Crypto Currencies

What’s Tether(USDT)? How Does Tether Work?

What is Tether?

Tether is a stablecoin issued by Tether Limited. Since Tether Dollars (USDT) is the most popular token of the company, by default it refers to Tether.

The main idea of the developers of this token is to provide cryptocurrency market participants with the opportunity to use a stable digital asset (“stablecoin”), the rate of which is pegged to the US dollar rate and does not experience such strong fluctuations as the rates of other cryptocurrencies. Tether is released on the Omni Layer platform, which is an add-on to the bitcoin blockchain.

Who are the founders of Tether?

The history of Tether began in 2012, when programmer J.R. Willett proposed a solution to create new cryptocurrencies based on bitcoin. Based on this decision, the Mastercoin token was released on July 31, 2013. In order to promote the Mastercoin protocol (it was later renamed the Omni Layer Protocol), the Mastercoin Foundation (later renamed the Omni Foundation) was created. The chairman of the Bitcoin Foundation, Brock Pierce, was one of the founders of the Mastercoin Foundation, and the CTO was taken over by programmer Craig Sellars.

In July 2014, Pierce, Sellars and advertising industry entrepreneur Reeve Collins launched Realcoin, a startup headquartered in Santa Monica, USA. On October 6, 2014, based on bitcoin and using the Omni Layer protocol, the company released Realcoin tokens.

On November 20, 2014, Realcoin CEO Reeve Collins announced the rebranding of the project into Tether. Thus, the creators of the project wanted to avoid being associated with altcoins.

Shortly thereafter, Tether Limited, registered in Hong Kong and the Isle of Man, announced the launch of closed beta testing of three tokens: USTether (US +) for the US dollar, EuroTether (EU +) for the euro, and YenTether (JP +) for the Japanese yen.

Tether also announced partnerships with Hong Kong-based crypto exchange Bitfinex and three startups in which Brock Pierce participated: Expresscoin, GoCoin and ZenBox.

In January 2015, Bitfinex listed Tether on the exchange. Although Bitfinex and Tether representatives said they were not connected, in November 2017, leaked documents (Paradise Papers) revealed that Bitfinex employees Philip Potter and Giancarlo Devasini founded Tether Holdings Limited in the British Virgin Islands.

How does Tether work?

Issue of tokens

The issuer of Tether tokens is Tether Limited. You can follow the emission process in the Omni Explorer.

The circulation cycle of Tether tokens includes the following stages:

  • The user deposits fiat funds into a Tether Limited bank account.
  • Tether Limited creates Tether tokens in the equivalent of 1 USD = 1 USDT or 1 EUR = 1 EURT and lends them to the user. Tokens come into circulation.
  • The user makes transactions with Tether: transfers, exchanges, etc.
  • The user makes a deposit to Tether to be redeemed in fiat.
  • Tether Limited destroys the deposited tokens and sends fiat to the user.

Using USDT for coin trading

Tether is essentially a stablecoin pegged to the US dollar. Its ticker is USDT

Its value is tied to the reserve they have in their bank accounts, and each Tether coin is roughly equal to one US dollar. Every time a US dollar is invested, a Tether coin is created. Tether is very useful for exchanges that often have problems transferring money into USD, for example, legal issues with banks. Using Tether, exchanges can reduce risk and speed up transactions.

Another problem that traders can solve is fees .. Every time they convert cryptocurrency to fiat currency, they are charged a fee, and vice versa.

Using Tether, traders can store their profits in something pegged to the US dollar without being charged.

IS IT POSSIBLE TO GET PROFIT FROM TRADING TETHER?

Of course, this is a difficult question and no guarantees can be given . It is worth mentioning, however, that in the future, it is entirely possible that stablecoins could become the new forex if governments move to adopt cryptocurrencies.

Where to buy Tether?

Among traders, the Tether cryptocurrency is considered one of the favorites. Thanks to this, the volume of daily trading using this crypt reaches $ 1.5 billion.

Most of the operations with this coin take place on such cryptocurrency exchanges as: OKEx, Binance, Huobi.

In addition, Tether can be purchased and sold for dollars on the Kraken cryptocurrency exchange trading platform. You can also get USDT cryptocurrency in online exchangers, where you can buy Tether for fiat.

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