Tether Stablecoin Explained for Beginners

Tether is a stablecoin, which means its value is pegged to a fiat currency, in this case, the US dollar.

Tether was created in 2014 by the company Tether Limited, a subsidiary of the cryptocurrency exchange Bitfinex.

The idea behind Tether is to provide a stable store of value in the cryptocurrency market, where prices can be highly volatile.

Tether is backed by a reserve of US dollars, which is held in a bank account, and is said to be fully collateralized, meaning that for every Tether token in circulation, there is a corresponding US dollar in the reserve.

USDT, or Tether, is a cryptocurrency that aims to maintain a 1:1 exchange rate with the US dollar.

It's a type of stablecoin, which means it's designed to reduce the volatility of cryptocurrency investments. USDT is a fiat-collateralized stablecoin, backed by a fiat currency like USD, CAD, or AUD.

Tether was created to bridge the gaps between fiat currencies and blockchain assets, offering transparency, stability, and low fees for USDT users.

As of 2024, USDT is still the world's most widely used stablecoin, with a market cap of over $110 billion.

USDT is a pegged cryptocurrency that's only as volatile as the U.S. dollar, making it a less riskier option for investors.

It's widely accepted by many vendors and protocols within the blockchain ecosystem, giving users seamless access to a platform-agnostic, blockchain-based fiat-backed stablecoin.

Tether's large reserves make it immune to market risks like Black Swan events, ensuring that its value remains stable.

USDT can be exchanged for a variety of goods at different vendors or used to exchange for a different currency, making it incredibly versatile.

Tether was created to bridge the gap between cryptocurrencies and fiat currencies, giving users a permissionless way to send crypto to anyone with speed, transparency, and low cost.

USDT is a stablecoin that can be purchased on many popular exchanges like Kriptomat, making it easily accessible to users.

Tether's flexibility makes it a desirable hedge for traders and users alike, allowing them to easily move money between cryptocurrency markets and the traditional financial system.

Tether's reserves are verified via their website, using Proof Of Reserves, which means that at any time their reserves will be equal to or greater than the number of Tether in circulation.

USDT has been accepted and used for years, holding legitimacy that few projects can match, and is widely used for various purposes such as lending, purchasing NFTs, and participating in ICOs.

Tether's value is pegged to the U.S. dollar, making it a less volatile option for investors, and is also available in other currencies like the euro, the offshore Chinese yuan, the Mexican peso, and gold.

USDT is issued on various blockchains, including Bitcoin, Ethereum, EOS, Tron, Algorand, and OMG Network, making it a platform-agnostic stablecoin.

The USDT stablecoin has a circulating supply of 40,805,169,352 tokens, which can fluctuate based on demand and market conditions. This supply can increase or decrease as users purchase or issue new tokens.

USDT tokens can be purchased on the secondary market or exchanges, providing users with a convenient way to acquire the stablecoin. However, it's worth noting that USDT does not support staking or yield farming, so users must purchase or issue new tokens to acquire more.

Tether's security is handled by the underlying blockchain networks, such as Ethereum, EOS, Tron, Algorand, and OMG Network, which conduct regular audits to ensure the code is secure and compliant with the current framework.

The circulating supply of USDT tokens is a staggering 40,805,169,352, which can fluctuate based on demand and market liquidity.

Tether (USDT) tokens can be bought on the secondary market or exchanges.

USDT's circulating supply is subject to change, and it's not uncommon for it to increase or decrease as market conditions shift.

USDT does not support staking or yield farming for its tokens, meaning you can't earn interest or rewards by holding onto them.

Tether's USDT token is secured by the blockchain networks it's issued on, such as Ethereum, EOS, Tron, Algorand, and OMG Network, which use Proof-of-Work or Proof-of-Stake to keep the networks secure.

These platforms conduct regular audits to ensure the code is up-to-date, secure, and compliant with the current framework, providing an additional layer of security for USDT.

Tether also ensures that USDT remains compliant with each network, adding another level of security to the token.

Tether uses Proof Of Reserves, which means that at any time their reserves will be equal to or greater than the number of Tether in circulation, allowing users to verify the security of the token.

Tether's reserves are intended to be a mix of cash, cash equivalents, and other assets, and they periodically publish reports from third-party auditors to assure users of their solvency.

As of March 3, 2024, Tether reported assets of $99.45 billion for USDT, with 84.58% of its reserves in cash, cash equivalents, short-term deposits, and commercial paper, providing a solid foundation for the token's security.

The value of USDT is entirely dependent on Tether’s reserves, and as long as Tether is backed 1:1, USDT will be worth 1 US Dollar, providing a stable and secure store of value.

Tether's reserves are held in a variety of assets, including U.S. Treasury bills, corporate bonds, precious metals, bitcoin, and other investments, which provides a diversified portfolio and reduces the risk of the token's security.

Tether's contentious history begins with its launch on the market, but the company has since made efforts to increase transparency and security, including publishing regular reserve reports and using Proof Of Reserves.

Stablecoins like USDT peg their value to an external reference, such as the US Dollar, which helps maintain their stability.

A Proof of Work (PoW) is a piece of data that is difficult to produce but easy for others to verify, which is a fundamental concept in cryptocurrency mining.

In contrast, Proof of Stake (PoS) relies on users who hold tokens on the network to mine or validate transactions, a different approach to securing the network.

Black Swan events can have a significant impact on the cryptocurrency market, often resulting in financially devastating consequences due to their unexpected nature.

Tether (USDT) can be used to exchange for a variety of goods at different vendors or used to exchange for a different currency. It's incredibly versatile and can be used almost anywhere a user wants to transfer or transact value.

Tether can be purchased on many popular exchanges like Kriptomat, and it's also widely accepted by many vendors and protocols within the blockchain ecosystem as a payment method and means of exchange. This makes it a desirable hedge for traders and users alike.

To store your USDT, you can choose from hardware wallets, software wallets, or online wallets. Hardware wallets like Ledger and Trezor offer the most secure option with offline storage and backup, but they can be more expensive and involve a bit more of a learning curve.

Tether (USDT) is widely accepted by many vendors and protocols within the blockchain ecosystem as a payment method and means of exchange.

You can purchase Tether on many popular exchanges like Kriptomat. It can be exchanged for a variety of goods at different vendors or used to exchange for a different currency.

Tether's flexibility makes it incredibly versatile and it can be used almost anywhere a user wants to transfer or transact value. This includes lending, purchasing NFTs, and participating in ICOs.

Using USDT for transactions, especially cross-border transfers, can be significantly cheaper than sending fiat currency. The low transaction fees associated with USDT make it a viable alternative option for international payments and remittances.

Tether's large reserves mean it doesn't suffer from market risks such as Black Swan events, making it a desirable hedge for traders and users alike. This stability is one of the reasons why Tether has been accepted and used for years.

You'll want to consider what you want to use your USDT wallet for when deciding which type to choose.

Hardware wallets or cold wallets provide the most secure option with offline storage and backup.

Both Ledger and Trezor hardware wallets offer storage solutions for USDT, but they can be more expensive and involve a bit more of a learning curve.

Software wallets are free and easy to use, available as smartphone or desktop apps, and can be custodial or non-custodial.

Non-custodial wallets make use of secure elements on your device to store the private keys, but are seen as less secure than hardware wallets.

Online wallets or web wallets are free and easy to use, accessible from multiple devices using a web browser, but are considered hot wallets and less secure.

For more experienced frequent traders, online wallets may be suitable for holding smaller amounts of USDT.

USDT transactions can be processed quickly, depending on the speed of the underlying blockchain networks it operates on.

USDT transactions on Solana will be processed much quicker than ones on Ethereum, due to the networks' differing capacity.

This rapid processing time is a significant difference from conventional payment systems, which can take days to settle some transactions, like international ones.

For example, international transactions can take days to settle, making USDT's fast transaction times a game-changer.

Tether was originally launched on October 6th, 2014 as Realcoin by Brock Pierce, Reeve Collins, and Craig Sellars.

The founders allowed users to create and trade smart-contract-based properties and currencies on Bitcoin's blockchain, utilizing the Omni Protocol.

In November 2014, Tether CEO Reeve Collins announced that the name of their token, Realcoin, would be changed to Tether (USDT).

Tether was rebranded from Realcoin to Tether (USDT) in November 2014.

The company was initially based on the Bitcoin blockchain but has since expanded to support multiple blockchains, including Ethereum, Avalanche, Kava, Polka, TRON, EOS, Algorand, and Solana.

By 2017, Tether's international transfers were blocked by US Banks, leading to a lack of transparency and speculation about the token's reserves.

Tether's international transfers were blocked by US Banks in April 2017.

The amount of outstanding Tether (USDT) grew from $10 million to almost $2.8 billion in September 2018.

Tether's Taiwanese legacy banking partners terminated their banking relationship with the company in 2017 due to concerns about the lack of KYC and other checks in the token.

Tether managed to find new banking partners in Puerto Rico and the Bahamas, allowing the company to continue its operations.

Tether is registered in the British Virgin Islands and lists JL van der Velde as its Chief Executive Officer.

The company and Bitfinix are both owned by iFinex.

Tether's Stablecoins are pegged to one unit of fiat currency or precious metal, meaning a single unit of USD₮ should maintain a market price of one US dollar or very close to it.

Tether was initially issued on the Bitcoin blockchain via the Omni Layer protocol, but can now be issued on any chain that Tether currently supports. Tether currently supports the Bitcoin, Ethereum, EOS, Tron, Algorand, and OMG Network blockchains.

Each Tether (USDT) issued is backed by one US dollar worth of assets, and Tether uses Proof Of Reserves, which means that at any time their reserves will be equal to or greater than the number of Tether in circulation.

Tether's contentious history begins with its launch on the market in January 2015, where Bitfinex allowed Tether (USDT) to be traded on their exchange platform for the first time.

The value of Tether (USDT) is entirely dependent on Tether’s reserves, and as long as Tether is backed 1:1, Tether will be worth 1 US Dollar.

Tether (USDT) is a pegged cryptocurrency, meaning its value is only as volatile as that of the U.S. dollar, and it is widely accepted by many vendors and protocols within the blockchain ecosystem as a payment method and means of exchange.

Tether's large reserves don't suffer from market risks such as Black Swan events, making it a desirable hedge for traders and users alike.

USDT is a type of cryptocurrency called stablecoins, which avoids the extreme volatility of untethered cryptocurrencies by tying their values to the price of a traditional currency like the U.S. dollar.

Tether was launched as RealCoin in July 2014 and was rebranded as Tether (USDT) in November 2014, originally based on the Bitcoin blockchain.

Tether issues tokens pegged to the euro, the offshore Chinese yuan, the Mexican peso, and gold, but none with more than a fraction of the market cap of its U.S. dollar-pegged USDT tokens.

USDT differs from other cryptocurrencies in that its value is pegged to the U.S. dollar, making it a less volatile option for traders and investors.

Tether aimed to give users seamless access to a platform-agnostic, blockchain-based fiat-backed stablecoin pegged to the U.S. dollar, and it has solved one of crypto’s most elemental challenges – the volatility of cryptocurrencies restricted their real-life utility in a fiat-denominated world.

Tether's Business Model is built around charging transaction fees for new fiat deposits on their platform, currently at 0.1% with a minimum deposit amount of USD100,000.

Tether makes money by charging transaction fees for new fiat deposits, which is a significant revenue stream for the company.

They also charge fees for redemptions of their tokens, which adds to their overall income.

A verification fee is charged for new accounts to undergo the KYC (Know Your Customer) process, another source of revenue for Tether.

This fee-based model allows Tether to generate revenue without exposing themselves to market risks, such as Black Swan events, due to their large reserves.