Tether (USDT) is one of the most widely used terms in the world of cryptocurrencies, and understanding what it is and its role in the crypto market is essential. This digital currency stands out for its fixed price and operates on its own special equations in the financial market. To grasp its functioning and applications, we must fully understand what Tether is and why it’s referred to as a “stablecoin.”
What is Tether?
Our discussion revolves around answering this simple question. Tether is represented by the code USD₮ or USDT and is sometimes referred to as a “stablecoin.” It holds the fourth position among cryptocurrencies, following Bitcoin, Ethereum, and Ripple. Before we proceed, let’s explain the concept of stablecoin.
Stablecoins refer to digital currencies with price stability backed by financial reserves. This means that each unit of stablecoin is backed by one unit of real, government-issued currency. For USDT, this unit is the dollar, meaning the value of each Tether is equivalent to one US dollar. With the creation of each Tether unit, one dollar is reserved in a government bank, and other financial reserves such as euros, Chinese yuan, and gold ounces are also allocated.
Now, let’s return to our discussion about what Tether is. Here, we must answer a serious question: Why has such a difference been made for this digital currency? The purpose of providing a dollar-backed reserve for USD₮ was to protect investors who are exposed to significant price fluctuations in the crypto market.
Several other currencies have also been proposed as alternatives to Tether, including TUSD, USDC, BUSD, and DAI, all of which are calculated as equivalent to one US dollar.
Birth of USDT
It was in July 2014 that news of the launch of the digital currency Tether on the Omni platform was announced, executed by Tether Limited Inc. The Omni platform is introduced as a layer on the Bitcoin blockchain network, allowing various tokens to be exchanged and traded on this network. After a while, this currency also operated as an ERC-20 token on the Ethereum network, and this progression continued to the “Tron” and “EOS” blockchains.
Founders of Tether
Whenever the question arises about what Tether is, questions about its founders are also raised. Three individuals have been named as the founders of USDT:
- Brock Pierce: Previously known as a Hollywood actor, Pierce later transitioned into a cryptocurrency entrepreneur. His involvement in the Bitcoin Foundation in 2014 is one of his activities in this field. Pierce is known as the owner of Bitfinex and Tether.
- Reeve Collins: Collins is an entrepreneur and senior executive in online advertising and marketing. He is also known as a former founder and CEO of vAtomic Systems.
- Craig Sellars: As a software engineer and expert in cryptocurrencies and blockchain networks, Craig Sellars is among the founders of USD₮. He also played this role in the Omni Layer protocol, which is a second layer on the blockchain network.
These three individuals initially introduced their project under the name RealCoin, which was later changed to Tether. They sought to support their project by inventing this currency and keeping its price stable through the consideration of dollar reserves.
Read More: What is Solana (SOL)?
What are the Uses of USDT?
Now, with a full understanding of what Tether is, we can better understand its effective use and importance in the crypto market. With this currency, investors can quickly store their digital assets in USDT and keep their assets safe from significant and unpredictable fluctuations. Generally, the uses of this cryptocurrency include:
- Converting digital currencies to USDT to protect them from financial risks.
- Buying and selling Tether, as well as trading or storing it instead of holding or purchasing physical dollars.
- Conducting trades and trades that are highly secure and fast.
- Making online transfers instead of using bank transfers and their limitations.
- The ability to lend and receive repayments easily via this currency.
- Investing and holding assets online without worrying about fraud, inflation, fees, etc.
How Did Storing USDT Help Me?
Before I talk about the advantages and benefits of USDT, it’s worth sharing one of my own experiences with this digital currency with you.
Early on in my acquaintance with Tether, I allocated a small amount of money to purchase it on one of the exchanges and didn’t do anything with it for a while. Honestly, I was a bit worried. Whenever I opened the page and saw the long list of cryptocurrencies and various features, I was afraid to put my hand on it and accidentally select an option and lose my assets. That is until I needed money on a trip and my account was empty.
You can’t imagine the extraordinary feeling I had when I found some Tether in my wallet, which had increased in value during this time due to the rise in the dollar. In less than a few minutes, I quickly sold it and solved my problem. Since that day, I’ve preferred to keep my money in Tether in my wallet instead of any other account and buy this currency.
What are the benefits of Tether?
The advantages of USDT are not hidden, and through initial recognition, they can be understood. Some of these advantages include:
- Support for multiple blockchains
- High performance
- Easy buying and selling
- High transparency and security
- Free transfers
- Lack of inflation
- No exposure to price fluctuations
- Providing daily reports on the allocation of financial backing to build trust among users and investors
- Support from various wallet providers due to its activity on multiple blockchains
- Purchasing NFTs
- Participating in initial offerings or ICOs
Summary:
A transparent answer to what Tether is is that it was the first stablecoin in the world of cryptocurrency to have financial backing in a government bank. This was done to protect investors who entered the digital currency markets and were exposed to significant price fluctuations and changes that increased the risk of their assets. Whenever asked what Tether is, it’s only fair to mention its founders, who are Brock Pierce, Reeve Collins, and Craig Sellars.
Also Read: What is Binance Coin (BNB)?
By David Taha