What is Tether?
Tether is a stable coin that maintains a 1:1 peg with the US dollar. Tether is operated by or referred to as Tether Restricted by Tether Keeping Limited. JL Van Der Velde is the CEO, Giancarlo Devasini is the CFO, and Suart Hoegner is the General Counsel.
The team operating Bitfinex, a global cryptocurrency exchange, first introduced Tether.
How does it work?
The Omni Layer, a transport protocol on the Bitcoin network, was initially based on Tether. The initial iteration of Tether is thus distinguished by the intrinsic reliability and protection of the blockchain network that has been built for the longest time.
Tether was released on the Ethereum network, as an ERC20 coin, in September 2017 to promote acceptance. The most common Tether token form now is Tether’s Ethereum ERC-20.
Ethereum, Tron, EOS, Liquid, and Algorand are now accessible on Tether. On Tether’s Transparency tab, you will see the entire breakdown.
On 20 March 2020, Tether revealed that using the Basic Ledger Protocol, they would now be on the Bitcoin Cash network.
How does Tether’s 1:1 peg work?
According to Tether, via a one-to-one collateral ratio, the USDT peg is retained. For the fiat currencies backing USDT, Tether serves as a third-party custodian.
Step 1: The customer deposits fiat currency into the bank account of Tether Limited.
Step 2: Tether delivers and rewards the Tether account of the consumer. New Tether joins circulation. The value of the consumer’s deposited fiat currency must be equivalent to the amount of Tether provided to the user (e.g.: USD $500 deposited = USD $500 issued)
Step 3: User purchases USDT. It is necessary for the customer to transact, share, and store USDT.
Step 4: For redemption into fiat currency, the customer deposits USDT.
Step 5: Tether destroys the Tether and sends the user’s bank account with fiat currency.
History of Tether
Tether started with an online whitepaper released in January 2012, J.R. On top of the Bitcoin Framework, J.R. Willett mentioned the concept of developing new currencies.
Willett proceeded to help incorporate this concept in the Mastercoin cryptocurrency, which had an underlying Mastercoin Base (later called the Omni Foundation) to promote the usage of this emerging “second layer” of Bitcoin.
On July 2014, co-founders Brock Pierce, Reeve Collins, and Craig Sellars revealed the successor to Tether, initially called “Realcoin,” as a company founded in Santa Monica. The first tokens were released on the Bitcoin network on 6 October 2014. This was achieved utilizing the Omni Layer Protocol.
Tether CEO Reeve Collins revealed on 20 November 2014 that the project was called “Tether”.The organization also announced that it was joining a private beta that funded a “Tether+ token” for three currencies: USD USTether (US+), EUR EuroTether (EU+), and YenTether (JP+) for Japanese Yen.
The cryptocurrency exchange Bitfinex enabled Tether to be exchanged on its platform in January 2015. A spokesman for Bitfinex and Tether said that Jan Ludovicus van der Velde is the CEO of both companies. Bitfinex is one of the world’s leading by volume Bitcoin exchanges.
The Omni Foundation and Charlie Lee revealed in June 2017 that Tether will soon be released on Litecoin’s Omni layer. In September 2017, Tether reported that it will introduce additional ERC-20 tokens on the Ethereum network for United States dollars and euros.
Later, Tether verified that the Ethereum tokens had been released. There are actually a total of four different Tether tokens: US Dollar Tether on the Omni layer of Bitcoin, Euro Tether on the Omni layer of Bitcoin, US Dollar Tether as an ERC-20 token, and Euro Tether as an ERC-20 token.