USDT is Tether USD (hereinafter referred to as USDT), a token launched by Tether based on the stable value currency U.S. dollar (USD). 1 USDT = 1 USD. Users can use USDT and USD for 1:1 exchange at any time. Tether strictly abides by the 1:1 reserve guarantee, that is, for every USDT token issued, its bank account will have a USD 1 fund guarantee.

Users can conduct fund inquiries on the Tether platform to ensure transparency. Users can wire US dollars to the bank account provided by Tether through SWIFT, or exchange for USDT through exchanges; when redeeming US dollars, the reverse operation can be done. Users can also exchange Bitcoin for USDT on the trading platform.

Overview of USDT

USDT is issued and traded using the Omni (formerly Mastercoin) protocol, which is a 2.0 currency based on the Bitcoin blockchain. USDT transaction confirmation and other parameters are consistent with Bitcoin. Users can wire US dollars to the bank account provided by Tether through SWIFT, or exchange for USDT through the exchange. When redeeming US dollars, the reverse operation can be done. Users can also exchange Bitcoin for USDT on the exchange.

Tether strictly abides by the 1:1 reserve guarantee, that is, for every USDT token issued, its bank account will have a USD 1 fund guarantee. Users can conduct fund inquiries on the Tether platform to ensure transparency.

USDT is not a new currency, it has been traded online as early as 2015, but because of the late introduction of domestic exchanges, many investors do not know much about it. After currency-to-currency transactions, many investors are more concerned about how to convert their tokens into legal currency. The emergence of USDT provides a channel for everyone to convert their tokens into legal currency.

USDT structure

The layers are introduced as follows:

Bitcoin blockchain layer mainly realizes the function of Tether distributed ledger. Tether transaction information is stored in Bitcoin's distributed ledger through OP_RETURN.

Omni protocol layer, the main functions of Omni protocol layer are as follows:

1. Create and destroy USDT

2. Provide OmniApi

3. Track Tether circulation through http://Omnichest.info provides blockchain browser function

4. Support users to trade and save Tether(USDT)

Tether business layer, the main functions of Tether business layer are as follows:

1. Fiat currency exchange to Tether(USDT)

2. Tether(USDT) to fiat currency

3. Tether(USDT) in supervision and circulation

Characteristics of USDT

Intuition: USDT is equivalent to US dollar, 1USDT=1 US dollar. Each currency = how much USDT, which is equivalent to its unit price in US dollars.

Stability:Because TEDA is backed by fiat currency, users can still trade in the blockchain asset market without being affected by price fluctuations of most blockchain assets.

Transparency: Tether, the issuing company of Tether, claims that its fiat currency storage account is regularly audited to ensure that every Tether in circulation in the market is backed by a corresponding one dollar. The storage account status is public and can be queried at any time. In addition, all Tether transaction records will be published on the public chain.

Small transaction fees: There are no fees for transactions between Tether accounts or between wallets that store Tether. A transaction service fee is charged when converting Tether to fiat currency.

The role of USDT

1. Avoid the overall downside risk

In currency trading, there are three common situations, LTC/BTC transaction as an example:

After buying LTC with BTC, both BTC and LTC are rising, and you enjoy two benefits;

After buying LTC with BTC, one of BTC and LTC will rise and the other will fall. Your income depends on the rise and fall of the two currencies, whichever is greater. As long as the increase of any one is greater than the decrease of the other, you will make money. Anyway, it's a loss. If the ups and downs are equal, neither profit nor loss;

After buying LTC with BTC, the market is extreme and both currencies are falling, so you need to bear two losses. This is often the worst.

But with USDT, when the price of the currency falls, you can immediately exchange the currency for USDT, so as to ensure that your assets will not shrink.

2. Reverse operation digital currency withdrawal

Recharging is very simple. The USDT company stated that investors can wire US dollars to Tether’s bank account through SWIFT, or exchange for USDT through the Bitfinex exchange.

If you have made a lot of profits and want to withdraw cash, you can first convert the currency in your hand to USDT, and then convert it to USD through Tether or other platforms. Here you can find that if you complete the certification of the USDT company, you can directly trade on other currency trading platforms that do not require certification, and you do not need to re-certify other platforms.

However, the withdrawal process is not so easy. You can return the USDT in your hand to Tether through Tether. Tether destroys the received USDT and distributes the equivalent USD to the user. It should be reminded that whether it is to purchase USDT by wire transfer of USD to the bank account provided by Tether, or to exchange USDT back into USD, account verification needs to be completed. It is understood that Tether's KYC is relatively difficult to pass, and the exchange fee is about 5%.

In addition, USDT can also be exchanged for US dollars through trading platforms such as kraken. On the Kraken platform, select the USDT / USD trading pair to exchange USDT for US dollars.

Risk of USDT

Regarding the risks of USDT, Tether also wrote in "Tether White Paper: A Legal Currency Token Utilizing Bitcoin Blockchain Transactions":

Tether is a decentralized digital currency, but we are not a perfectly decentralized company. We store all assets as a centralized pledger.

The company may go bankrupt;

The bank with which the company has an account may go bankrupt;

Banks may freeze funds;

The company may run away with money;

The risk of re-centralization may paralyze the entire system;

It can be seen that USDT is issued by Tether and has its own centralized attributes. There are still many risk points in it, and investors need to judge carefully.

Comments from the media

Tether (USDT), almost the most popular stablecoin in recent years, has a market share of nearly 3 billion US dollars, far surpassing its stablecoin counterparts USDC, Gemini Dollars, and JPM Coin. USDT is used as an alternative to the U.S. dollar in digital currency trading platforms, so people don't have to exchange them for fiat currency. Nearly 80% of all Bitcoin transactions and all money laundering is done with Tether. This is very natural, just like the process of most digital currency transactions.

Tether is one of the top five digital currency companies in terms of cash flow. They make 3-5% of the $2 billion provided by users around the world, all at virtually no operating cost. This "stablecoin," which they call a 1:1 exchange rate with the dollar, does not take into account the additional profit they get from it.