Founded in July 2014 by Brock Pierce, Craig Sellars and Reeve Collins, Tether (USDT), originally known as “Realcoin”, is a crypto-currency commonly known as “Stablecoin”, which aims at a fixed exchange ratio of 1:1 to the US dollar. Tether was one of the earliest Stablecoins and built on Mastercoin (Omni), a protocol layer for Bitcoin that introduced the Stablecoin concept worldwide in 2012. They pioneered what is now known as the fiat-certified stablecoin model, and USDT is currently the most widely used stablecoin.
Tether was created as an attempt to solve two major problems with the existing crypto-currencies: High volatility and convertibility between fiat currencies and crypto currencies. To address these supposed problems, Tether created a crypto currency that is fully hedged 1:1 by deposits of US dollars in banks. On Ethereum, USDT tokens are represented as ERC-20 tokens, while on Bitcoin, Tether uses the Omni layer to represent USDT tokens. While the tokens themselves operate in a decentralized network, Hong Kong-based Tether Ltd. is solely responsible for generating and redeeming the tokens and maintaining the 1:1 deposit protection.
Stock exchanges have been the main users of USDT as an alternative to fiat currencies, reducing or eliminating the need to maintain external banking relationships. Notable exchanges using the token include Bitfinex, Bittrex, Binance, Coinbase, Kraken, Huobi, Poloniex, Liquid.io, Gate.io and OKEx. Tether Ltd. shares many senior executives and maintains close relationships with Hong Kong-based Bitfinex, both of which are part of the same parent company iFinex Inc.