What is Tether OMNI (USDT)
Tether USDT is a stablecoin backed by an equivalent amount of fiat currency. A stablecoin is an asset, a type of cryptocurrency, and a digital currency that’s tied to a real currency to maintain a stable amount. Many kinds of stablecoins match other fiat currencies. Tether tokens are designed to always follow the value of the traditional currency of US dollars: $1 is equivalent to one Tether token.
These were created by Brock Pierce, Reeve Collins, and Craig Sellars. The digital tokens are developed by Cryptocurrency Exchange BitFinex and run on blockchain technology like other cryptocurrencies. You can convert other currencies with USDT anytime, trade them in the crypto market, or send them with Changelly. This digital money is hosted by the Ethereum blockchain and is issued by Tether Ltd.
USDT offers traders and investors a way to avoid the extreme volatility of other assets by reducing their exposure to sudden drops of values. Moreover, it’s cheaper and faster to transact with USDT and trade with other cryptos.
How Is the Tether Network Secured?
Every token is backed up by Tether’s reserves, which are always equal in value with the tokens they issue. This is opposed to the rapid swinging of a common cryptocurrency like Bitcoin or Ethereum. It’s also categorized under a fiat-collateralized stablecoin, which means a fiat currency backs up the crypto in circulation.
Currently, Tethers can be issued on numerous crypto networks and third parties such as:
- Bitcoin through Omni Foundation
- OMG Network
As it doesn’t work on its own blockchain, it’s secured by the algorithms of the blockchains it operates on.
However, these coins faced an issue back in November 2017. It was allegedly hacked with over US$31 million worth of coins that caused a hard fork or a comprehensive protocol change in the network. In April 2019, Letitia James accused the parent company iFinex Inc. of hiding a loss of $850 million of commingled client and corporate funds from investors. Court filings stated that this amount was given to a Panamanian entity without any official contract or agreement to handle customers' withdrawal requests.
In February of 2021, the New York Attorney General’s office settled the charges with Bitfinex and Tether after the accusation of losing $850 million to a Panamanian money-transfer service, Crypto Capital Corp. They said that Tether’s claims were not actually backed by an equal US dollar total supply of reserves in commercial paper.
What Makes Tether Unique?
This stablecoin has been widely accepted and used for many years in the crypto world compared to other stablecoins. Many vendors and protocols utilize it as payment and trading options within the industry.
Because of its large reserves, Tether trading also gives investors the option to avoid the extremely volatile aspects of the market. Its ability to maintain its value makes it unique, significantly cutting the risks its users have to deal with.
Since there’s no exchange rate risk with this kind of trading, its daily volume can be estimated with more than its market capitalization. Unlike non-stable crypto that has this issue, USDT poses a safer option for short-term fund transfers in crypto markets.