How it works
Tether Limited mints USDT when authorised participants send US dollars to its bank accounts, and burns USDT when those participants redeem. The peg is enforced by redemption arbitrage: if USDT trades below $1.00 on an exchange, arbitrageurs buy at the discount and redeem for full dollars; if above, they mint and sell. USDT exists on multiple blockchains, with the highest volume on Tron and Ethereum.
Example
You move 10,000 USDT from a Binance account to your self-custody wallet on Tron. Transaction cost is under $1 and settlement takes seconds. From there you can swap into BTC, ETH, or other tokens on a DEX without ever leaving the chain. To convert back to bank-dollar, you sell USDT for fiat on an exchange that supports your local banking rails.
Why it matters
USDT settles the largest share of crypto trading volume. Its accessibility on most chains and venues makes it the default crypto cash. The trade-off is reserve transparency: Tether publishes quarterly attestations rather than full audits, and reserve composition has historically been a source of debate. Use USDT for trading and liquidity but think carefully about long-term parking versus alternatives.
