What is Tether?
Tether (USDT) is a stablecoin, a cryptocurrency with a stable price pegged to the US dollar. One USDT always aims to be worth one dollar. It is the most widely used stablecoin by market capitalization and trading volume.
How the price is maintained
The issuer releases tokens backed by reserves: cash, short-term government securities, and other assets. When a user returns USDT to the issuer, the tokens are redeemed and dollars are paid in exchange. USDT has been issued on multiple blockchains, which facilitates transfers between platforms.
Use cases and risks
- Applications: safe haven during volatility, fast cross-border transfers, base currency for trading pairs.
- Risks: dependence on issuer reliability and reserve quality, regulatory pressure, possibility of short-term price deviation from 1 dollar.