Tether is a blockchain-based cryptocurrency whose circulation is supported by an amount equivalent to traditional fiat currencies, such as dollars, euros, and yen which are deposited in designated bank accounts. The Tether token, the Tether network’s native token, is traded under the USDT symbol.
Tether belongs to a new type of cryptocurrency called stablecoin which aims to keep cryptocurrency valuations stable, as opposed to the large changes observed from the prices of popular cryptocurrencies such as Bitcoin and Ethereum. This would allow Tether to be used as a medium of exchange and a store of value, rather than being used as a medium for speculative investment.
Tether is specifically included in the stablecoin category that is guaranteed by fiat currencies. Other categories of stablecoins are crypto-guaranteed stablecoins (using a cryptocurrency reserve as collateral), or there are also unsecured stablecoins (they do not have any collateral, but operate in a similar way to a reserve bank to maintain a certain supply of tokens, depending on the economic situation).
Tether is specifically designed to build the necessary bridge between fiat currencies and cryptocurrencies and offers users stability, transparency and minimal transaction fees. Tether is based on the US dollar and maintains a 1: 1 ratio to the US dollar for value. However, no warranty is provided by Tether Ltd. for the right to redeem or exchange Tether for real money – that is to say, Tether is not exchangeable for US dollars.
USDT History and Origins
Starting from a whitepaper published online in January 2012, J.R. Willett described the possibility of creating a new currency on top of the Bitcoin Protocol. Willett went on to help implement this idea in the cryptocurrency Mastercoin, which was part of the Mastercoin Foundation (which was later renamed the Omni Foundation) to promote the use of this new “second layer”. The Mastercoin protocol will be the foundation of Tether’s cryptocurrency technology, and one of the original Mastercoin Foundation members, Brock Pierce, will be one of the founders of Tether. Another Tether founder, Craig Sellars, CTO of the Mastercoin Foundation.
Tether was originally named “Realcoin”, announced in July 2014 by the founders of Brock Pierce, Reeve Collins, and Craig Sellars as a Santa Monica-based startup. The first token was issued on October 6, 2014, on the Bitcoin blockchain. This is done using the Omni Layer Protocol. Then on November 20, 2014, CEO of Tether, Reeve Collins announced that the project was being renamed “Tether”. The company also announced that the project has entered into a private beta, which supports “Tether + Tokens” for 3 currencies: USTether (US +) for the US dollar, EuroTether (EU +) for the euro, and YenTether (JP +) for the Japanese yen.
On 25 February 2015 trading started. In December 2016, Tether launched 6 million USDT, which is six times the amount launched the previous year. As seen from January 2017 to September 2018, the number of Tether in circulation grew by around $ 10 million to around $ 2.8 billion. In early 2018 Tether accounted for about 10% of Bitcoin trading volume, and amazingly into the summer of 2018, Tether accounted for up to 80% of Bitcoin trading volume.
In June 2017, the Omni Foundation and Charlie Lee announced that Tether would soon be published in the Litecoin Omni layer. Then in September 2017, Tether announced they would launch additional ERC-20 tokens for the United States dollar and euro on the Ethereum blockchain. Tether then confirms the ethereum token is launched. Currently, there are a total of four different Tether tokens: US dollar tethering on the Omni Bitcoin layer, euro tethering on the Omni Bitcoin layer, US dollar tethering as an ERC-20 token, and euro tethering as an ERC-20 token.
15 September 2017 USDT releases the first approval by Friedman LLP, confirming that Tether has $ 443 million in USD reserves. Unfortunately in November 2017 the USDT was hacked when 31 million Tether were transferred from Tether’s treasury wallet to an unauthorized Bitcoin swallow address. To prevent the funds from being spent, the hard-fork began.
January 31, 2018, the publication of Tether was fast and frenetic. Meanwhile at the same time the price of Bitcoin was declining. Tether launched 850 million USDT, more than a month earlier. About 250 million USDT was created in the middle of the month the Bitcoin price crash.
June 1, 2018, second endorsement released, conducted by the law firm Freeh, Sporkin & Sullivan. This confirms that Tether has $ 2.5 billion in USD reserves. But the FSS is not an accounting firm and “The bottom line is that audits can’t be obtained,” Stuart Hoegner, Tether’s General Counsel, told Bloomberg.
October 14 2018, amid concerns over the company’s solvency and ability to build banking relationships, Tether’s benchmark value slipped again, this time to $ 0.92, according to CoinMarketCap, which collects prices from major exchanges. Then on 24 October 2018 USDT announced that it had “redeemed a large amount of USDT” and would now burn 500 million USDT, representing that redemption. According to the company, the remaining 446 million USDT in its treasury will be used as “a preparatory step for future USDT issuance.”
November 1, 2018, Tether released its third endorsement, carried out by Bank Deltec which confirmed that the company had $ 1.8 billion in USD reserves.
December 31, 2018, Tether issued more than 1 billion tether.
April 17, 2019, Tether goes live on the Tron network as a TRC-20 token.
November 8, 2019, USDT said that the stablecoins were “fully supported” again.
January 2020, USDT added up to 900 million tokens which is nearly 22% of the total supply.