The Blockchains, Part 8: The Tether Blockchain
Despite the fact that some members of the crypto community consider it controversial due to ongoing legal drama and speculations, Tether’s token USDT is the most popular stable coin backed by the United States Dollar with the market capitalization of over $4.1 billion. The above mentioned legal drama and speculations are not the topics of this article, thus, all interested parties should research them separately. In this article, we will dive deeper into what Tether really is and learn more about its blockchain.
Initially known as RealCoin, USDT stable coin has emerged in July 2014 and was renamed as Tether three months later. Tether Ltd., is the operator that maintains the reserves of the underlying fiat currency. The trading of USDT began in early 2015.
The official website states that “Every Tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.”
There are two types of Tether: the ones that are issued on the Omni layer of Bitcoin blockchain and the ones that are “authorized” on the Ethereum network in compliance with ERC-20 token standards.
Omni layer is built on top of the main Bitcoin blockchain for the purpose of enabling easy, safe, trustless, decentralized, distributed P-2-P transactions platform.
Other cryptocurrencies are built on the Omni layer as well, however, USDT is “occupying” more than 75% of the entire Omni layer transactions at this point.
ERC-20 tokens are made on the Ethereum blockchain in accordance with a protocol of specific standards (6 compulsory rules and 3 optional). These tokens can be transferred or stored in a wallet. “ERC” is an acronym for “Ethereum Request For Comment”, whereas 20 is a dedicated identification number that sets this standard apart from the rest.
Emirex supports all the major blockchains, including the ones used by Tether. Come back soon to check out the next articles about the fascinating world of blockchains!
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Digital Commodities Asset Exchange in the Middle East, focusing on tokenised commodities. Licensed and Regulated. Tokenisation advisory.
