Tether, also known as USD Tether or USDT, is a cryptocurrency that is pegged to the value of the US dollar. This means that each Tether token is backed by an equivalent amount of US dollars held in reserve by the Tether company. The purpose of Tether is to provide a stable and reliable form of cryptocurrency that can be used for transactions and trading without the volatility that is often associated with other cryptocurrencies.
Tether was first launched in 2014 by a group of individuals and companies, including Brock Pierce, Reeve Collins, and Craig Sellars. The idea behind Tether was to create a stablecoin, a form of cryptocurrency that is pegged to a stable asset like the US dollar, so that it can be used for transactions and trading without the risk of losing value due to market fluctuations. Tether operates on the Bitcoin blockchain and it’s also available on Ethereum and Tron blockchain.
Tether operates on a 1-to-1 ratio with the US dollar, which means that each Tether token is backed by an equivalent amount of US dollars held in reserve by the Tether company. This reserve is audited regularly to ensure that it is sufficient to cover the outstanding Tether tokens in circulation. Tether can be used for transactions and trading just like other cryptocurrencies, and it is often used as a form of collateral for margin trading on crypto exchanges.
One of the main advantages of Tether is that it is highly liquid and widely accepted on crypto exchanges. It can be easily converted into other cryptocurrencies or fiat currencies, making it a popular choice for traders looking to move in and out of different assets quickly. Additionally, because it is pegged to the value of the US dollar, it offers more stability compared to other cryptocurrencies, which can be subject to significant volatility.
However, Tether has also been surrounded by controversies, such as a lack of transparency in regards to its reserve, and regulatory issues. Tether has also been criticised for its centralised structure and its close relationship with Bitfinex, a leading cryptocurrency exchange.