- What is USDT?
USDT (Tether) is a stablecoin issued by Tether Limited. Unlike other highly volatile cryptocurrencies (such as Bitcoin and Ethereum), USDT is pegged to the US dollar at a 1:1 ratio, meaning 1 USDT ≈ 1 USD. This stability makes it an important tool for cryptocurrency trading, cross-border payments, and asset preservation.
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- Basic Information about USDT
Issuing Company: Tether Limited
Issuance Time: 2014 (originally named Realcoin, later renamed Tether)
Blockchain Support: Initially based on Bitcoin's Omni protocol, now expanded to multiple blockchain networks including Ethereum (ERC-20), Tron (TRC-20), Solana, etc.
Market Cap: Long-term ranking among the top three cryptocurrencies, with a circulation exceeding $89 billion (as of 2025).
What currency is USDT? This article will help you understand Tether. - Main Uses of USDT
Intermediary Currency for Cryptocurrency Trading: Due to the stable price of USDT, exchanges often use it as a trading pair (e.g., BTC/USDT, ETH/USDT).
Hedging Tool: When the market is highly volatile, investors can convert their assets into USDT to avoid risks.
Cross-Border Payments and Remittances: USDT transactions are fast and have low fees, making it suitable for international transfers.
DeFi (Decentralized Finance) Applications: Many DeFi protocols support USDT as collateral or liquidity provision tokens. - The Operating Mechanism of USDT
The core mechanism of USDT is the "1:1 reserve system," meaning that for every 1 USDT issued, Tether must hold 1 USD (or equivalent assets) in reserve in its bank account. This model aims to ensure the stability and convertibility of USDT.
Issuance and Redemption of USDT
Issuance (Minting): When users deposit USD into Tether, Tether issues an equivalent amount of USDT.
Redemption (Burning): When users convert USDT back to USD, Tether burns the corresponding amount of USDT. - Comparison of USDT with Other Stablecoins
In addition to USDT, there are various other stablecoins in the market, such as USDC, DAI, BUSD, etc. Here is a comparison:
| Stablecoin | Issuer | Pegging Method | Main Features |
|------------|--------|----------------|----------------|
| USDT | Tether | Fiat-backed (USD) | Largest market cap, strongest liquidity, but transparency is questioned |
| USDC | Circle | Fiat-backed (USD) | Stricter regulation, transparent audits |
| DAI | MakerDAO | Crypto-backed (Decentralized) | Fully decentralized, relies on smart contracts |
| BUSD | Binance and Paxos | Fiat-backed (USD) | Regulated in the US |
Advantages of USDT:
Strongest liquidity: Almost all exchanges support USDT trading pairs.
Fast transaction speed: USDT transfers based on Ethereum, Tron, and SOL take only a few minutes.
Wide range of use cases: From exchanges to DeFi, USDT is highly accepted.
Disadvantages of USDT: Tether controls the issuance and redemption of USDT (centralization risk).
What currency is USDT? This article will help you understand Tether. - How to Use USDT Safely?
Despite the controversies surrounding USDT, reasonable use can still reduce risks: - Choose compliant exchanges: Such as Binance, OKX, Coinbase, etc., to avoid the risk of small platforms running away.
- Pay attention to reserve reports: Tether's official website regularly publishes audit data.
- Diversify assets: Do not store all funds in USDT; consider pairing it with stablecoins like USDC and DAI.
- Be mindful of on-chain fees: ERC-20 USDT (Ethereum network) has higher fees; for small transfers, consider TRC-20 (Tron network) or SOL network.
- Characteristics of USDT
- Stability
The most notable feature of USDT is its price stability. As a stablecoin pegged to the US dollar, the value of USDT fluctuates relatively little, typically maintaining around $1. This makes USDT an important "safe haven" in the cryptocurrency market. For cryptocurrency traders, USDT provides a means to quickly enter and exit the market, avoiding losses during periods of high volatility. - High Liquidity
Due to the stable value of USDT and its support from multiple mainstream blockchain platforms, it has extremely high liquidity in the cryptocurrency trading market. Almost all major cryptocurrency exchanges support USDT trading, and within these exchanges, USDT is often one of the most common stablecoins in trading pairs. - Cross-Chain Support
USDT's cross-chain support means it is not limited to a single blockchain platform. Initially, USDT was issued on the Bitcoin blockchain, but over time, Tether began to support multiple blockchains including Ethereum, Tron, and EOS. This allows USDT to be traded and transferred across multiple blockchain ecosystems, further enhancing its applicability and liquidity. - Convenient Transfers and Payments
As a stablecoin, USDT can be used as a tool for cryptocurrency transfers and payments. Due to its low price volatility, many merchants and investors choose to use USDT for cross-border payments. Additionally, the transfer speed of USDT is relatively fast, making it a preferred tool for digital currency payments.