For many years, crypto traders traded altcoin pairs against BTC when Tether (USDT) did not exist. BTC has always been the major cryptocurrency, and technical traders had to buy altcoins using BTC or ETH. In 2014, though, the narrative changed. USDT was introduced to the cryptocurrency market, and altcoins had a better base currency to pair with.
Compared to Bitcoin, USDT is a stable cryptocurrency. Millions of users across the globe have used the stable asset as a store of value. But USDT is more than just a store of value. It also has multiple uses in the crypto ecosystem.
What is Tether (USDT)?
USDT is a stablecoin pegged to the United States Dollar and issued by Tether. The stablecoin maintains a value of 1:1 to the dollar. Although USDT does not have its own blockchain, it operates as a layer two crypto asset on popular layer one networks like the Ethereum network, Tron network, Solana chain, and BSC network.
Brock Pierce, Reeve Collins, and Craig Sellars are the founders of USDT. The cryptocurrency was launched on the blockchain in 2014, and the founders had the goal of creating a digital asset that would be less volatile than regular cryptocurrencies.
Brock Pierce, Reeve Collins, and Craig Sellars have worked on multiple blockchain-related projects prior to their time with Tether. Brock Pierce was the co-founder of Blockchain Capital, Reeve Collins co-founded RedLever entertainment studio, and Craig Sellars worked as a member of the Omni Foundation for years.
How Does USDT Work?
Although USDT operates on decentralized networks, the company issuing the stablecoin is centralized. Hence, the stablecoin is not completely decentralized.
Tether operates on layer one blockchain networks and is kept secure by their hash algorithms. It currently runs on more than 50 different blockchain networks. Tether can be sent across these networks when a blockchain bridge is used.
The Peg
USDT maintains the same value as the dollar through a mint-and-burn mechanism. The company Tether issues or mints USDT when the demand for it is high. When the USDT token is sold, the company burns an equivalent amount. During this process, Tether maintains equivalent cash and assets in its reserves. For USDT’s $1 value to stand, the company’s holdings must be equivalent to or greater than the minted USDT coins on the blockchain.
The USDT Token
For many years, USDT has been among the top three cryptocurrencies. Tether is the company that issues the USDT token. There are 82,845,432,957 USDT in circulation at the moment. USDT also has a total supply of 86,090,638,895 USDT. The amount of USDT released in circulation is tied to the amount of cash and assets Tether has in its reserves.
USDT holders can stake USDT to earn an annual percentage yield. Typically, USDT staking offers a more significant percentage turnover than volatile cryptocurrencies. The average range users earn from staking USDT is between 4% and 10% per annum.
Use Case
USDT can be used as a means of payment. The token’s stability makes it one of the most suitable cryptocurrencies to serve as a payment option. Users can also earn from locking their USDT in staking pools. On some platforms, USDT is used to purchase NFTs and other digital assets.
Distribution
The distribution of USDT changes regularly. There are multiple wallet holders with USDT across several blockchain networks. According to data from Coincarp, over 4.3 million USDT holders are on the Ethereum blockchain. Most USDT (ERC-20) holders have their assets stored in decentralized wallets.
On centralized exchanges, 5.82% of the total supply is on Binance, while the Okex exchange has 1.37%. Gate.io has 1%, and Bitget has 0.28% of USDT distribution.
Tether: Future Development Plans
USDT has been the leading stablecoin for years. Interestingly, the asset has had some tough times along the line. Due to regulatory concerns and panic among holders, USDT has lost stability at specific historical points. But Tether is now stronger and will look to maintain a stable value in the coming years. USDT will also look to retain its position as the world’s leading stablecoin.
FAQs
Is USDT the same as the US Dollar?
No. USDT is a blockchain-based stablecoin issued by Tether, while the Fed issues the US Dollar and can be controlled by the US government. The US dollar does not operate on the blockchain. Also, there are physical dollar notes, but there is no such thing as USDT.
Is USDT Secure?
USDT has had some regulatory and security concerns in the past. Tether has also been attacked for lack of transparency and has been tipped to collapse in the future. However, USDT remains the world’s leading stablecoin, and many investors believe the crypto asset is too big to fail.
How can I Buy USDT?
You can buy USDT on Kucoin, Gate.io, Bitget, or any other major centralized exchange.
