What is Tether?

Deep Dive into Tether
By 
Coin Cloud Team
, published on 
December 15, 2020
What is Tether?

Tether is one of the more popular cryptocurrencies on the market right now. It was originally announced under the name “Realcoin” in July of 2014 by its co-founders, Brock Pierce, Reeve Collins, and Craig Sellars. Like many cryptocurrencies, Tether works with blockchain technology. Along with that, this altcoin (as most altcoins are) was made to solve some of the problems found in many of the primary cryptocurrencies.

As you might know, cryptocurrency is often feared for its potential volatility, which gives it a tendency to fluctuate in hard-to-predict ways. Tether was created as not only a response to this fear, but also in an attempt to make government-issued money (fiat) and digital currency more compatible. But how exactly does a digital currency decrease its volatility? One response to this issue is the creation of stablecoins.

Stablecoins Explained

As mentioned previously, many popular cryptocurrencies such as Bitcoin can be extremely volatile. Bitcoin has the potential to increase or decrease in value by thousands of dollars over the span of only a month. Stablecoins seek to decrease this wide range of fluctuation and make their digital currency just as stable as fiat, such as the US dollar. They usually do this by simply pinning (or pegging) the coin's value to another currency, like USD.

Tether’s Accomplishments

Tether’s goal is to solve many issues that stablecoins address, and therefore was created as a stablecoin. As of today, Tether is one of, if not the, most used stablecoins. When created, the makers of Tether made sure each token was redeemable for a US dollar. This is one of the primary attributes that increase Tether’s stability. Now Tether has expanded to making stablecoins backed by not only the US dollar, but also the Chinese Yuan, the Euro, and even gold. These assets are held by Tether’s firm’s reserves.

In many ways, Tether accomplished its initial goal of connecting more stable assets like fiat to more volatile things like Bitcoin. Tether helps crypto users who want to take their money out of the volatile crypto market but don’t necessarily need to cash out that investment.

Rather, Tether provides them an option of making that value a more stable asset without going through the transaction process of turning it into cash. This allows crypto users to store their coins in a different way.

Disclaimer: The information and views supplied on the Coin Cloud blog are for educational and entertainment purposes only. We are not financial advisors, so please do your research and consult with a trusted financial specialist before investing your money.

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