Digital finance has accelerated over the last year and a half, and one of the most popular assets in this ecosystem is crypto-currencies. In addition to bitcoin and ethereum, there is a third player that is gaining a strong foothold in investor research. Even more so among those who want to bet on something less fluctuating.
Tether, better known as USDT, is currently the world’s third most valuable crypto with $60 billion in circulation and, according to data from asset management firm NYDIG, 6 out of every 10 bitcoin transactions go through it first.
What is the USDT? It is a stable currency. They are tokens linked to a fiat currency, i.e. a currency backed and recognised as such by a government. Stablecoins differ from other crypto-currencies in that they are backed by a specific asset and are therefore less subject to the fluctuations and risks of supply and demand.
In this case, Tether is linked to the US dollar. Its name is therefore derived from the union of USD, the international abbreviation for the US dollar, and T, the initial of the company’s name. USDT maintains a parity of close to 1 to 1 with the dollar, and the company indicates that it is committed to maintaining the same number of dollars in reserve as the Tether in circulation in its balance sheet to support this token.
ITS HISTORY
The founder of the Tether idea was J.R. Willet, who envisaged the possibility of building other currencies on top of the bitcoin protocol. Thus was born the Mastercoin project, which at the same time created the Mastercoin Foundation to promote the use of this second layer. It was within this foundation that the emergence of the USDT was born.
Craig Sellars, the foundation’s CTO, and Brock Pierce, an original member of the foundation, launched Realcoin in mid-2014. This project used the protocol they called Omni, which was an evolution of what was done in Mastercoin. In November of the same year, they relaunched the company as Tether and created three currencies, each linked to a fiat currency: USDT for the dollar, EURT for the euro and YENT for the yen.
Although it is currently one of the most widely used stable currencies, specialists also point to certain inconsistencies. Recently, doubts have arisen about its reserves in US dollars and the transparency with which it operates, which, they point out, could create a bottleneck and a potential financial conflict.
