What is USDT (Tether)?
USDT is a stablecoin that tries to stay worth one US dollar. Here is how it works, why people use it and what the risks are.
USDT, also called Tether, is a stablecoin: a crypto token designed to stay worth about one US dollar. It is the most traded cryptocurrency in the world, often ahead of Bitcoin by daily volume.
How it keeps its value
Tether Limited says every USDT is backed by reserves such as US Treasury bills, cash and other assets. When someone sends dollars to Tether, new USDT is created. When USDT is redeemed, it is destroyed. Traders keep the price close to $1 because they can profit whenever it drifts away.
Why people use it
- A dollar you can move anywhere. Sending USDT across borders takes minutes and costs little, especially on the TRON (TRC20) network.
- Protection from a weak local currency. In countries where the local currency loses value quickly, people hold USDT to keep savings in dollars.
- A parking spot between trades. Traders move into USDT to lock in gains without leaving the crypto world.
The same coin on different networks
USDT exists on many blockchains: TRON (TRC20), Ethereum (ERC20), BNB Chain (BEP20), Solana and more. The networks are not connected. If you send TRC20 USDT to an ERC20 address, it can be lost. Always match the network on both sides.
Risks to understand
- USDT depends on a private company and its reserves. If confidence drops, it can briefly trade below $1.
- Tether can freeze USDT at specific addresses, usually at the request of law enforcement.
- Local rules differ. Some countries restrict buying USDT with local currency.
Most people buy USDT through an exchange or through peer-to-peer (P2P) markets, where prices can be above or below the bank rate.