What is Tether (USDT)?

Tether (USDT) is a stablecoin tied to the US dollar that hopes to provide a safe crypto asset that investors can use to conduct transactions. As such, Tether is supposed to maintain the value of its pegged currency, which is $1. Although there have been lots of fluctuations, the value of Tether has always been within this range.

The native token of the Tether network is the USDT.

Unlike other cryptocurrencies, Tether doesn’t own a blockchain of its own; instead, it operates on other blockchains. So, users from other blockchains like Avalanche, Ethereum, and Polygon can transact with the USDT.

Tether has grown since its creation, allowing it to support Ethereum, Solana, EOS, and many other blockchain protocols besides Bitcoin. Besides the Tether, which is tied to the US dollar with a USDT token, there are other Tether stablecoins like: 

• Tether Peso (MXNT): tied to the Mexican Peso
• Tether Gold (AUXT): tied to gold
• Tether Yuan (CNHT): tied to the Chinese Yuan
• Tether Euro (EURT): tied to the Euro

Who Created Tether (USDT)?

Tether (USDT) is a product of the collective efforts of Craig Sellers, Brock Pierce, and Reeve Collins in July 2014. Before this, J.R. Willet published a whitepaper on the possibility of creating such a digital coin on the Bitcoin blockchain. His idea was later used to create the Bitcoin-based protocol Mastercoin in 2012.

It is one of the earliest stablecoins ever developed, with a template from Mastercoin. When Tether was introduced, it was known as Realcoin, which aimed to maintain a 1:1 exchange rate with the US dollar. However, Realcoin got rebranded to Tether in November 2014.

Tether Limited Inc launched the Tether cryptocurrency, and it operates under the ownership of iFinex Inc., a company based in Hong Kong. As Tether is run under the leadership of Tether Limited Inc., it isn’t a decentralized cryptocurrency.

How Does Tether (USDT) Work?

Tether (USDT) was created to aid investors who wished to invest in cryptocurrency without worrying about the volatility of digital coins. As such, there’s no concept like mining or a proof-of-stake algorithm.

This stablecoin allows individuals to exchange their fiat currency for USDT or the USDT for fiat currency. When this is done, the exchanged fiat currency or USDT is stored or exchanged by others. Some USDT is usually removed from circulation or burnt (destroyed) to prevent inflation.

Is Tether (USDT) a Good Investment?

Tether (USDT) is a stablecoin that allows investors to efficiently conduct cryptocurrency transactions across multiple blockchains. Although Tether is an excellent idea that has come to life, it still faces some hijinks.

In 2017, Tether Limited Inc reported that USDT worth $31 million was stolen from the network. While they performed a hard fork to mitigate future occurrences, it still left many people doubting the capability of this network.

Some people have also started questioning the legitimacy of the Tether reserves as a result of an incident in 2018. This involved Friedman, an accounting company hired to audit the Tether balance sheet. Tether dismissed Friedman because they felt they were performing complex procedures for a simple balance sheet. In 2021, Tether paid a $41 million fine for falsely claiming that they backed 100% of their tokens with US dollars reserve. Despite all these issues centring on the trustworthiness of Tether Limited Inc., the value of stablecoins cannot be over-emphasized. Although Tether isn’t much of an investment (since it’s a stablecoin), it’s still a valuable medium of exchange.