airdrop algo appstore-mobile appstore arrow-dropdown atom awc-bnb awc-erc20 xlm knowledge explorer academy blog membership assets btc debian doge download_apk_android eth facebook-header facebook fedora footer-logo-atomic github-footer google-play--mobile linkedin-blue ltc macos msite playstore rating referral telegram-header telegramm trust-pilot trx twitter-blue twitter-footer twitter-header ubuntu wiki-blue win xrp aave nem xtz youtube
Download
Download

Jan 26, 2021

15 min

2

0

2

15 min

What it Tether (USDT)? A Complete Guide

USDT is a cryptocurrency asset otherwise known as stable coin (crypto asset backed 1:1 to any fiat currency peg, in this case, pegged to U.S. dollars. It’s issued on the Bitcoin blockchain (using the Omni and Liquid Protocol), Ethereum, EOS, Tron, Algorand, Bitcoin Cash (Simple Liquid Protocol), and OMG blockchains. Each unit of USDT (i.e., one USDT) is backed by one U.S. Dollar held in the fiat reserve of Tether Limited and can be redeemed through the Tether Platform.

Brief History

The stable coin’s whitepaper was first published in January 2014 by J.R Willett. Tether (USDT) was founded by Brock Pierce, Craig Sellar, and Reeve Collins in July 2014 under the name Realcoin. It was officially renamed to Tether on 20th November 2014. The first USDT tokens were issued on 6th October 2014, using the Bitcoin blockchain through Omni layer protocol.

USDT was first introduced on Bitfinex cryptocurrency exchange for trading in January 2015. In September 2017, it was introduced onto Ethereum blockchain as an ERC-20 token. It was later introduced to other blockchain protocols like Tron as TRC-20 token, EOS, Algorand, and others.

Following the debut launch on other blockchain protocols, it was introduced into multi-blockchain wallets like Atomic Wallet, which has a high-security protocol for securing user funds.

A group of investigative journalists in November 2017 claimed that both Bitfinex and Tether officials are of the same group of individuals. This is against Tether’s claims that both companies are separately run by different individuals. The paradise papers leak of 2017 supports this claim where named Bitfinex officials Philip Potter and Giancarlo Devasini were responsible for setting up Tether Holdings Limited in the British Virgin Islands in 2014.

According to Tether’s website, the Hong Kong-based Tether Limited is a fully owned subsidiary of Tether Holdings Limited. The current CEO of Tether is Jean-Louis Van Der Velde, who is also the current CEO of Bitfinex.

However, there have been errors in auditing the dollar reserve that Tether company claims to have in the company bank account in a 1:1 ratio to the USDT amount in circulation. The circulating supply of USDT is currently at 24,747,346,122 USDT billion according to coinmarketcap data, whereas; the audited report doesn’t show the availability of the circulating amount in the company fiat bank account. Tether confirms that the worth of assets from receivables, loans, third party affiliate entities, etc., will count to support the 24,747,346,122 USDT billion circulating supply of USDT. There are currently 25,531,104,623 USDT in total supply minted already, according to coinmarketcap data. The total supply exists across all the blockchain platforms used by Tether in issuing its USDT stable coin.

The company states that USDT is “backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”

USDT Technology:

Tether Holdings is the company behind USDT. The stable coin is available on these top three blockchains, including Bitcoin Blockchain (using omni layer and liquid protocol), Ethereum Blockchain, and Tron Blockchain. Other blockchains include EOS, Algorand, Bitcoin Cash (using Simple Liquid Protocol), and Omesigo (OMG).

These blockchains provide security to the transfer of USDT stable coins across exchanges and their users. For example, USDT was launched on the liquid protocol, a sidechain on Bitcoin blockchain to offer faster, confidential transactions and sophisticated multi-sig security. 

How it Works: 1 USD: 1 USDT. This is a fiat-collateralized type of stable coin that is issued on request and burned to maintain the fiat reserve supply. Tether, the issuer behind the USDT stable coin, mints more USDT once demand grows and subsequently burns excessive supply of the crypto assets on decreased demand in order to stabilize the price with the fiat reserve supply. The USDT in circulation must correspond with the amount in the company fiat account.

Features of Theter (USDT)

Confiscation of Asset:

One of the key features of USDT technology, apart from security, is the ability to freeze assets. Tether can freeze addresses having it’s USDT on any blockchain, which enables the platform to fight against money laundering, anti-terrorism, hacks, and illicit transfers.

Stable Price:

This stable coin maintains a stable price all day, always. The price of each USDT whenever you buy or sell must remain $1 across any blockchain it was issued on. The token price doesn’t drop its value. This makes it possible to be sold at a dollar rate any time across other fiat currency pairs because it is pegged at a 1:1 ratio to the real fiat dollar asset. Tether, the issuing company behind USDT, is expected to have an equivalent of the amount of USDT in circulation in a bank account or assets.

Multiple Blockchain: 

The stable coin is created across multiple blockchains, including; Omni, Ethereum, Tron, EOS, Algorand, Bitcoin Cash, and Omesigo (OMG). These blockchains provide easy accessibility of the token across multiple platforms popularly used in the crypto space. The token utilizes the technology and features available on these blockchains to ensure efficiency, accountability, and security for all users. For example, the launch of USDT on Bitcoin Cash using Simple Liquid Protocol will provide efficiency and security to the USDT ecosystem. 

Smart Contract Compatible:

USDT on Ethereum makes it compatible with smart contract functionalities. Another top smart contract enabled blockchains to include EOS and Tron Blockchain. This is a good feature that allows the censorship of USDT tokens deployed on them. It can be used across DeFi (decentralized finance) platforms, bringing the traditional finance type of interest on savings to the decentralized system. This allows projects to offer automated APY (Annual Percentage Yield) percentage on USDT staking on their platform under the DeFi ecosystem.

Censorship

All USDT tokens minted on any of these blockchains are censored. This means that users or investors who use these stable coins on any platform can risk freezing of their assets if any wallet is found defaulting, especially in cases of a hack involving USDT tokens on any of the chains it was created. Tether Holdings can freeze the address holding the assets by using smart contract functionalities or other features enabled on these chains to control the movement of this illegal funds transfer.

Advantages of Theter (USDT)

There are numerous reasons why USDT is the most widely adopted stable coin. The company has shown a reputable amount of trust and accountability in management, which puts it out there as the most reliable stable coin provider. There are other advantages which include;

  • It’s a stable coin: USDT will always remain 1:1 to real U.S. dollars. The token worth will forever remain $1, and it is not volatile.
  • It is a good hedge against the market volatility of the cryptocurrency market for cryptocurrency traders, allowing them to easily save funds in dollars, especially during bear markets and trading.
  • Fast Transaction: The transfer of this stable coin is fast and borderless. USDT has all the features of a cryptocurrency, which allows it to be transferred at the speed of its incumbent blockchain. For example, on Tron Blockchain, the transaction time is nearly instant. On Ethereum Blockchain, it usually takes 10-50 seconds.
  • Low Transaction Fee: There is near zero-fee transaction on Tron Blockchain and a reduced fee on transfer on Ethereum Blockchain and other blockchains compared to the traditional means of money transfer of USD.
  • Anonymity: The transactions are anonymous transactions, but users have custodial access to their funds.
  • Available Cash Reserve: There is always an equivalent cash of the stable coin USD Tether in the bank to support the cryptocurrency stable coin in circulation, thereby maintaining the stable price at a 1:1 ratio always.
  • Maintaining Trust: There is always an audit report published frequently to maintain transparency to the users that the equivalent in circulation is available in the company’s fiat bank account.
  • Legally Compliant: It is legally compliant with regulatory bodies for all regions.

Disadvantages of Theter (USDT)

There is a big disadvantage of stable coins like USDT when it comes to making sure that the amount in circulation is the equivalent amount at the bank account.

Considering that it is a stable coin, the company is bound to ensure that the cash reserve supporting the crypto asset is always available for redemption. The disadvantages, therefore, include:

  • Stability Issues: If the cash reserve fails to correspond to the amount of the crypto asset (USDT) in circulation, the coin’s stability to U.S. dollars will be affected. It will no longer remain 1:1 to U.S. dollar peg.
  • Asset Control: There is no full ownership of funds synonymous with crypto assets like USDT. Tether, the company behind the stable coin, can freeze addresses found violating rules of the usage of the asset.
  • Trust Issues: An audit report taunting user confidence can lead to less adoption.
  • Asset Mismanagement: Failure to burn excess tokens to meet up with the amount in the reserve balance can lead to price instability and possible crash.

Key Perspective and Takeaways:

According to coinmarketcap data, there are over 19,634,648,391 USDT in circulation now, and the current market capitalization of the stable coin puts it at the fourth position. There is no limit to the supply that will forever exist because it is pegged to a fiat currency. Fiat currencies do not have a limited supply.

Currently, the market capitalization is $19,645,436,944 USD. Binance cold wallet is the number-one holder of the stable coin capped at $3,472,095,731 on Tron protocol Blockchain while Huobi is the second-largest holder also on Tron capped at 1,309,358,376 according to the rich list provided on Tether website.  

The highest amount of the USDT stable coin currently minted on any blockchain lies on Ethereum Blockchain, followed by Tron Blockchain. The company behind the stable coin also has launched other stable coins under its reserve: Euro Tether (EURt), Offshore Chinese Yuan Tether (CNHt), and Gold Tether (XAUt). All of these assets are pegged 1:1 to the corresponding fiat and asset value (gold), respectively.

USDT stands out as the most reliable stable coin among other stable coins in the market. The first stable coin is issued in cryptocurrency and one of the most regulatory compliant, stable coins.

Tether Website:

For the ultimate source of information, visit Tether.to

Tether Twitter Handle:

Follow @Tether_to on Twitter to keep up with the latest update.

Tether Rich List

Visit wallet. Tether.to

How to store and manage USDT

You can manage and store USDT on numerous platforms that support the blockchain protocols on which it is issued. But there is always the best platform among many platforms. 

  • Atomic Wallet is a highly secured multi-chain wallet that can be used to manage and store USDT across the top two chains; Ethereum and Tron Blockchain. 
  • Atomic Wallet is the best multi-cryptocurrency wallet for storing multiple cryptocurrencies on different blockchains. 
  • Atomic Wallet is a non-custodial wallet that gives you full access and control over your funds and does not store user details on its server. 

Conclusion:

As the number one fiat-collateralized stable coin, USDT has proven to be a successful experiment in creating a stable cryptocurrency that will closely equal U.S. dollars. The system using blockchain redefines the traditional way of money transfers, making it convenient for anyone to transfer fiat currencies represented on the blockchain across borders.

Do you like the article?

Thank you for your opinion. You can leave your feedback or share this article.

leave a comment
Write a Comment
Even more features are coming

Thank you for downloading Atomic!

Your support helps us build a stronger and convenient platform. A lot of interesting features are coming soon!