Search

What is Tether Cryptocurrency?


What is Tether (USDT)?

Tether (USDT) is a blockchain-based cryptocurrency in which the same amount of U.S. dollars backs the tokens in circulation, making it a stable coin with a price pegged to $1.00. Stable coins track the traditional fiat currencies, like the dollar, the euro, or the Japanese yen, held in a designated bank account.


Tether tokens, formerly launched as Realcoin in 2014 was developed by the crypto exchange BitFinex. They rebranded as Tether in November by Tether Ltd, and it started trading in February 2015. They are the native tokens of the Tether network, and they trade under the symbol USDT. As of October 2021, Tether is the fifth-largest cryptocurrency by market capitalization, worth more than $68 billion.


Why do investors use Tethers?

Tethers aim to keep cryptocurrency valuations stable, compared to the wide swings in the prices of other popular cryptocurrencies like Bitcoin and Ethereum. The primary use is to be used as a medium of exchange and as a storage medium instead of making speculative investments.


Tether specifically belongs to the category of fiat collateralized stablecoins. This means that a fiat currency like the U.S. dollar, the euro or the yen backs each cryptocurrency in circulation. To simplify it, the stable coins have the same value as those fiat currencies. It just copies them. Other stablecoin categories include crypto-collateralized stable coins, which use reserves as collateral, or non-collateralized stablecoins. Non-collateralized stablecoins don't have any collateral but operate similarly to a reserve bank to maintain the necessary supply of tokens, depending on the economic situation.


Tether was designed to build the necessary bridge between fiat currencies and cryptocurrencies and offer stability, transparency, and minimal transaction charges to users. It is pegged against the U.S. dollar and maintains a 1-to-1 ratio with the U.S. dollar in terms of value. But, there is no guarantee that there is any right of redemption or exchange of Tether for real money. That is - Tethers cannot be exchanged for U.S. dollars.


Just note that we are not financial advisors or do not encourage you to invest in this cryptocurrency. Just remember to invest smartly and acquire the necessary knowledge to be successful.

More Posts