USDT is a stablecoin that is pegged to the US dollar. Tether created its USDT tokens as a way to exchange money without using the banking system. This is because it enables users to move money across exchanges quickly and cheaply. Tether is a cryptocurrency that facilitates transactions through a digital currency but keeps the transaction prices low.
Tether was launched on the Ethereum blockchain in 2017, and the Tether Ethereum ERC-20 is now the most popular Tether token type.
Tether was created in 2014 by the same team that created the popular cryptocurrency exchange Bitfinex. This includes Brock Pierce, Reeve Collins and Craig Sellars.
The stablecoin is now controlled by Tether Holding Limited. The CEO of Tether Holding is JL Van Der Velde, Giancarlo Devasini is the CFO, and the general counsel is Suart Hoegner.
A major difference between Tether and other cryptocurrencies is that it is tied to fiat currencies. For every Tether coin in the market, there should be an equal value of money in a bank account. So, if you are holding one dollar worth of Tether ($1 USDT), then the company should have one dollar ($1) in their bank account.
This ensures that the users are protected from volatility risks in the market, because the value of a Tether coin is always equivalent to a dollar. The company can issue any number of coins, as long as there is money in its bank account. This makes it different from cryptocurrencies that have no backing or collateral.
The USDT peg is maintained via a one-to-one collateral ratio. Tether Limited acts as a third-party custodian for the fiat currencies backing USDT. This means that all Tether in circulation are backed by fiat currencies held in the company's bank account.