Key Takeaways
- USDT is a USD-backed stablecoin issued by Tether Ltd., with 1 USDT pegged to 1 USD. Think of it as "blockchain dollars."
- With a 65.89% market share, USDT dominates the stablecoin sector, followed by USDC at 23.05%.
- Depegging risks stem from Tether’s reserves not being fully 1:1 backed—in a worst-case scenario, ~8.3% of USDT couldn’t be redeemed.
USDT Basics
Name: Tether (USDT)
Launch: 2014 by Brock Pierce, Craig Sellars, and Reeve Collins
CEO: JL van der Velde (also CEO of Bitfinex)
Current Supply: 141,996,505,143 USDT (as of February 2025)
👉 Track USDT’s real-time supply
How USDT Works
USDT maintains its peg through:
- Reserves: Claims 1:1 USD backing (audits disputed).
- Issuance/Redemption: Users swap USD for USDT via Tether Ltd.
- Usage: Primary trading pair (e.g., BTC/USDT) on exchanges.
What Is a Stablecoin?
Stablecoins bridge crypto volatility and fiat stability. They’re crucial for:
- Lowering trading costs.
- Facilitating cross-border payments.
Example: USDT’s price stability relies on its reserve system—though transparency issues persist.
USDT’s Use Cases & Advantages
- Trading Pairs: 90% of crypto trades involve USDT.
- Volatility Hedge: Holds value during market swings.
- Cross-Border Transfers: Fast, low-fee global payments.
- ICO/IEO Investments: Accepted by token sales for stability.
⚠️ Caution: USDT’s reserves remain controversial. Diversify with alternatives like USDC.
Depegging Risks: Why USDT Could Fail
Reserve Shortfalls
- **$40B gap**: ChainEye reports $818.3B reserves vs. $140B USDT circulating (Feb 2025).
- Liquidity Crunch: If all holders redeemed simultaneously, ~70B USDT would go unpaid.
Audit Concerns
- Latest audit (March 2023) by BDO—reputable but preceded by MHA MacIntyre Hudson, which faced scrutiny.
- Skepticism persists about reserve transparency.
USDT vs. USDC: Key Differences
| Factor | USDT | USDC |
|---|---|---|
| Issuer | Tether Ltd. | Circle & Coinbase |
| Reserves | Disputed 1:1 backing | Monthly attested audits |
| Transparency | Low | High |
| Market Share | 65.89% | 23.05% |
| Stability | History of minor depegs | More reliable peg |
Bottom Line:
- USDT: Higher liquidity but riskier.
- USDC: Safer but fewer trading options.
FAQs
Is USDT a Scam?
No—but scams misuse its blockchain features. Common frauds:
- Romance scams
- Phishing
- Fake arbitrage schemes
Protect Yourself: Use regulated exchanges and enable 2FA.
How to Buy/Sell USDT?
- Exchanges: Binance, Bybit (P2P).
- Local Platforms: e.g., MAX (Taiwan).
Note: Spreads mean you’ll pay slightly over $1 to buy and receive under $1 to sell.
Is Bitfinex Linked to USDT?
Yes. Both are operated by iFinex Inc., sharing key leadership.
USDT’s CEO in Taiwan
Jean-Louis van der Velde lived in Taiwan since 1985, lecturing at NTUST and NTU.
Final Tip: Diversify stablecoin holdings to mitigate risks. For deeper insights, explore our guide to crypto security.