About Tether (USDT)

Tether Frequently Asked Questions (FAQ)

What is the primary function of Tether in digital transactions?


The primary function of Tether in digital transactions is to serve as a stablecoin, providing a less volatile digital currency option pegged to a fiat currency, usually the US dollar, thus facilitating smoother and more predictable transfers and trades in the cryptocurrency market.




How does Tether maintain stability against the USD?


Tether maintains its stability against the USD by ensuring that each Tether token (USDT) is backed by an equivalent amount of US dollars. This backing is meant to be one-to-one, with Tether holding reserves in a mixture of cash, cash equivalents, and sometimes other assets and receivables from loans made by Tether to third parties. These reserves are supposed to match the number of USDT in circulation, providing assurance that Tethers can be redeemed for US dollars.




Can you explain how Tether tokens are 100% backed by reserves?


Tether tokens (USDT) are said to be 100% backed by Tether’s reserves, which means the total amount of USDT in circulation is equivalent to the value of the reserves held by Tether. These reserves consist of traditional fiat currency, cash equivalents, other assets, and receivables from loans made by Tether to third parties. The company aims to maintain a 1-to-1 reserve ratio to ensure that each USDT token can be redeemed for one U.S. dollar worth of value.




Who were the original founders of Tether, and what were their previous involvements?


The original founders of Tether were Brock Pierce, Reeve Collins, and Craig Sellars. Brock Pierce was involved in the Bitcoin Foundation and has a background in the entertainment industry as a child actor, as well as entrepreneurship in the digital currency space. Reeve Collins had experience in digital advertising, serving as the CEO of several tech companies. Craig Sellars has been involved with the Omni Foundation and has contributed to various blockchain and cryptocurrency projects.




What makes Tether different from other cryptocurrencies?


Tether differs from other cryptocurrencies by being a stablecoin, which means it's designed to have a stable value by being pegged to a fiat currency like the US dollar. This contrasts with the high volatility typically associated with other cryptocurrencies.




Has Tether faced any controversies regarding its USD reserves?


Yes, Tether has faced controversies regarding its USD reserves. Critics have questioned the validity of Tether's claims that each of its USDT tokens is backed 1:1 by US dollars, leading to investigations and legal actions. There have been doubts about the sufficiency and transparency of Tether's reserves, which the company has tried to address through sporadic reserve attestations and reports.




What is the maximum supply of Tether (USDT) coins?


Tether (USDT) does not have a set maximum supply. The number of USDT tokens in circulation is based on demand and the reserves held by Tether Ltd. Whenever there is a demand for USDT, Tether mints new tokens, and when USDT is redeemed for fiat currency, the corresponding number of tokens can be burned or held temporarily by Tether’s treasury.




Since Tether does not have its own blockchain, how is the network secured?


Tether operates as a token on top of existing blockchains such as Bitcoin (via the Omni Layer protocol), Ethereum, EOS, Tron, Algorand, and others. The security of Tether is therefore provided by the underlying blockchain it operates on. For instance, when USDT is an ERC-20 token on the Ethereum blockchain, it benefits from the same level of security protocols, encryption, and consensus mechanisms (like Proof of Work or Proof of Stake) that Ethereum uses.




What motivated Tether to introduce MXNT in the Latin American market?


Tether was motivated to introduce MXNT in the Latin American market to provide a stable digital currency pegged to the Mexican Peso, facilitating cheaper and faster cross-border transactions, and offering a hedge against local currency volatility for individuals and businesses in the region.