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USDT is a stablecoin issued on various blockchains and whose value is backed by that of the US dollar (USD).
Created in 2014, it plays a pivotal role in the crypto-asset ecosystem: its price always remains close to $1 and allows you to quickly protect yourself from market volatility without exchanging your crypto-assets for fiat currency.
JR Willett developed the beginnings of USDT in a white paper in 2012.
In it, he described the possibility of creating additional currencies on top of the Bitcoin protocol (Bitcoin courses), via new layers.
At the time, he was working on Mastercoin, a cryptocurrency in which he implemented this idea.
Mastercoin thus became the basis for Tether (the parent company of USDT), and one of its founders, Brock Pierce, would come to be known as a co-founder of Tether.
Realcoin was announced in July 2014.
It is the direct ancestor of USDT.
The first tokens are issued in October 2014 on the Bitcoin blockchain.
The Omni Layer protocol was used.
At the end of the same year, Realcoin officially became Tether.
The company is based in Hong Kong and Switzerland.
A private beta version was launched at the same time, with the promise that each Tether + token would be 100% guaranteed in its original currency.
Three currencies are involved: dollars (USTether), euros (EuroTether) and yen (YenTether).
Crypto-trading platform Bitfinex, one of the world’s largest sources of Bitcoin exchanges, added USDT in 2015.
An initial controversy erupts in 2017, when links between Bitfinex and Tether are revealed, casting a pall over the platform’s supposed neutrality.
In 2017, Tether was released on Litecoin‘s Omni layer. Later that year, Tether launches dollar and euro tokens on Ethereum.
In 2018, Tether alone accounts for almost 80% of Bitcoin transactions.
Other controversies arise around this time, including suspicions of Bitcoin price manipulation. A lawsuit is filed in 2019 by the New York State Attorney General.
Bitfinex is accused of using Tether reserves to cover its losses.
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USDT (Tether) is a stablecoin widely used in the cryptocurrency ecosystem.
It is designed to maintain a stable value by being backed by the US dollar, meaning that each USDT is supposed to be backed by an equivalent reserve of dollars.
This 1:1 parity with the USD makes it a valuable tool for traders and investors looking to avoid the volatility of other cryptocurrencies while retaining the ability to transfer funds quickly and cheaply across trading platforms and DeFi (decentralized finance) applications.
USDT also facilitates the transition between cryptocurrencies and fiat currencies, simplifying transactions.
However, debates persist over the transparency and verification of dollar reserves, raising questions about the long-term security and stability of USDT.
This crypto offers definite advantages:
In 2023, Tether made news by investing $420 million in Bitcoin (BTC) mining in Europe, via the acquisition of 10,000 units of H100-type GPUs from Northern Data Group, a German company.
These chips are highly sought-after in both the crypto-currency mining and artificial intelligence sectors (see our article “crypto AI in 2024“).
By investing in Northern Data Group, Tether is positioning itself as a key player in the field of artificial intelligence in Europe.
This move is part of Tether’s strategy to expand beyond its role as a simple stablecoin issuer.
The company is diversifying by investing in areas such as energy production, Bitcoin mining and communication technologies.
With this initiative, Tether becomes one of Europe’s leading GPU cloud operators.
USDT is a crypto that raises many questions.
While it is popular and, in theory, quite safe, regular controversies cast a shadow over USDT.
Against this backdrop, what is your opinion of USDT?
This crypto-currency offers definite advantages, providing reassuring and undeniable protection against market volatility.
Tether therefore seems “too big to fail”.
Representing 75% of the stablecoin market’s valuation and almost all its volume, it remains an indispensable asset for speculators who need to be able to quickly rebalance their positions in a relatively stable currency.
The market as a whole prefers to turn a blind eye to the weaknesses of the Tether model.
Cynical observers may draw an easy parallel with the classic business model based on debt management.
Tether has comfortable financial reserves and won’t be competing so easily. After all, the motto of the currency that parent company Bitfinex used for its fundraising is Unus Sed LEO: “alone but a lion”.
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