Tether (USDT) is a cryptocurrency that is designed to be a stablecoin, meaning its value is pegged to a stable asset, typically the US dollar. Introduced in 2014, Tether operates on blockchain technology and is issued by Tether Limited, a company based in Hong Kong. The primary purpose of Tether is to provide a digital representation of traditional fiat currencies, aiming to offer stability and liquidity within the volatile cryptocurrency market.
Each Tether token is supposed to be backed by an equivalent reserve of fiat currency, usually held in bank accounts. This mechanism is known as fiat-collateralized stablecoin. Tether Limited claims that the tokens are fully backed, although this has been a subject of controversy and scrutiny. Tether is widely used as a means of facilitating trading and liquidity on cryptocurrency exchanges, providing traders with a stable intermediary while moving funds between different cryptocurrencies.
Tether has faced regulatory challenges and skepticism regarding its transparency and the verifiability of its reserves. Critics argue that the lack of a transparent audit raises concerns about the actual backing of Tether tokens. Despite these controversies, Tether remains one of the most widely adopted stablecoins, serving as a popular bridge between cryptocurrencies and traditional fiat currencies in the crypto market.