What is Tether (USDT)?

When you step into the world of cryptocurrency or become interested in Bitcoin and altcoins, one of the names you'll probably come across most often is USDT (Tether). But what exactly is USDT and why is it so important? If you're curious about the answers to these questions and want to learn more about what USDT does and where it's used, you've come to the right place. Let's explore USDT step by step together, centering on questions such as what is Tether and is USDT stable.

Definition and Emergence of Tether

Tether (USDT) is one of the cryptocurrency market's most unique and widely used types of stablecoins (stablecoin-stablecoin). It is also the most popular answer to the question of what is a stablecoin. Stablecoins are cryptocurrencies that usually peg their value to traditional (fiat) currencies such as the US dollar or other stable assets. The main feature and purpose of USDT is that it is a coin whose value is pegged to USD 1. This peg makes it possible to trade or store value between crypto assets, avoiding the extreme price volatility of the cryptocurrency market. USDT aimed to become the digital currency of the internet and continues to offer users the ability to make fast and stable transactions in the blockchain ecosystem.

The project was first launched in 2014 under the name Realcoin, then rebranded as Tether. It was launched as Realcoin by Brock Pierce, Reeve Collins and Craig Sellars in October 2014 and renamed Tether in November 2014. This was one of the first blockchain-powered platforms to facilitate the digital use of fiat currencies. USDT was issued by the company Tether Limited. Tether Limited is affiliated with a Hong Kong-based company called iFinex, which also owns the Bitfinex cryptocurrency exchange.

Instead of just having its own blockchain, Tether tokens run on different blockchains. While it started out running on the Omni Layer protocol of the Bitcoin blockchain, over time it has become supported on many different blockchains, including Ethereum (ERC20), Tron (TRC20), Solana, Liquid Network, Avalanche, Celo, Cosmos, Near, Polkadot, Tezos, Ton and Aptos.

The basic principle is based on the claim that every USDT token is backed by a dollar equivalent asset. The company claims to hold cash, cash equivalents, government bonds, gold and other assets in its reserves for every USDT in circulation. The company claims that its reserves are backed by 100% (and often more than 100%). It emphasizes on its transparency page that it publishes a record of its reserve holdings. However, these reserve declarations and the issue of full transparency have been controversial in the past and present. In 2021, the CFTC fined Tether $41 million for making misleading statements that its reserves were not always 100% backed by cash during 2016-2018.

This mechanism is at the core of how USDT works and how stablecoins work. It works like this: when users send fiat money, new USDT is minted, and when users convert their USDT into fiat money, the corresponding USDT is burned.

Tether's History: Key Milestones

As the cryptocurrency market has grown and evolved over time, Tether's role in this adventure has become increasingly visible. Since its inception, it has been both a safe haven for investors and the center of controversy from time to time. But despite all the ups and downs, Tether's influence and importance in the crypto ecosystem is undeniable. Under this heading, we will take a look at the historical development of Tether. Let's discover which steps have been taken since its inception and which events have been turning points:

• July 2014: Tether was launched as RealCoin.
• November 2014: RealCoin was rebranded as Tether (USDT). It was initially published on the Bitcoin blockchain (via the Omni protocol).
• 2015: USDT was integrated into Bitfinex, a major cryptocurrency exchange. This integration significantly contributed to increasing the use of USDT. During this period, USDT remained stable at $1 due to promised reserve guarantees, but widespread adoption was limited due to lack of regulation.
• 2015-2017 - Heavy usage of Ethereum and Bitcoin: The launch of Ethereum in 2015 and its smart contract capabilities created new opportunities for Tether. In 2017, Tether launched USDT tokens on the Ethereum network in the ERC-20 standard. This development enabled USDT to be used for faster and low-cost transactions. Thus, between 2015 and 2017, Tether was heavily used on both Bitcoin and Ethereum networks and became an important liquidity tool in the cryptocurrency market.
• 2018: USDT's market capitalization grew from a few million to over $2.8 billion. Meanwhile, Tether was accused of lack of transparency and market manipulation. In certain months of 2018, USDT-dominated transactions accounted for 80% of Bitcoin trading volume. An uncertainty in October 2018 caused USDT to temporarily drop below $1, raising further questions about Tether's reliability. USDC was launched by Circle and Coinbase to offer a more secure and regulated alternative.

2019: USDT's trading volume even surpassed that of Bitcoin, becoming the underlying asset for most exchanges. Despite controversy and legal investigations, including fines by the CFTC for misrepresentations about reserves, Tether maintained its position as the main stablecoin.

2020 saw a boom on the Tron network: The year 2020 marked a major turning point in stablecoin transfers, with Tether launching USDT on the TRC-20 standard on the TRON network. High transaction fees and network congestion on the Ethereum network drove users to faster and cost-effective alternatives. The TRON network responded with low transaction fees and transfer times in seconds. Thanks to these advantages, adoption of TRC-20 USDT has skyrocketed. In fact, in the second quarter of 2020, USDT transfer volume on TRON reached $25.2 billion, a figure that continued to grow exponentially in the following years.

Feature	ERC-20	TRC-20
Blockchain Network	Ethereum	TRON
Transactions Per Second	20,000 – 100,000	Approximately 2,000
Transfer Speed	Slower (minutes)	Faster (seconds to minutes)
Fees	Average $0.0107 USD/token	From $0.26 USD
Security	High	Relatively lower
Recommended Use	Medium-level transactions	Small-amount, frequent transactions
Development Focus	Token issuance, smart contracts, dApps	Token issuance, smart contracts, dApps

• 2023-2024: In 2023, during Silicon Valley Bank's financial difficulties, USDC significantly deteriorated its peg to $1 and dropped to $0.90, but quickly returned to its former value. That same year, Tether posted record profits of $5.2 billion. The company diversified its operations, establishing divisions dedicated to Bitcoin mining, artificial intelligence and blockchain education. It also highlighted plans to launch a new stablecoin tied to AED. Expanding government involvement through strategic collaborations in states such as Georgia and Switzerland was also on the agenda. Regulatory challenges were faced in Europe. In 2024, when the European Union's Markets in Crypto Assets Regulation (MiCA) came into force, Tether (USDT) chose not to comply. While MiCA imposed strict reserve requirements and European licensing requirements on stablecoin issuers, Tether CEO Paolo Ardoino argued that these rules could pose systemic risk, especially for small and medium-sized European banks.
• April 2025: According to CoinGeko, approximately 143,937,546,292 USDT are in circulation. USDT exists as digital tokens on various blockchains, including Algorand, Avalanche, Celo, Cosmos, Ethereum, EOS, Liquid Network, Near, Polkadot, Solana, Tezos, Ton and Tron.

Why is USDT valuable?

If you're wondering what USDT coin is for, the answer lies in its critical role in the cryptocurrency ecosystem. As a cryptocurrency pegged to $1, USDT offers an element of stability in the volatile nature of crypto markets. This allows investors to maintain their value even in volatile market conditions. Furthermore, USDT's ability to run on different blockchain networks (such as Ethereum, Tron, Solana) allows users flexibility in terms of transaction fees and speed. This versatility makes USDT not only a store of value, but also a preferred option for day-to-day transactions and international transfers. Overall, USDT's value comes from the key benefits it offers, which are outlined below:

• Provides price stability in the crypto market: It acts as a refuge in the volatile crypto market. For example, when Bitcoin or other cryptocurrencies fall in value, investors can protect their capital from sudden drops by converting their assets into USDT. This allows investors to “freeze” their gains without completely exiting the crypto ecosystem.
• Backed by the dollar equivalent asset: Tether claims that every USDT token in circulation is backed 100% by reserve assets. These reserves can include cash, cash equivalents, government bonds, gold and other assets. This claim is the basis for USDT's 1:1 peg. Due to user unease over claims that its reserves are insufficient, Tether periodically publishes a reserve report, working with independent auditing firms. The company's most recent report came out at the end of March.

• It can be used in decentralized applications (DeFi, NFT, staking): USDT is one of the core assets of the Decentralized Finance (DeFi) ecosystem. It can be used as collateral on lending platforms, provided to liquidity pools, and in some protocols, USDT can be staked to generate returns. These applications have made the use of stablecoins even more widespread.
• It has high liquidity and is traded on almost all exchanges: USDT is the largest stablecoin by market capitalization and trading volume and may have the highest trading volume of all cryptocurrencies. This means that USDT is extremely easy to trade and can be converted quickly, even in large amounts. It is listed as a basic trading pair on most major exchanges, which makes it easy to trade with different cryptocurrencies.
• It offers fast and low-cost transfer options: Compared to the traditional banking system, USDT transfers can be carried out much faster and often with minimal or zero commissions. Networks like TRON and Solana have become popular for USDT transfers thanks to their lower transaction fees and high speed. The availability of USDT on different blockchains gives users choice in terms of transaction costs and speed. USDT also offers a cost-effective solution for cross-border payments and remittances.

These benefits of USDT make it an attractive option for both individual investors and businesses. It serves as a bridge to enter or exit the crypto ecosystem and can also be used as an inflation hedge, especially in countries where local currencies are unstable.

Who is the Founder of USDT?

The answer to the question of who founded USDT includes the names of the founders and the company behind the project. USDT was issued by the company Tether Limited. Tether Limited is affiliated with Hong Kong-based iFinex Inc. It is also known as the owner of the Bitfinex exchange. At the beginning of the project, Craig Sellars, Reeve Collins and Brock Pierce contributed to the project early on. In 2014, Realcoin was launched by these names.

Today, Tether is led by a senior management team with extensive experience in financial services, technology and compliance. Paolo Ardoino is the CEO of the company. Giancarlo Devasini is the Chairman, Simon McWilliams is the Chief Financial Officer (CFO) and Claudia Lagorio is the Chief Operating Officer (COO).

Tether came to the fore with its reserve declarations and audit processes. While the company claims that every USDT is 100% backed by reserves and regularly publishes reserve reports, these reports are often criticized for not fully meeting independent financial auditing standards. The CFTC's findings in 2021 showed that during the period 2016-2018, reserves were not always fully backed by cash. This raises some transparency and trust concerns around the question of whether USDT is safe. Nevertheless, the company says it is taking steps to have a full independent audit. Past legal settlements (with the NY AG and CFTC) also reflect the controversy over the company's reserve practices.

Frequently Asked Questions (FAQ)

As a result, there are many questions about Tether (USDT) in the cryptocurrency world. In this section, we shed light on the most frequently asked questions, from how USDT works to which networks it is traded on, from security to transfer details, with short and clear answers. You can find everything you need to know about USDT here and support your informed trading process:

• What is USDT and how does USDT work? USDT, or Tether, is a digital asset categorized as a “stablecoin” in the cryptocurrency world. With its value pegged to $1 USD, USDT aims to offer price stability, unlike volatile cryptocurrencies. Tether claims that each USDT is backed by a reserve of $1 or the equivalent. It reports this every three months. This allows users to trade on the assumption that USDT will always be worth around $1.
• Why is USDT always worth $1? Theoretically, the value of USDT is pegged to 1 US dollar. The price of USDT remains stable because each token is backed by $1. Tether says that it holds $1 in reserves for every USDT on the market. This system ensures that the value of USDT stays close to $1 by maintaining a balance of supply and demand.
• Does Tether really hold reserves? In theory, Tether claims to hold an equivalent value of reserves for every USDT on the market. However, this has been disputed for years. In the past, Tether has acknowledged that its reserves are not entirely cash, with some parts being short-term debt, bonds and other assets. Starting in 2021, it began publishing reserve reports to be more transparent, but these reports are “attestations”, not independent audits. As a result, while Tether does hold reserves, the exact content and reliability of the reserves are still questioned by some investors and regulators.
• Which networks does USDT work on? USDT is traded on many blockchain networks, including Ethereum (ERC20), Tron (TRC20), Solana, Binance Smart Chain, Algorand, EOS, Liquid Network, Omni and Bitcoin Cash. When choosing a USDT transfer network, you should make sure that the sending and receiving networks are compatible. Choosing the wrong network can lead to loss of funds.
• How to transfer USDT? To transfer USDT, you must first select the correct transfer network (for example, ERC20, TRC20). Then, the recipient's wallet address is entered and the transfer process is initiated. During the transfer process, transaction fees and speeds may vary depending on the chosen network. Choosing a USDT transfer network is important to ensure that transactions are accurate and secure.
• Is USDT safe? USDT is one of the most widely used stablecoins in the cryptocurrency market and has a large user base. However, it has been criticized at times for reserve transparency and regulatory oversight. Users are recommended to use compatible digital wallets (e.g. Trust Wallet, MetaMask, Ledger) to store USDT securely. These wallets help users control their private keys and keep their holdings safe.

To better understand the role of USDT and stablecoins in the crypto market, follow our JR Kripto Guide series!