First out the blockchain was the cryptocurrency Bitcoin; then came altcoins like Ethereum, Tezos and Ripple; next came stablecoins like Tether and US Coin. With the latest revolutionary development, you have a ‘cryptocurrency’ that has improved functionality and greater market value because it is fungible.
Basically, Tether aims to provide a simple interface for businesses and individuals to access a blockchain-based cryptocurrency that is always valued at a 1-to-1 ratio with the US dollar. This makes Tether ideally suited to short-term trading and transfers.
Tether has surged in popularity since it was launched in 2014. It’s had its fair share of controversy like many cryptocurrencies but many of the rumours have been debunked. Regardless, keep an eye on cryptocurrency news for latest developments.
What is Tether (USDT)?
Tether is a new-age cryptocurrency known as a stablecoin or stable currency. It is fungible asset, meaning it is easily interchanged with another asset of the same type. Examples of fungible goods are the US dollar, gold, shares and options.
In the case of Tether, the stablecoin is pegged to a major fiat currencies to stabilise the price. All Tether digital coins in circulation are allegedly backed with an equivalent amount of US dollars, Japanese Yen or Euro which can be deposited in an account at a mainstream bank.
USDT is meant to be worth around $1 but at various points, it’s been valued above $1.05 or below $0.95 as the markets gain and lose confidence in Tether.
According to Tether, whenever it issues new USDT tokens, it allocates the same amount of USD to its reserves. This ensures that USDT is fully backed by cash and cash equivalents. USDT protects investors from extreme price fluctuations that plague the cryptocurrency market, hence the name stablecoin.
In addition, Tether provides the market with a simple way to transact a US Dollar equivalent between regions, countries and continents using open-source blockchain technology. This means investors aren’t incumbent to slow and expensive intermediaries like banks and third-party payment portals like Mastercard and PayPal.
What makes Tether unique?
Price stability is a key property of USDT. Tether aims to provide a safe haven for cryptocurrency investors in high volatility trading conditions. Basically, you can park your financial portfolio in Tether without having to completely cash out into US Dollars.
Tether brings a comparative advantage which Bitcoin has failed to bring to the market. That is value-for-value conversion of fiat currencies into crypto coins, thereby making it easy to trade with them.
Fast facts about Tether
| 📈Tether | ⚡Fast Facts |
|---|---|
| Launched | 2014 |
| Headquarters | Hong Kong and British Virgin Islands |
| Founders | Brock Pierce, Reeve Collins and Craig Sellars |
| Ownership | Tether is controlled by Tether Holding Ltd |
| Market capitalization | $35 457 330 275 |
| Native token | USDT |
| 7-day low/ 7-day high* | $0.9987 / $1.00 |
*1 February 2025
How do Tether tokens work?
Tether tokens exist as digital tokens that are built on Bitcoin, Ethereum, EOS, Tron, Algorand, SLP and OMB blockchains using Omni and Liquid protocols. The transport protocols consist of open source software that interface with blockchains to allow Tether tokens to be issued and redeemed.
The Tether Platform is 100 percent backed by Tether’s reserves and is fully reserved when the sum of all Tether tokens in circulation is less than or equal to the value of its reserves.
What can you do with Tether?
You can store, send and receive 1-to-1-pegged digital currency across exchanges, platforms and wallets. It gives you the joint benefits of open blockchain technology and traditional currency by converting your fiat cash into a stable digital currency equivalent.
For example, if you hold US$100 USDT, you can exchange it for US$100 through a traditional bank account.
The transaction is done person-to-person, globally, instantly and securely for a fraction of the cost of banks and third-party payment platforms.
A key feature of a stablecoin like Tether is it provides stability to the valuations as opposed to wild fluctuations that we frequently observe in Bitcoin and other cryptocurrencies.
As a stable cryptocurrency, Tether can be used as a medium of exchange and a mode storage of value, rather than being used as a speculative medium of investments.
What is a stablecoin?
To understand the benefits of Tether, you need to understand more about stablecoins which are a new class of cryptocurrencies.
As the name suggests, stablecoins were created to stabilise the value of cryptocurrencies. They are given equal value to real-world assets like major fiat currencies, gold, shares and options.
Stablecoins are likened to a bridge that provides those who are reluctant to invest in notoriously volatile cryptocurrencies to cross over into the world of digital currencies. It provides investors with some kind of guarantee that their investment is more stable and secure than it would be if entirely made up of more volatile cryptocurrencies.
In practice, Tether is a very useful digital token due to its steady value and the fact that it can be used to trade both digital and fiat currencies on many of the world’s major exchanges. Basically, Tether has an edge over Bitcoin and Ethereum due to its liquidity.
Pros and Cons of Stablecoins
| ✔️ Pros | ❌ Cons |
|---|---|
| Lack of volatility | centralised not decentralised. |
| Quick and easy to trade interchangeably with real-world assets | |
Even though stablecoins use blockchain technology, they are not decentralised currencies. Tether, for example, is managed by a private company, Tether Holding Ltd, that has enough equity to back USDT with real-world assets.
The centralised nature of stablecoins is somewhat of a disadvantage because it defers to potentially fallible human intervention.
Where cryptocurrencies like Bitcoin and Ethereum are revolutionary is they have decentralised the control of money. In fact, decentralisation is pivotal to the blockchain and the cryptocurrencies that run on it.
The premise is secure transactions can be achieved on blockchain – saving time and money – without the need of a central authority, including central banks and traditional third-party payment processors like PayPal and Mastercard.
Why is Tether so popular?
Tether is a stablecoin. The name itself gives you an idea of why it’s so popular. Tether was designed to mirror the value of the US Dollar. The whole point was to create a stable cryptocurrency that can be used like digital dollars. Tether even acts as a US Dollar replacement on many major exchanges.
Tether converts cash into digital currency to anchor or ‘tether’ the value of the coin to the price of national currencies such as the US Dollar, the Euro and the Japanese Yen. The digital tokens are supposed to be backed by US Dollars kept in reserve on a 1-to-1 ratio, although there is some controversy around this claim.
If Tether trades at US$1 on all exchanges, it can theoretically be used in place of one US dollar in a bank. In practice, the price tends to fluctuate a bit.
What is Tether used for?
Traders and investors use Tether as a US dollar replacement. It’s mostly used as a way of keeping funds on markets when trading is volatile or when traders fear the stock is high risk.
Tether can easily and quickly be exchanged between individuals and exchanges which saves on time and cost moving money via traditional banks. USDT can be bought and sold through any cryptocurrency exchange.
Cryptocurrency price movements are notoriously volatile. Any monetary profit made by investing in a cryptocurrency like Bitcoin or an altcoin like Ethereum can quickly disappear if the value of the digital currency crashes.
By investing in Tether (USDT), you can enjoy the stability of a core currency like the US Dollar. You can quickly and easily jump between holding cryptocurrencies and US Dollars without fearing monetary losses.
In other words, investors can trade in and out of USDT with the reassurance that the value of the stablecoin is pegged to the US Dollar or other financial assets.
Tether 1:1 update
In 2019, Tether changed the wording on its website regarding how the stablecoin is backed. Basically, Tether no longer claims to be backed 1:1 by US Dollars in a bank account. It now claims to be more than 74% backed but less than 100% backed.
The new wording reads:
“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and – from time to time – may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively “reserves”).
Every tether is also 1-to-1 pegged to the dollar, so 1 USDT is always valued by Tether at 1 USD.”
To fill in this gap, Bitfinex – a cryptocurrency exchange owned and operated by iFinex Inc – initiated an ICO and started selling an exchange token called LEO. Bitfinex is using part of the proceeds of the ICO and its other revenue to pay back Tether for the loan and restore its backing.
The New York Attorney General’s office uncovered many peculiarities and raised several concerns but it also found that Tether had large cash reserves.
As a whole, the market appears to trust Tether despite FUD and USDT remains the primary stablecoin. More importantly, it’s the most liquidity-driven cryptocurrency on the market.
Tether dominates stablecoin market
In 2025, the value of stablecoins in circulation increased from $5.7 billion to $22 billion. The third quarter of 2025 saw an increase of 120% in contributions, from $10 billion in May to about $22 in October.
In 2025, Tether’s share of the stablecoin market was 80%. Tether (USDT) is by far the most significant stablecoin, with a supply six times bigger than USD Coin (USDC) which runs on the Ethereum blockchain. All signs are interest in Tether has shifted from speculative to utility.
Tether is also being adopted in crypto derivatives. It even acts as a dollar replacement on popular exchanges such as Bitfinex and Poloniex.
Is Tether a good investment?
In theory, Tether delivers exactly what the market needs; a stable cryptocurrency. However, in practice, there are price fluctuations in its exchange value as well as other real concerns, mainly related to third-party centralisation.
Tether has a lot to offer the market and you shouldn’t let FUD (fear, uncertainty and doubt) generated by sceptics stop you from trading in USDT. The benefits of a stable cryptocurrency appear to outweigh short-position concerns.
Trading any cryptocurrency is associated with a high level of risk. If you’re interested in Tether, we recommend using the crypto-asset for short-term trading and transfers. It’s best to convert to and transfer large amounts of USDT in batches. That way you reduce your overall exposure.
DISCLAIMER
Trading cryptocurrencies carries a high level of risk and may not be suitable for all retail traders and investors. Consider your capacity for risk before deciding to trade cryptocurrencies. There is the possibility that you could lose some or all of your initial investment so you should not invest money that you cannot afford to lose.
The information in this article is for education purposes only. SA Shares will not accept liability for any financial loss which may arise directly or indirectly from use of or reliance on information contained in this article.
Frequently Asked Questions
What is Tether?
Tether is a new-age cryptocurrency known as a stablecoin or stable currency.
What is the value of Stablecoins?
They are given equal value to real-world assets like major fiat currencies, gold, shares and options.
