What is Tether? – Definition, Work, and More

Definition of Tether

Tether, the maker of the first and most widely used stablecoin, Tether Limited, is a company operating a platform that issues blockchain-based assets linked to the price of government monies.

Today, Tether supports four stable coins: the U.S. dollar (USDT), and the Chinese Yuan (CNHT).

And the Euro (EURT), as well as a stable currency backed by 1 oz. of gold (XAUT).

Also first launching with USDT in 2014, the company’s idea was it make government monies extra compatible with newer crypto assets, which traded 24/7 on an active global market.

And each USDT token save for the corresponding U.S. dollar it held under custody by Tether Limited. Also, the total value of all USDT is said to equal the reserves held by the firm.

And once the USDT is new-minted and issued, it can transfer, stored, and spent by various businesses (exchanges, wallets, financial services).

Also it individual traders look to avoid the sometimes extreme volatility of the cryptocurrency markets.

Today, stable coins are an emerging class of crypto assets that are beginning to find use cases beyond the world of trading, including in sectors.

It’s like traditional cross-border payments. As of 2020, USDT remains the largest, and most broadly, it uses stablecoin.

However, the concept embraces by the world’s largest companies.

For example, Facebook announced in 2019 that it was looking to launch its stablecoin, named Libra.

How does Tether work?

Tether Limited accepts sanction deposits and withdrawals on behalf of clients.

And is responsible for minting and destroying Tether tokens following reserves they administer.

Tether on Bitcoin

And tether it initially launch and issue on the Bitcoin blockchain via the Omni Layer protocol, a platform for creating and trading digital assets on top of Bitcoin.

And technology enables the minting and burning of Tether tokens based on the amount under custody.

Also, the circulation of Tethers can also track and reported via the protocol.

Also, Tether’s ledger is store on the Bitcoin blockchain thanks to Omni, and the Omni Explorer allows users to view their verified transactions there.

As of 2020, Tethers are also available as assets on Liquid, a Bitcoin sidechain.

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