Tether (USDT) is a stablecoin, which is a type of cryptocurrency that actively works to keep its valuation stable through market mechanisms. It’s used by investors who want to hedge against the inherent volatility of their cryptocurrency investments while still keeping value inside the crypto market, ready to be used without hassle.
Tether is a fiat-collateralized stablecoin, which is a type of stablecoin that is backed by a fiat currency like USD, CAD, AUD, or even Yen (JPY). Tether was created to bridge the gaps between fiat currencies and blockchain assets while offering transparency, stability, and low fees for USDT users. Tether is pegged against the U.S. Dollar at a 1:1 ratio. There is no guarantee from Tether Ltd. for any right of redemption or exchange of Tether to USD. USDT cannot be exchanged directly for USD through the Tether company.
How does Tether (USDT) work?
Each Tether (USDT) issued is backed by one US dollar worth of assets. All Tether was initially issued on the Bitcoin blockchain via the Omni Layer protocol, but can now be issued on any chain that Tether currently supports. Once a tether (a single unit of USDT) has been issued, it can be used the same as any other currency or token on the chain that it has been issued on. Tether currently supports the Bitcoin, Ethereum, EOS, Tron, Algorand, and OMG Network blockchains.