The company had a market capitalization of nearly $99 billion as of March 2024. According to the firm’s CTO, Paolo Ardoino, the decision to expand into Latin America was fueled by an increase in cryptocurrency usage in the region. In May 2022, Tether announced the launch of MXNT, a new stablecoin backed by the Mexican peso.
Trading and market stability
As of 2024, it has a market cap of over $110 billion, and holds the rank of the world’s third-largest cryptocurrency, just behind Bitcoin and Ethereum in terms of market cap. Both Tether’s USDT and Circle’s USDC are backed by real assets and issued by a centralized entity, but the key difference between them is in the composition of reserves. USDC only holds cash and short-term U.S. government bonds, according to its monthly report. Tether issues one of the most popular and widely used cryptocurrencies on the crypto market, a stablecoin called tether (USDT).
- Tether has not made its inner workings transparent to the public, making it difficult for users to trust Tether completely.
- Some other notable stablecoins include USD Coin (USDC) and Dai (DAI), which have market caps of $US24.8 billion and $US5 billion, respectively.
- As part of the settlement, Tether was required to release regular reports on its business, including details of its funds held as reserves.
- Tether was launched as RealCoin in July 2014 and was rebranded as Tether (USDT) in November 2014.
Forex-style trading
Unlike speculative cryptocurrencies that can surge in value, Tether is a stablecoin designed to maintain a consistent 1-to-1 peg with the US dollar. For investors looking to invest in an asset that has the potential to gain value, Tether isn’t a great choice. Tether publishes daily reports detailing the total number of USDT tokens in circulation compared to the reserves it holds to ensure transparency and build trust with users. This practice is crucial, especially given the scrutiny and controversies the company has faced. Tether tokens are the most widely adopted stablecoins, having pioneered the concept in the digital token space.
- It highlighted the importance of maintaining robust, transparent reserves to uphold a stablecoin’s value.
- When a user deposits fiat currency into Tether’s reserve, selling fiat to buy USDT, Tether then issues the corresponding digital amount in tokens.
- All transactions are recorded on the Tether blockchain, and stored in Tether’s database.
- Tether Limited developed the cryptocurrency towards the end of 2014, under the name “Realcoin” prior to its rebranding as Tether.
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Tether tokens started to be issued on Omni software layer for the Litecoin blockchain in the summer of 2017. Across the world, online and brick and mortar stores accept Tether Tokens as a valid payment method. More importantly, you can spend Tether Tokens and enjoy low transaction fees combined with price stability for purchasing some of your favorite products and services. “Issued” Tether Tokens are authorized tokens that are in actual circulation, including those sold and issued to Tether’s customers. If you’re tethering your phone to multiple devices at the same time, then the data use can be even higher. The articles and research support materials available on this site are educational and are not intended to be investment or tax advice.
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If this happens, USDT units could likely continue to work as they did before, because they would be the same type of cryptocurrency. For this reason, it is possible that if Tether ceases to exist, it might take other cryptocurrencies with it because people will no longer trust them. If Tether collapses or shuts down then all of the Tethers will become completely what is tether worthless because they are not backed by anything other than the trust people have in the cryptocurrency. Tether first launched in 2014 mainly as a way to provide users with an alternative payment method. It was originally available on the Bitcoin blockchain, but it was later moved onto the Omni Layer protocol which is built on top of Bitcoin’s blockchain.
Some exchanges do not have facilities for fiat deposit and withdrawal but do allow USDT trading. By obtaining Tether first, you’re able to trade on these exchanges without worrying about the market volatility of placing your main trading funds in BTC (or other cryptos). Tether Limited’s reserves include cash, as well as real-world cash equivalents, assets, and receivables from loans. While Tether aims to maintain its peg to various fiat currencies, the prices of the coins do fluctuate. For example, the price of USDT has exhibited some volatility, reaching highs of $1.20 and lows of $0.91.
These authorized tokens could be from a customer’s redemption of their Tether token holdings for fiat currency. These redeemed and returned Tether Tokens could alternatively be held by Tether’s treasury (thus out of circulation and not part of the total market capitalization), ready for future issuance. Despite stablecoins being a popular choice among crypto traders, Tether has some additional controversies regarding liquidity issues and whether its reserves are adequate to cover the number of USDT tokens in circulation. In the past, Tether’s communications regarding its reserves could have been more specific and, at times, more transparent.
Tether has the same functionality as most cryptocurrencies, allowing for anonymous transactions with no interference from any third party. Tether is intended to help people transact without having to go through fiat currencies. For example, if someone wants to send money to another person they can do so by sending Tethers. Tether is a centralized crypto, whereas Bitcoin is decentralized by not being linked to any real-world currencies. For that reason, in theory, Tether’s value should remain more stable than Bitcoin’s. Tether’s price slipped below its peg to $0.9485 in market moves related to the collapse of TerraUSD on May 12 but has since rebounded close to its 1-to-1 dollar parity.