As the value of bitcoin and other currencies have always been highly dynamic, crypto-currency world is synonymous with volatility. But a new type of cryptocurrency is trying to change this story—enter Tether, the first stablecoin in the world.

Despite the fact that several stablecoins have entered the market, Tether is still the most popular, with a market worth of more than $60 billion. It necessitates the regulation of the currency by a custodian, who then reserves a specific amount of collateral as security.

The notion of creating a stablecoin was first discussed in 2012 under the name ‘RealCoin.' One Tether or USDT was supposed to be worth $1. As a result, 100 USDT equals $100, and so on.

Brock Pierce, Reeve Collins, and Craig Sellers, the co-founders, ultimately issued the first tokens two years later. Bitfinex, a Hong Kong-based cryptocurrency exchange, was the first to host the currency on its platform in 2015. Binance, WazirX, Huobi, and a slew of other exchanges now employ it to provide liquidity and a buffer against market volatility.

However, it has sparked a number of debates since then.

The shadowy background of Tether :

Tether and Bitfinex were discovered to have the same management and corporate team in 2017. It revealed that the two firms were closer than they wanted to admit publicly, and Bitfinex was instrumental in promoting its acceptance by listing it on the exchange.

Critics have often stated that there is no genuine collateral backing the money, implying that it could be a hoax. The corporation attempted to use its affiliates as collateral for loans, but transparency and audits were severely constrained.

Tether Ltd.'s parent firm, iFinex, was accused in 2019 of attempting to conceal a $850 million loss by seizing about $700 million of Tether's cash reserves and using it to reimburse investors. The money was stored for safekeeping, according to the corporation, and was not taken.

What distinguishes stablecoins from other crypto currencies?

Cryptocurrencies such as Ether and Bitcoin are based on the free market idea, which means their value is solely determined by supply and demand. While this makes them a great way to generate rapid money, it also makes them extremely unreliable.

In the classical sense, a 'currency' must be stable in order for people to rely on it for everyday transactions. Central banks control and regulate fiat currencies like the Dollar and the Rupee in order to keep inflation, debt, and other external forces under check.

Bitcoin, Ethereum, and other coins lack this consistency, making them a less appealing alternative for people wishing to save money for a short period of time.

Stablecoins, on the other hand, are cryptocurrencies that are linked to a fiat currency, such as the US dollar.

Stablecoins are said to have a set value because their daily fluctuations are minimal. Stablecoins, like gold and silver, can be tied to anything. TrueUSD (TUSD), MakerDAO (DAI), and Paxos Standard (PAX) are some of the most extensively utilised stablecoins, in addition to Tether (USDT).

Despite a few flaws, Tether has weathered the test of time and continues to deliver on its promise of being a simple, stable coin that's excellent for storing wealth with low risk.