What is Tether, the closest cryptocurrency to fiat money?

Tether (USDT) is a cryptocurrency stable money. The nature of a stablecoin is the fact that, in theory, it shouldn’t be subject to price fluctuations. Tether is based on the United States dollar (USD), so the value of a Tether coin will also correspond to the exchange rate of one dollar. Price volatility is present, but fluctuation is slight. There are many stablecoins in the crypto industry, but this is the one that beats them all.

This is due to the fact that the cryptocurrency is based on the dollar and a very large market capitalization, a product of all the currencies in circulation and their current price. Most cryptocurrencies are based on their own blockchain, or from Bitcoin or Ethereum. Tether uses the SHA256 algorithm, which is the Bitcoin algorithm. The amount of withdrawable coins is strictly limited by the amount of money deposited in the Tether account.

Being a stable currency, it is impossible to mine. The only way to get it is to transfer fiat money to the organization’s account or buy it on the cryptocurrency development company. Thanks to the stability of USDT, investors can hold their digital assets similar to regular fiat currencies, but at the same time retain the ability to easily exchange them for other currencies in the cryptocurrency market. It was these key features that made this coin popular; however, you are not completely immune to risk.

Tether (USDT) is a token called stablecoin ( cryptocurrency that maintains a fixed value compared to other types of currency or crypto assets), issued on the Bitcoin blockchain and launched by the company Tether Limited. It is considered the largest stablecoin issued in the market. In addition, it is based on the stable value currency of the United States dollar (USD), with an equivalence of 1: 1. That is, 1 USDT = 1 US dollar. USDT can be easily exchanged for USD at any time.

Tether was issued via the Omni Layer protocol and is a unique currency in many ways. It was launched in 2015 to represent the digital crypto value of a traditional currency, namely the US dollar. The Tether has functions like other cryptocurrencies, it works in a decentralized network, it is also stored there and all data is processed there. What sets it apart is centralized issuance and a value that always stays at one dollar.

In other words, Tether is an unregulated token. The main objective of the creation of this cryptocurrency was to facilitate transactions with a rate fixed in the US dollar, in order to circumvent state intervention and regulatory supervision. Each USDT unit is backed by one US dollar that is held in the reserves of Tether Limited and can be exchanged through the Tether platform. Each USDT token can be transported, stored, and issued as bitcoins or any other cryptocurrency.

How did this cryptocurrency originate?

Tether USDT is an idea that was born in 2014 in the mind of JR Willet, who along with Brock Pierce and Craig Sellars were working on the development of mastercoin. This was a blockchain that served as a communications protocol, running on top of Bitcoin, creating a series of layers in which other cryptocurrencies or tokens could be executed. Pierce and Sellars then decide, through Omni Layer, to launch their independent project called Realcoin, using the Bitcoin blockchain.

Realcoin was considered the biggest project at the time. However, its name would change on November 20, 2014 when Reeve Collins, CEO of Tether Limited, announced that the project would be called Tether. He also announced the creation of three simultaneous currencies: USTether (USDT), EuroTether (EURT) and YenTether (YENT). In this way, Collins announced to the world the birth of three stablecoins, thus initiating the history of USDT and its peers. Coins added to the Bitfinex platform in early 2015.

How is it working?

Tether is powered by open block technology, taking advantage of the security and transparency it provides, while meeting international standards and compliance regulations. Its main value is to convert the cash into a digital currency to anchor the value to the price of the national currency. Tether should always be backed by reserves that include traditional currency, cash equivalents and, from time to time, other assets and accounts receivable from Tether loans to third parties.

The main idea behind this stablecoin is to take a step towards a secure blockchain ecosystem. Today, many new entrants who cannot afford to enter a volatile market or who do not have enough capital are buying Tether as a reserve. Thanks to its stability, it can be used later, since its price remains anchored to the dollar. Also, there is no way to mine Tether, as a necessary step to keep the value of the coin stable at 1 USD.