A Quick Guide To Tether (USDT)

Denys Chubchyk
2 min readOct 3, 2021

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Tether was created and founded as the first stablecoin by Brock Pierce, Craig Sellars and Reeve Collins in July 2014.

Cryptocurrencies are volatile and not stable, which makes them an impractical currency for commerce. But cryptocurrency volatility is what solves the problem of high inflation rates. It is a natural hedge against inflation because the value of a cryptocurrency will keep going up over time as long as it is more volatile than the country’s currency. Tether USDT has been able to offer a way to help stabilize the market for other cryptocurrencies.

What is Tether (USDT)?

Tether (USDT) is a cryptocurrency with a stable exchange rate pegged to the price of one US dollar. Since its launch in 2015, Tether has grown in use and become the most widely used stablecoin. Tether’s success has proven that cryptocurrencies need stable coins to be adopted by mainstream consumers.

What is a stablecoin?

In a nutshell, a stablecoin is a crypto that attempts to retain a stable value and is commonly linked to a traditional fiat currency or a commodity, such as gold. Stablecoins are developed to serve as protection against the volatility in large price swings of typical cryptocurrencies. Thus, stablecoins enable users to transact using digital currencies without worrying about price volatility found with normal cryptos.

How does Tether work?

Tether is a stablecoin that functions as a token on several public blockchain networks, including Ethereum, Tron, and Algorand. For example, on the Ethereum network, USDT operates as an ERC-20 token. To ensure that USDT stays as close as possible to $1, Tether coins are backed by actual, tangible US dollars held in bank accounts operated by Tether Ltd. Regular financial audits are carried out to ensure that every dollar is present to maintain the 1:1 peg.

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Denys Chubchyk

Crypto enthusiast 💎 I understand blockchain and invest in ambitious projects.