What is Tether (USDT)?

USDT is a stablecoin (cryptocurrency with a stable value) that reflects the price of the US dollar, issued by Tether, based in Hong Kong. Pegging the token to USD is achieved by maintaining an amount of commercial paper, trust deposits, cash, reserve repo bills and treasury bills in reserves equal in USD value to the number of USDT in circulation.

Originally launched in July 2014 as Realcoin, a second-tier cryptocurrency token built on the Bitcoin blockchain using the Omni platform, it was later renamed USTether and finally USDT. In addition to Bitcoin, USDT was later updated to work on the Ethereum, EOS, Tron, Algorand and OMG blockchains.

The stated purpose of USDT is to combine the limitless nature of cryptocurrencies – which can be sent between users without a trusted third-party intermediary – with the stable value of the US dollar.

Who are the founders of Tether?

USDT – or as it was known at the time, Realcoin – was launched in 2014 by Brock Pierce, Reeve Collins and Craig Sellars.

Brock Pierce is a well-known entrepreneur who has co-founded a number of major projects in the crypto and entertainment industry. In 2013, he co-founded venture capital firm Blockchain Capital, which raised over $80 million in funding by 2017. In 2014, Pierce became the director of the Bitcoin Foundation, a non-profit organization established to help improve and promote Bitcoin. Pierce also co-founded Block.one, the company behind EOS, one of the biggest cryptocurrencies on the market.

Reeve Collins was Tether's CEO for the first two years of its existence. Before that, he co-founded several successful companies such as the online advertising network Traffic Marketplace, the entertainment studio RedLever and the gambling site Pala Interactive. As of 2020, Collins heads SmarMedia Technologies, a marketing and advertising technology company.


How secure is the Tether network?

USDT does not have its own blockchain – instead, it functions as a second-layer token on top of the blockchains of other cryptocurrencies: Bitcoin, Ethereum, EOS, Tron, Algorand, Bitcoin Cash and OMG, and is secured by their respective hashing algorithms.

What makes Tether unique?

A unique feature of USDT is the fact that Tether guarantees that its value will remain tied to the US dollar. According to Tether, whenever it issues new USDT tokens, it allocates the same amount of USD to its reserves, ensuring that USDT is fully backed by cash and cash equivalents.

The notoriously high volatility of crypto markets means that cryptocurrencies can rise or fall by 10-20% in a single day, making them unreliable as a store of value. USDT, on the other hand, is protected from these fluctuations.