Tether (often referred to by its currency codes, USD₮ and USDT, among others), is an asset-backed cryptocurrency stablecoin. It was launched by the company Tether Limited Inc. in 2014. Tether
Limited is owned by the Hong
Kong-based company iFinex Inc., which also owns the Bitfinex cryptocurrency exchange. As of July 2022, Tether Limited has minted the
USDT stablecoin on ten protocols and blockchains. Tether is
described as a stablecoin because it was originally designed to be valued at
USD $1.00, with Tether Limited stating it maintains USD $1.00 of asset reserves
for each USDT issued.
Creation
In 2012, J.R.
Willett published a whitepaper which described the possibility of building new cryptocurrencies on top of the Bitcoin blockchain. Willett went on to help implement
this idea in the cryptocurrency Mastercoin,
which had an associated Mastercoin
Foundation (later renamed the Omni
Foundation) to promote the use of this new "second layer". The
Mastercoin protocol became the technological foundation of the Tether cryptocurrency, and one of the original members of
Mastercoin Foundation. Brock Pierce, became a co-founder of Tether. and Tether
founder, Craig Sellars, became the CTO of the Mastercoin Foundation.
The precursor to
Tether, originally named "Realcoin", was announced in July 2014 by
co-founders Brock Pierce, Reeve Collins, and Craig Sellars as a Santa Monica based startup. The
first tokens were issued on 6 October 2014, on the Bitcoin blockchain. This was done by using the Omni
Layer Protocol. On 20 November 2014, Tether CEO Reeve Collins announced
the project was being renamed to "Tether". The company also announced
it was entering private beta, which supported a "Tether+ token" for
three currencies: USTether (US+) for United States dollars, EuroTether (EU+) for euros and YenTether (JP+) for Japanese yen. Tether said, "Every Tether+ token is
backed 100% by its original currency and can be redeemed at any time with no
exposure to exchange risk." The company's website states that it is
incorporated in Hong Kong with offices in Switzerland, without giving details.
2015–2016
In January 2015,
the cryptocurrency exchange Bitfinex enabled trading of
Tether on their platform. While representatives from Tether and Bitfinex say
that the two are separate, the Paradise Papers leaks in November 2017 named Bitfinex
officials Philip Potter and Giancarlo Devasini as responsible for setting up Tether Holdings Limited in the
British Virgin Islands in 2014. A spokesperson for Bitfinex and Tether has said that the CEO of
both firms is Jan Ludovicus van der Velde. According to Tether's website,
the Hong Kong-based Tether
Limited is a fully owned subsidiary of Tether
Holdings Limited. Bitfinex is one of the largest Bitcoin exchanges by volume in the world.
For a while,
Tether was processing US dollar transactions through Taiwanese banks which, in
turn, sent the money through the bank Wells Fargo to allow the funds to move outside Taiwan. Tether announced that on 18 April 2017, these
international transfers had been blocked. Along with Bitfinex, Tether filed
suit against Wells Fargo in the U.S. District Court for the Northern
District of California. The lawsuit was withdrawn a week later.
Tether issues
tokens on Bitcoin (Omni and Liquid Protocol), Ethereum, EOS, Tron, Algorand, SLP and -OMG Network blockchains.
Currently, there
are a total of five distinct Tether tokens: United States dollar tether on
Bitcoin's Omni layer, euro tether on Bitcoin's Omni layer, United States dollar
tether as an ERC-20 token, and euro tether as an ERC-20 token, and added in
2020 United States dollar tether as an TRC-20 token on the TRON network.
2017–2018
From January 2017
to September 2018, the number of tethers outstanding grew from about $10
million to about $2.8 billion. In early 2018 Tether accounted for about 10% of
the trading volume of Bitcoin, but during the summer of 2018 it accounted for
up to 80% of Bitcoin volume. Research suggests that a price manipulation
scheme involving tether accounted for about half of the price increase in Bitcoin in late 2017. More than $500
million of Tether was issued in August 2018.
On 15 October
2018 the tether price briefly fell to $0.88 due to the perceived credit risk as
traders on Bitfinex exchanged tether for
Bitcoin, driving up the price of Bitcoin.
2019–Present
In 2019, Tether
surpassed Bitcoin in trading volume with the highest daily and monthly trading
volume of any cryptocurrency on the market.
