablecoin market volume.

However, over time, other centralized and decentralized stablecoins have entered the market.Powerful competitors to Tether include USDC by Coinbase and BUSD by Binance, both created by major cryptocurrency exchanges, as well as DAI, offered by MakerDAO, which is the most famous decentralized stablecoin.

Tether remains one of the most popular stablecoins in the market, thanks to its benefits such as price stability, fast transactions, low transaction fees, ease of access, high liquidity, and its use as trading pairs in various cryptocurrency markets.


  • Is Tether (USDT) always pegged to one US dollar?

Yes, Tether (USDT) is minted with the backing of the US dollar and is always pegged to one US dollar. However, due to supply and demand dynamics, there may occasionally be slight price deviations.

  • Does Tether have any backing other than the US dollar?

Yes, Tether issues tokens backed by fiat currencies such as the US dollar, euro, and yuan. Additionally, there are Tether stablecoins backed by gold.

  • What are the transfer fees for Tether (USDT) transactions?

The transfer fees for Tether (USDT) transactions depend on the type of Tether, network congestion, network speed, and supply and demand.

  • How is Tether mined?

Tether (USDT) is not mined like Bitcoin. Tether Limited issues USDT tokens directly into the market.

  • Can Tether freeze a user’s wallet balance?

Yes, Tether’s smart contract is designed to allow the issuer company to freeze the balance in any wallet at any time.

  • How to track Tether transactions?

To track USDT transactions, you can use compatible blockchain explorers for the specific network your Tether is on. For example, you can use Etherscan for ERC20 USDT or TronScan for TRC20 USDT.

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