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What is the Stablecoin USDT?

USDT is a representation of the U.S. dollar on the Ethereum, EOS, Tron, Omni, and Algorand blockchains. 

USDT is a fiat-backed (fiat = government-issued money) stablecoin issued on multiple blockchains. USDT is backed by currency and loan reserves and is redeemable 1:1 for the U.S. dollar with the issuer. USDT tokens are issued by Tether, the largest issuer of stablecoins as of July 2020. Stablecoins USDC, PAX, and GUSD are direct competitors of USDT and are similarly backed by real-world cash reserves.

Where do you acquire USDT?

Usually, businesses can only purchase and redeem USDT 1:1 to the U.S. dollar directly with the issuer Tether. All other parties have to use exchanges and free markets to buy and sell USDT. You’ll need an interface or a wallet to buy, store, and transfer the crypto currency, which is the norm.

On Ethereum, USDT operates under the ERC-20 token standard and are compatible with a range of DeFi applications, including Compound.

Why do you need USDT?

Just like with real-world currency, you can spend, trade, and transfer USDT. But unlike paper money, USDT is blockchain-based and offers extra advantages. Settlements happen in near-real-time on blockchains, for example. Furthermore, like any asset issued on public blockchains, transactions are much more transparent.

USDT is becoming enormously popular

Bitcoin was once the world’s most-used cryptocurrency, but it was supplanted by Tether’s USDT in 2019. Despite a 30-times-smaller market capitalization than Bitcoin, Tether has an 18% higher trading volume! On Ethereum, USDT’s market capitalization almost quadrupled, from $2 billion in 2019 to $7 billion in 2020.

USDT continues to grow and evolve rapidly and is becoming more popular with the DeFi movement.