Tether (USDT) cryptocurrency – what it is and why it is needed in simple words
Tether (Tether or Tizer) is a cryptocurrency that uses the bitcoin blockchain. The coin is tied to fiat money, including the dollar, euro and Japanese yen. It is used for various financial transactions. The token is issued by Tether Limited Corporation, which claims that the coin is backed by a real stock of assets in its accounts, in other words, 1 million tokens equals 1 million fiat money.
What is Tether (USDT)
Tether cryptocurrency is a digital asset that differs from other coins by being backed by fiat (real) money. Such a feature excludes speculators. The Tether (USDT) platform converts U.S. dollars.
The digital currency is based on an open-source Omni Layer protocol that works in conjunction with a blockchain. This enables the creation and redemption of Bitcoin-based tokens. Users can transfer, buy coins for other cryptocurrencies or fiat money, and store them in wallets. The creators of Tether Limited assure that 1 coin of Tether is equal to $1, in practice there are small jumps in the rate, but they do not exceed $0.1. The reason may be the fake pegging of the coin to fiat.
Bitcoin was previously considered a promising digital currency that could provide maximum security, fast and convenient payments. At the end of 2017, it became clear that this could not be achieved, but for speculation, the coin was perfectly suited. Bitfinex cryptocurrency exchange took advantage of this by creating the Tether token (USDT). In 1 month after creation of new currency, half a billion coins were issued, Bitcoin began to rise sharply in price up to 20,000 dollars, after that there was a sharp decline.
History of Tether (USDT)
Knowing what Tether is, it’s not unreasonable to familiarize yourself with the history. The token was created in 2015 by Tether Limited, after which there were rumors that the organization’s activities were related to the Bitfinex cryptocurrency exchange. It was it that was the first to introduce the coin into its system for transactions. After some analysis and investigation by Paradise Papers, such information was confirmed. Almost immediately after the cryptocurrency’s release, its integration was on the American exchange Poloniex.
The founders are CEO Philip Potter and CFO Giancarlo Devasini of the Bitfinex exchange. The corporation is based in the British Virgin Islands. The token was originally named Realcoin. The coin was common and could not create competition to popular altcoins. After a series of updates, it changed its name and its issuance technology. This was necessary to survive in the digital world of money. This is how the cryptocurrency Tether appeared, which became convenient for businesses and individuals.
On 30.01.18 was published data from Bloomberg that the organizations Bitfinex and Tether Limited were sent a subpoena from the Futures Trading Commission. The reason for the summons is the regulatory doubts about whether Tether’s 2.3 billion coins are in fact backed by a similar number of dollars.
A year later, on 3/14/19, the creators said the coin is backed not only by cash, but also by loans from related organizations. In late April of that year, the creators said that only 74% of the cryptocurrency is backed by fiat money (dollars). The history of Tether on the described facts does not end, the coin is actively used in the field of cryptocurrencies, it has a future.
Characteristics of Tether
Compared to Bitcoin, Tether is on the security of real money, which is in the accounts of Tether Limited. The very first cryptocurrency is made as an alternative to fiat money and to remove intermediaries during financial transactions. Tether is made to input real funds into the blockchain by digitizing them. Since this mechanism, today, is considered the best in terms of security, for storage or transfer.
The work of the coin depends on the reliability of links with banks, other institutions of this type and government support.
