What is Tether (USDT)?
Tether (USDT) is the world’s first stablecoin (a cryptocurrency that mimics the value of a fiat currency). It was originally released in 2014 under the name Realcoin by Bitcoin investor Brock Pierce, entrepreneur Reeve Collins, and software developer Craig Sellers.
USDT was originally issued on the bitcoin protocol through the Omni Layer, but it has since then migrated to other blockchains as well. In fact, as you can see on the chart below, most of its supply exists on Ethereum as an ERC-20 token. It’s also issued on several other blockchains, including TRON, EOS, Algorand, Solana, and the OMG Network.
The creator of the first and most widely used stablecoin, Tether Limited is a company operating a platform that issues blockchain-based assets linked to the price of government monies.
Today, Tether supports four stablecoins: the U.S. dollar (USDT), the Chinese Yuan (CNHT) and the Euro (EURT), as well as a stablecoin backed by 1 oz. of gold (XAUT).
First launching with USDT in 2014, the company’s idea was to make government monies more compatible with newer crypto assets, which traded 24/7 on an active global market.
Each USDT token is redeemable for a corresponding U.S. dollar held under custody by Tether Limited. The total value of all USDT is said to be equal to the reserves held by the firm.
Once a USDT is newly minted and issued, it can be transferred, stored and spent by a variety of businesses (exchanges, wallets, financial services) and individual traders looking to avoid the sometimes extreme volatility of the cryptocurrency markets.
Today, stablecoins are an emerging class of crypto assets that are beginning to find use cases beyond the world of trading, including in sectors like traditional cross-border payments.
As of 2020, USDT remains the largest and most widely used stablecoin.
However, the concept has been embraced by the world’s largest companies. For example, Facebook announced in 2019 that it was seeking to launch its own stablecoin, named Libra.
Who created Tether?
The origins of Tether date back to the early 2010s, when technologists first began to theorize that Bitcoins might be modified so they could represent new kinds of assets.
As it so happened, two groups began to work on the idea that the Bitcoin blockchain could be a platform used for issuing fiat currencies – a startup called Realcoin and the cryptocurrency exchange Bitfinex.
Eventually, the two projects would merge efforts, resulting in the formation of Tether Limited.
How does Tether work?
Tether Limited accepts fiat deposits and withdrawals on behalf of clients, and is responsible for minting and destroying Tether tokens in accordance with reserves they administer.
Tether on Bitcoin
Tether was originally launched and issued on the Bitcoin blockchain via the Omni Layer protocol, a platform used for creating and trading digital assets on top of Bitcoin.
This technology enables the minting and burning of Tether tokens based on the amount under custody. The circulation of Tethers can also be tracked and reported via the protocol.
Tether’s ledger is stored on the Bitcoin blockchain thanks to Omni, and the Omni Explorer allows users to view their verified transactions there. As of 2020, Tethers are also available as assets on Liquid, a Bitcoin sidechain.
Tether on Other Blockchains
Tether is now available on other blockchains, including Ethereum (ETH), Tron (TRX) and EOSIO (EOS), which allow for the creation of new assets natively on their blockchains.
To date, the largest market for USDT is on Ethereum.
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Cryptocurrency