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CRYPTO BLOG
USDT
What is USDT?
USDT (Tether) is a stablecoin: a digital asset whose value is pegged to the US dollar (1 USDT ≈ 1 USD).
Its purpose is to provide price stability in the crypto world, enabling fast and low-cost transfers without converting to fiat money.
Birth and Early Years (2014-2017)
The Origin
Created in 2014 by Tether Limited, initially under the name Realcoin. It was a revolutionary idea: a digital currency backed 1:1 by USD.
One of the co-founders was Brock Pierce, and the project is linked with Bitfinex executives, a key exchange in USDT's history.
Technology
Initially ran on the Omni network (a layer over Bitcoin), but later expanded to Ethereum (ERC-20), Tron (TRC-20), Solana, and more.
Surge in Use and Controversies (2017-2020)
Market Domination
USDT becomes the dominant stablecoin. Essential for crypto trading: avoids banks and facilitates capital movement between tokens.
First Major Controversy
- Questions arise about whether there are truly enough reserves to back the circulating USDT.
- Investigations between 2017-2018 into possible Bitcoin price manipulation.
- A University of Texas study suggests USDT inflated BTC's price during the 2017 bubble.
Relationship with Bitfinex
Tether and Bitfinex share executives. In 2019, the New York Attorney General accuses Bitfinex of using Tether funds to cover an $850 million deficit.
Regulation, Expansion, and Consolidation (2020-2023)
Regulation and Sanctions
- Tether pays $18.5 million in 2021 and is banned from operating in New York.
- It is revealed that USDT was not fully backed by cash dollars.
Reserve Changes
Since 2022, Tether has improved transparency, backing USDT with liquid and safe assets like U.S. Treasury bonds and cash.
Market Dominance
USDT remains the most-used stablecoin, surpassing Bitcoin and Ethereum in daily volume.
Crucial in economies with inflation or banking restrictions: Argentina, Turkey, Venezuela, etc.
Social and Economic Impact
Financial Survival Tool
In emerging economies, USDT serves as a digital store of value against weak local currencies.
In many cases, it is more accessible than physical dollars.
Alternative to Traditional Banking
- Store value in USD without a bank account.
- Send remittances and make global payments without banking fees.
DeFi and Crypto Economy
USDT is a pillar in:
- DeFi (lending, yield farming)
- Decentralized exchanges
- Crypto derivatives markets
Criticism, Controversies, and Current Risks
Centralization
USDT can be frozen or blocked by Tether Ltd., raising concerns about financial censorship.
Trust and Transparency
Although there has been progress, Tether still does not conduct full and independent audits. Its corporate structure remains opaque.
Competition and Regulatory Pressure
It competes with:
- USDC (more regulated and transparent)
- DAI (stable and decentralized)
Additionally, CBDCs (central bank digital currencies) could pose a future threat.
Current Status and Future Outlook (2024-2025)
Today
USDT remains the most-used stablecoin on the planet, with over $100 billion in circulation.
It is essential in regions where access to traditional finance is limited.
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*This website has an educational or informational purpose about cryptocurrencies and does not recommend any type of investment.
