Tether (USDT) is a stablecoin that is pegged to the value of a specific fiat currency, such as the US dollar (USD). It was created in 2014 by the company Tether Limited and is the most widely used stablecoin in the world, with a market capitalization of over $66 billion as of January 2023.
The main advantage of Tether is its stability, as it is designed to maintain a stable value relative to the underlying asset it is pegged to. This is in contrast to other cryptocurrencies, such as Bitcoin or Ethereum, which can be highly volatile and subject to significant price swings. This stability makes Tether a popular choice for investors who want to hedge against market volatility or for merchants who want to accept cryptocurrency as payment without the risk of price fluctuations.
Tether is also widely used as a means of facilitating transactions on cryptocurrency exchanges. It can be used to trade for other cryptocurrencies or to transfer value between exchanges without the need to convert back to fiat currency, which can be a slow and costly process.
One of the key features of Tether is its transparency, as the company publishes regular audits and transparency reports to demonstrate that it has sufficient reserves to back all outstanding Tethers in circulation. This is important because it helps to build trust and confidence in the stability of the Tether system.
Despite its many benefits, Tether is not without its risks and controversies. The company has faced criticism and legal challenges related to its relationship with the cryptocurrency exchange Bitfinex, and there have been concerns about its ability to maintain its peg to the underlying asset.