USDT meaning: what is USDT (Tether)?

What USDT is

USDT is the ticker of Tether, the oldest and largest stablecoin by market value. A stablecoin is a crypto token built to hold a steady price instead of floating like bitcoin. USDT targets one US dollar: you should be able to buy one for about $1 and sell it for about $1, today or next year.

It is issued by a company, Tether Limited, not by a bank or a government. When a large customer sends Tether dollars, Tether creates new tokens; when tokens are returned for dollars, it destroys them. The company publishes regular reports on the reserves it holds against the tokens, which it says are mostly US Treasury bills and cash equivalents.

The name Tether describes the idea: the token is tethered to the dollar. "USD₮" is the stylised form Tether uses in its own branding, and you will also see USDT written simply as Tether on exchanges.

TRC20, ERC20, BEP20: the networks USDT runs on

USDT is not a blockchain of its own. It is a token issued on top of other blockchains, and Tether issues it on several of them. The common ones are:

The token is worth the same on every network, but the networks do not talk to each other. A TRC20 address and an ERC20 address look different and live on different blockchains. If you withdraw USDT from an exchange, the withdrawal screen asks which network to use, and the answer has to match what the receiving wallet or exchange accepts. Sending on a network the receiver does not support can lose the funds, or at best leave them stuck until support staff recover them.

How traders use USDT

Most crypto trading volume is priced against USDT rather than against dollars. A pair such as BTC/USDT means bitcoin priced in Tether. That has three practical uses:

• A parking place. Selling a coin into USDT takes you out of the market without withdrawing to a bank, which can take days and cost fees.
• A transfer currency. Moving USDT between exchanges on a cheap network takes minutes, which is why it is the usual way to fund an account on another platform.
• A unit of account. Profit and loss on most crypto exchanges is shown in USDT, so a trader thinks in dollars even when no dollars are involved.

Some forex and CFD brokers also accept USDT deposits, usually over TRC20, and credit the account in US dollars. The broker's conversion rate and any fee are worth checking before you rely on it.

The risks of holding USDT

A stablecoin is only as stable as the promise behind it. Three risks matter:

• Reserve risk. The peg holds because people believe each token can be redeemed for a dollar. If the reserves were ever found short, the price could fall below $1. USDT has dipped briefly below the peg during market panics, most visibly in May 2022, and recovered each time; that history is a reason for caution, not proof in either direction.
• Issuer and legal risk. Tether can freeze tokens at specific addresses, and does so when asked by law enforcement. Regulation of stablecoins also differs by country and is still changing.
• Operational risk. Most losses in practice are mistakes: the wrong network, a mistyped address, or a missing memo when sending to an exchange. Send a small test amount first when using a new address.

For a side-by-side with the other big dollar stablecoin, see USDT vs USDC.