Abstract
Tether (USDT) is one of the most popular stablecoins, maintaining a 1:1 value ratio with the US dollar. It operates across multiple blockchains and has seen growing trading volumes and liquidity in recent years. Like other stablecoins, USDT benefits cryptocurrency trading by shielding users from market volatility and eliminating conversion delays between crypto and fiat currencies.
Introduction
Tether is a cornerstone of the crypto ecosystem. As of December 2020, it ranked as the fourth-largest cryptocurrency by market cap (~$200B), trailing only Bitcoin, Ethereum, and XRP. Its daily trading volume often surpasses Bitcoin’s. But what exactly is Tether, and how can you use it effectively?
Launched in 2014 as "Realcoin," USDT was the first stablecoin pegged to fiat currency. Initially issued via Bitcoin’s Omni Layer, it later expanded to blockchains like Ethereum (as ERC-20), TRON, Solana, and others. Despite early price fluctuations, USDT has stabilized significantly since 2019, attributed to rising adoption and broader crypto market maturity.
How Does Tether (USDT) Work?
Stablecoins derive utility from their price stability. USDT was originally 100% backed by USD reserves, with each token representing $1. Over time, its collateral expanded to include cash equivalents, loans, and other assets.
As Tether’s whitepaper states:
All Tether tokens are pegged 1:1 with their corresponding fiat currencies and are backed 100% by Tether’s reserves. Reserve holdings are published daily and updated at least once per 24 hours.
While USDT/USD typically trades at parity, major market events can cause temporary deviations.
Why Is Tether (USDT) Important?
USDT bridges crypto and fiat systems, enabling investors to trade dollars at a 1:1 ratio while avoiding crypto volatility. Its stability makes it a preferred medium for trading other tokens.
Key Features
- 1:1 redeemability (USD to USDT)
- Price-stable (mirrors the USD)
- Multi-blockchain compatibility
- Distinct use cases vs. traditional cryptocurrencies
Use Cases for Tether (USDT)
Quick Market Stabilization
Convert Bitcoin or other volatile assets to USDT during sudden downturns instead of cashing out.
Cross-Exchange Transfers
Move funds seamlessly between platforms for arbitrage or liquidity management.
Crypto-Only Exchange Trading
Trade on platforms without fiat support using USDT as a stable base currency.
Forex-Like Trading
Capitalize on local currency fluctuations by holding USDT when FX rates favor the USD.
Storing Tether (USDT)
USDT can be held on exchanges like Binance or in wallets such as Trust Wallet (mobile), Ledger (hardware), or ERC-20-compatible software wallets. Always verify the blockchain network (e.g., ERC-20, TRC-20) before transferring—sending tokens via the wrong network may result in permanent loss.
👉 Explore secure USDT storage options
Other Tether Tokens
Beyond USDT, Tether offers:
- EURT: Euro-pegged stablecoin
- CNHT: Yuan-pegged stablecoin
- XAUT: Gold-backed stablecoin
Track circulating supplies on Tether’s transparency page.
FAQs
Q: Is USDT always 100% backed by USD?
A: No. While initially USD-only, reserves now include other assets like commercial paper.
Q: Can USDT lose its peg?
A: Rarely. Temporary depegs occur during extreme market stress but typically correct quickly.
Q: Which blockchain is best for USDT transfers?
A: ERC-20 (Ethereum) balances security and low fees; TRC-20 (TRON) offers faster/cheaper transfers.
👉 Learn more about USDT’s blockchain options