Tether (USDT) stands as the largest stablecoin by market capitalization in the cryptocurrency world. Its primary function is to provide a stable bridge for transactions between various cryptocurrencies and traditional fiat currencies. Founded by iFinex, a company registered in Hong Kong that also owns the BitFinex cryptocurrency exchange platform, Tether was initially introduced as RealCoin in July 2014 and later rebranded to Tether in November of the same year. This stablecoin is exclusively pegged to the US dollar and is promoted as being "100% backed by Tether’s reserves," as stated on its official website.
Originally built on the Bitcoin blockchain, Tether has expanded its compatibility and now operates on several protocols, including Bitcoin’s Omni and Liquid protocols, as well as the Ethereum, TRON, EOS, Algorand, Solana, and Bitcoin Cash (SLP) blockchains. Notably, in January 2023, Tether ranked third in the cryptocurrency hierarchy, just behind Bitcoin (BTC) and Ethereum (ETH) in terms of market capitalization. With a market capitalization nearing $68 billion, Tether’s USDT played a fundamental role in many high-value exchange platforms throughout 2022, solidifying its position as the leading stablecoin choice for traders and investors. This stability, combined with its widespread adoption, positions Tether as a crucial component in the ever-evolving cryptocurrency landscape.
According to data from CoinMarketCap, as of the first quarter of 2025, Tether’s market capitalization exceeded $104 billion, reaffirming its position as the dominant stablecoin. On average, monthly USDT transactions surpass $85 billion in value, making it the most traded digital asset by volume, even exceeding Bitcoin and Ethereum combined.
This stability, along with its broad adoption, cements Tether’s role as an indispensable asset within the dynamic crypto ecosystem.
Expert Perspective: "Tether remains a fundamental pillar in the liquidity of digital assets," states Laura Shin, a cryptocurrency journalist and host of Unchained. "Despite concerns about transparency, its role as a transactional bridge is unmatched, especially in emerging markets where volatility is high."
According to crypto-economist Dr. Evan Cheng, "In 2025, Tether’s dominance reflects not only technical integration but also deep trust in its usability. It is more than a stablecoin: it has become the digital dollar for most on-chain transactions."
What Is a Stablecoin?
Stablecoins, like Tether, offer a digital asset with minimal volatility that typically maintains a constant valuation. These stablecoins are anchored to stable assets such as gold, the US dollar, or other fiat currencies, ensuring their value remains equivalent to their parity.
"The fundamental concept is that 1 Tether is always redeemable for $1, regardless of prevailing market conditions," explains Steve Bumbera, co-founder and lead developer of Many Worlds Token.
Currently, Tether positions itself as the largest stablecoin, contributing approximately 53% of the total stablecoin market capitalization. The second-largest stablecoin, USD Coin (USDC), controls around 31% of the market share, followed closely by Binance USD (BUSD).
The importance of stablecoins like Tether in the cryptocurrency world lies in their function of providing stable and reliable liquidity for trading cryptocurrencies. This liquidity protects traders from unexpected losses caused by the erratic price fluctuations inherent in the crypto market. This stability and predictability increase the appeal of stablecoins among both traders and investors.
How Does Tether Work?
The inherent stability of Tether is based on its robust reserve structure. The company claims to hold dollars and other assets equivalent to or greater than the total USDT tokens in circulation. Essentially, for every Tether token issued, the company claims to hold one dollar in its reserves, denominated in liquid currency or similar assets like short-term bonds and time deposits.
Tether maintains a transparent stance by periodically disclosing its reserve quantities compared to the circulating USDT tokens on its official website. However, inquiries and disputes have arisen regarding Tether’s reserves, with scrutiny from regulatory bodies such as the Commodity Futures Trading Commission (CFTC) and the New York Attorney General focusing on the company’s reserve practices.
Interested investors can acquire Tether seamlessly on major cryptocurrency exchange platforms. Investing $100 in Tether grants approximately 100 USDT tokens, increasing the company’s reserves by $100 to maintain the essential parity of 1 dollar to 1. Tether tokens are withdrawn from circulation and eliminated when users decide to exchange them for traditional fiat currency.
Unlike having its own autonomous blockchain, Tether issues its tokens through various third-party blockchain networks. The current servers for USDT tokens include:
- Ethereum – USDT ERC-20
- Tron – USDT TRC-20
- Binance Smart Chain – USDT BEP-20
- Solana – USDT SPL
- TON (The Open Network) – USDT TON
This extensive multi-chain support enhances the utility and accessibility of USDT across different ecosystems. Whether through fast and low-cost transactions on Solana, deep DeFi integration on Ethereum, or expanding its adoption in Telegram-based applications via TON, Tether continues to adapt and integrate where liquidity is needed.
The dynamic interaction of Tether’s collateralized reserves and its strategic token issuance on these diverse blockchains underscores its fundamental role as a stabilizing force in the global cryptocurrency landscape.
Real-World Use Cases and User Experiences
Tether is not just a financial instrument for institutions and traders: it is increasingly part of real-world commerce, especially in regions where local currencies face inflation or where access to US dollars is limited.
Cross-border freelancers: Freelancers in countries like Argentina, Nigeria, and Turkey use Tether to receive payments from international clients. Platforms like Deel and local peer-to-peer (P2P) exchange platforms enable freelancers to accept USDT and convert it to local currency when rates are favorable.
“I get paid in USDT and only convert to pesos when the exchange rate benefits me,” shares Luis, a freelance graphic designer from Buenos Aires. “It gives me more control and protects me from inflation.”
E-commerce stores: Online retailers increasingly accept Tether for products ranging from electronics to clothing. A electronics seller from Eastern Europe reported that USDT currently accounts for 40% of their international sales volume.
Remittances: USDT is widely used in remittance channels across Asia and Africa. Unlike traditional bank transfers, which can take days and incur high fees, sending USDT through a cryptocurrency wallet usually takes only minutes and costs a fraction.
“My brother sends me USDT from Dubai every month,” says Amina, a university student in Kenya. “I receive it on my phone and use local exchange houses to convert it to Kenyan shillings. It’s cheaper and faster than bank transfers.”
Crypto-savvy businesses: Companies integrating cryptocurrency payment gateways use USDT to stabilize their income during market fluctuations. By converting volatile cryptocurrencies to Tether, businesses can maintain their liquidity without relying on traditional banks.
Everyday users: Some use Tether as a digital US dollar savings account. With the help of mobile crypto wallets, they store USDT and only withdraw it when needed, especially in regions with limited banking infrastructure.
“USDT is like my emergency fund,” explains Rashid, a delivery driver in Pakistan. “I keep some on my phone so I can access money anytime, even if banks are closed.”
These real-life examples illustrate how Tether is not just a tool for traders: it is increasingly integrated into the financial lives of ordinary people, offering flexibility, stability, and global accessibility.
History of Tether
Tether’s history dates back a decade, with its origin in the innovative ideas of JR Willet. His exploration of creating new cryptocurrencies using the Bitcoin protocol culminated in the creation of Mastercoin, where one of its early members co-founded Tether in 2014.
Tether quickly gained momentum as a liquidity vehicle by integrating into the BitFinex exchange platform in January 2015. However, the path has not been without challenges. In November 2017, Tether reported a theft of USDT tokens worth $31 million, leading to a subsequent hard fork.
While Tether sought to stabilize its value through a 1-to-1 parity with the US dollar, its reserves were questioned. These questions coincided with the company’s difficulties in accessing banking services.
Notably, in April 2019, the New York Attorney General obtained a court order against Tether and BitFinex’s parent company, iFinex. This order followed an investigation that revealed BitFinex had borrowed around $700 million from Tether’s reserves to address the freezing of funds linked to its Panamanian banking partner, Crypto Capital Corp. The situation raised concerns about the company’s financial practices.
In the following years, Tether faced legal complexities. By February 2021, Tether and BitFinex reached agreements that included fines and commitments to share information about their reserves with regulatory bodies.
In October 2021, new developments emerged when the US Commodity Futures Trading Commission (CFTC) announced that Tether had agreed to pay a substantial fine due to discrepancies in the backing of its reserves. Tether’s stability was tested in May 2022 when its value briefly plummeted, attributed to the crash of another stablecoin issuer’s value. However, Tether quickly recovered, fulfilling its commitment to honor redemption requests according to its parity.
In its efforts to expand its reach, Tether broadened its offerings to include stablecoins backed by other fiat currencies, such as the Mexican peso, while continuing its presence on various blockchains.
Throughout its journey, Tether maintains a significant presence in the cryptocurrency space, characterized by both achievements and challenges that have shaped its role within the broader digital asset landscape.
How Is Tether Useful?
Stablecoins continue to be a favorite preference among cryptocurrency traders, and Tether has navigated controversies related to the liquidity and sufficiency of its reserves.
Until 2022, the company’s information about its reserves remained somewhat opaque. The Tether website, at one point, offered little clarification, merely stating that "All Tether tokens maintain a 1-to-1 relationship with the corresponding fiat currency and are fully backed by Tether’s reserves."
Adam Carlton, CEO of Pink Panda, a cryptocurrency wallet provider, highlights that Tether’s historical transparency regarding its backing has faced periods of obscurity and inconsistency.
"The currency’s past is marked by legal uncertainties, and even today, the visibility of its actual reserves remains uncertain and is believed to substantially comprise unidentified origins of commercial paper," observes Carlton.
Other cryptocurrency experts acknowledge that there is a certain level of recognition within the crypto sphere that Tether might not possess full collateralization.
"The market has dealt with this notion of how comfortable it feels; it is widely recognized that Tether is not tied solely to the dollar," notes James Putra, vice president of product strategy at TradeStation Crypto.
What Is USDT Payment?
Paying with USDT refers to making a payment with the Tether (USDT) cryptocurrency. Using USDT for payments allows individuals and businesses to conduct transactions in a digital currency designed to maintain a constant value similar to the US dollar. This can help mitigate the volatility typically associated with other cryptocurrencies like Bitcoin or Ethereum. Payments with USDT enable the purchase of various goods and services, such as online shopping, remittances, investments, and more. The appeal of USDT payments lies in their potential to combine the advantages of cryptocurrencies (such as fast and borderless transactions) with the relative stability of traditional fiat currencies.
How Does Payment with Tether Work?
If you are considering enabling Tether transactions for your business, you will first need a Plisio business cryptocurrency wallet with support for USDT.
To facilitate your customers’ Tether transactions, it is crucial to integrate a cryptocurrency payment gateway into your website, platform, or app. A standout option allows you to generate multiple invoices and effectively manage various corporate transactions across different wallets.
When receiving payments in Tether, you are presented with an option: retain the received USDT in the corresponding wallet or convert it to an alternative currency. Numerous exchange platforms and online wallets offer the possibility to convert Tether into various cryptocurrencies or traditional fiat currencies like US dollars, euros, or pounds. This flexibility underscores Tether’s adaptability as a medium of transaction and a potential asset diversification strategy.
As you navigate the world of Tether payments for your business, it is advisable to prioritize secure and reliable wallets, seamless integration of payment gateways, and understanding the potential conversion options available to you. 👉 Explore payment integration solutions
Tether vs. Bitcoin
As stated by Daniel Rodríguez, chief operating officer of Hill Wealth Strategies, a notable distinction between Tether and Bitcoin lies in their anchoring principles. Tether relies on a non-crypto asset, specifically the US dollar. In contrast, Bitcoin derives its value solely from the supply and demand dynamics of BTC.
Furthermore, Tether functions as a centralized cryptocurrency, while Bitcoin operates in a decentralized manner. This inherent contrast contributes to the perception of Tether’s stability when compared to Bitcoin.
Cryptocurrencies that lack ties to real-world assets or currencies remain susceptible to market volatility. Conventional cryptocurrencies like Ethereum and Litecoin (LTC) are known to experience significant swings in response to market fluctuations, inflation, and changes in interest rates.
Rodríguez elaborates, noting that Tether exhibits a relatively high level of stability due to its tendency to closely replicate the value of a US dollar, with minor variations. He clarifies that Tether is not primarily designed to generate profits; rather, it seeks to serve as a reliable store of value.
In summary, Rodríguez’s insights underscore the contrasting mechanisms driving Tether and Bitcoin, highlighting the former’s effort to achieve stability and its association with the US dollar, in contrast to Bitcoin’s decentralized and market-driven nature.
Is Tether a Good Investment?
Stablecoins like Tether do not fit the traditional concept of investment, as their purpose is not to accumulate value. Instead, they function as a store of value, ensuring that the value of one USDT token constantly equals one US dollar.
Beyond its role as a reliable store of value, Tether serves as an invaluable tool for conducting business with greater simplicity compared to Bitcoin.
The intrinsic nature of Bitcoin, characterized by its price fluctuations, creates complexities for businesses attempting to establish pricing structures. According to Bumbera, "The value of a Bitcoin today may differ significantly from its value tomorrow, making it extremely difficult to establish pricing frameworks focused solely on BTC."
A key reason for holding a stablecoin like USDT, as Bumbera suggests, is the desire to interact with the cryptocurrency world while avoiding volatility. However, even pegged to the US dollar, the safety of Tether as an investment remains uncertain.
Bumbera adds a note of caution, highlighting potential risks such as the devaluation of Tether or the use of an illegitimate staking platform.
While Tether claims to have an impeccable track record in honoring redemption requests from verified customers, it is essential to recognize that there are no guarantees in the realm of investments or cryptocurrencies.
Furthermore, cryptocurrency enthusiasts should stay vigilant about the evolving regulatory framework governing digital assets. As LoPresti emphasizes, the trajectory of Tether and other stablecoins depends on transparency, the suitability of collateral, and liquidity. Regulators are likely to direct their attention to these aspects of the digital asset economy, especially after the collapse of TerraUSD.
In conclusion, the dynamics of stablecoins like Tether encompass their distinctive role as repositories of value, offering an alternative to the investment goals commonly associated with traditional cryptocurrencies.
Tether finds its primary utility in facilitating the conversion of cryptocurrencies to fiat currencies, a measure employed to mitigate the risk of slippage, which involves the depreciation of value that can occur between the initiation and completion of a transaction. Nevertheless, cases arise where Tether’s alignment with its designated fiat currency parity is not consistently maintained. An illustrative incident occurred when the FTX exchange platform collapsed in November 2022. During this period, Tether experienced a drastic drop, descending to an approximate value of $0.995. However, Tether’s resilience was evident, as it quickly recovered, at times even exceeding the intended 1-to-1 parity.
In 2025, the average daily transaction volume of Tether exceeds $110 billion, reflecting its widespread use in cryptocurrency transactions, both retail and institutional. Over 70% of global stablecoin settlements are currently conducted through USDT, consolidating its role as the de facto digital dollar on blockchain networks.
This episode exemplifies the nuanced dynamics that can affect Tether’s stability and alignment with its linked fiat currency during exceptional market conditions.
Frequently Asked Questions
What is Tether (USDT) primarily used for?
Tether is primarily used as a stable digital asset that facilitates transactions between cryptocurrencies and traditional fiat currencies. It provides liquidity, minimizes volatility risks, and enables seamless cross-border payments, remittances, and trading activities.
How does Tether maintain its value stability?
Tether maintains its stability by being pegged to the US dollar on a 1:1 basis. The company claims to hold reserves in cash, cash equivalents, and other assets matching the total number of USDT tokens in circulation, ensuring redeemability and value consistency.
Is Tether considered a safe asset to hold?
While Tether is widely used and trusted for its stability, it is not without risks. Concerns about reserve transparency and regulatory scrutiny exist. Users should assess their risk tolerance and stay informed about market developments and compliance updates.
Can businesses integrate Tether payments easily?
Yes, businesses can integrate Tether payments by using supported cryptocurrency payment gateways and wallets. This allows them to accept USDT, manage transactions, and optionally convert funds to other currencies or assets based on their needs.
What distinguishes Tether from other stablecoins like USDC?
Tether is the largest stablecoin by market cap and trading volume, with broader adoption across multiple blockchains. USDC, issued by Circle, emphasizes regulatory compliance and transparency, often appealing to users prioritizing audited reserves and institutional trust.
How can individuals acquire and store Tether securely?
Individuals can acquire Tether through major cryptocurrency exchanges. For storage, using reputable hardware or software wallets that support multi-chain USDT tokens is recommended. Always enable security features like two-factor authentication for added protection. 👉 Get advanced storage methods