What Is USDT (Tether)?

What is USDT? It is a stablecoin: a crypto token designed to keep a steady value of one US dollar. USDT is issued by a company called Tether, and it is used heavily on crypto exchanges as a stand-in for dollars, because moving a token between platforms is faster than a bank transfer. Its stability is the whole point, and also the thing to understand before relying on it.

What is USDT backed by?

Tether says each USDT in circulation is backed by reserves, such as short-term US government debt, cash equivalents and other assets, and it publishes regular reports on those reserves. Large verified customers can create new USDT by sending dollars to Tether, or redeem USDT for dollars. That redemption route is what keeps the market price close to $1: if USDT trades below a dollar, traders can buy it cheaply and redeem it; if it trades above, new tokens can be created and sold.

Ordinary users usually cannot redeem directly. They buy and sell USDT on exchanges, where the price can drift slightly from $1, especially in periods of market stress.

USDT networks: why the chain you pick matters

USDT exists as separate tokens on several blockchains. The same balance can be sent over different networks, but a single transfer must stay on one network from start to finish.

Several other blockchains also carry USDT. Whichever you use, the rule is the same: the network selected by the sender must be supported by the receiver for that exact address. Sending over a network the recipient does not support can leave funds stranded, and recovery, when possible at all, is slow and at the platform's discretion.

Sending USDT safely, step by step

1. On the receiving side, choose USDT and the network, then copy the deposit address shown for that network.
2. On the sending side, select USDT and the same network.
3. Paste the address and compare the first and last several characters with the original.
4. Check the withdrawal fee. As an illustration, if you send 250 USDT and the platform deducts a 1 USDT fee from the amount, 249 USDT arrives.
5. For a new address, send a small test amount first and wait for it to arrive.

Watch out for address poisoning: scammers send tiny transfers from addresses that look almost identical to ones you use, hoping you will copy the wrong one from your history later. Always copy addresses from the original source, never from past transactions.

Checking a USDT transfer yourself

Every USDT transfer is recorded on the public ledger of the network it used. When you send or receive, the platform usually shows a transaction ID, also called a hash. Pasting that ID into a block explorer for the correct network shows whether the transfer is confirmed, the exact amount, the sending and receiving addresses and the fee.

This is useful in two ways. If a genuine transfer seems slow, the explorer tells you whether it is still waiting or has already arrived and is being credited by the receiving platform. And if someone claims to have sent you USDT, or a platform claims to have processed your withdrawal, the explorer shows whether that is true. A screenshot of a "sent" message proves nothing; a confirmed transaction on the right network does.

What people use USDT for

• Trading: many crypto pairs are quoted against USDT, so traders move in and out of positions without touching a bank.
• Moving money between platforms: a stablecoin transfer can be faster than an international wire.
• Holding dollar value: some people in countries with unstable currencies hold USDT as a substitute for dollars, accepting the issuer risk.

Risks of USDT

• Issuer risk. The peg depends on Tether's reserves being sufficient and accessible. Questions about its reserves have been raised by regulators in the past.
• De-pegging. Stablecoins have traded below $1 during market panics; some other stablecoins have failed entirely.
• Freezing. The issuer can freeze USDT at particular addresses, for example in response to law-enforcement requests.
• Platform risk. USDT held on an exchange is only as safe as that exchange.
• Scams. Many investment frauds ask victims to "deposit USDT" to a platform or wallet. A request to pay in USDT is not proof of anything; see how to spot trading scams.

Stablecoins and regulation

Several jurisdictions now have or are introducing specific rules for stablecoin issuers, covering reserves, redemption rights and disclosure. Whether a particular stablecoin meets those rules, and whether a local platform may offer it, differs from country to country. If a platform near you delists or restricts a stablecoin, it is usually because of these rules, not a sign of fraud; but always check the platform's own announcement rather than a message from a stranger.

USDT compared with bitcoin

Bitcoin has a fixed supply and a price set entirely by the market; USDT has a supply that grows and shrinks with demand and aims for a fixed price. Bitcoin has no issuer; USDT has one company at its centre. If you want to understand the difference in more depth, read what is bitcoin, and for the bigger picture, how crypto works.

Sources

• Tether, published reserve reports and transparency page
• Tron and Ethereum token standard documentation (TRC20, ERC20)