USDT, also known as Tether, is the first "coin" that many people encounter when entering the world of cryptocurrency. Unlike Bitcoin, which experiences significant price fluctuations, its core function is to provide a stable value bridge. Simply put, 1 USDT strives to maintain a value of 1 dollar, allowing you to have a "cash-like" presence in a volatile market.
OKX cryptocurrency trading platform, register with the dedicated link to enjoy a 20% lifetime fee rebate!
OKX registration: https://www.okx.com/join/BITCOIN369 (click the link to register)
Binance registration: https://www.binance.com/join?ref=BITCOIN369
Domestic registration installation package download: https://96927.cc/
The core of stablecoins: Why is USDT needed?
The crypto market operates 24/7, but trading directly with fiat currencies like the US dollar or euro can be very cumbersome, involving banking systems, exchange rates, and long settlement times. Stablecoins like USDT solve this problem.
Trading medium: In exchanges, when buying and selling assets like Bitcoin and Ethereum, USDT is the most commonly used pricing and trading pair, such as BTC/USDT. This is more efficient than using US dollars.
Hedging tool: When the market crashes, you can immediately convert your Bitcoin into USDT to lock in value and avoid further losses, effectively "holding and waiting."
Cross-border flow: Transferring or paying overseas with USDT may be faster and cheaper than traditional remittances, especially in regions with restricted financial channels.
DeFi cornerstone: In decentralized finance applications, USDT is the primary source of liquidity, used for lending, mining, trading, etc., and is one of the "fuels" for the entire ecosystem.
Must-read for beginners: What is USDT? Analysis of the value and risks of stablecoins - php Chinese network
Where does the value come from? Reserves and trust
The value of USDT does not arise from thin air; it is backed by reserve assets claimed by the issuing company, Tether Limited. Understanding its support is key to assessing its risks.
According to Tether's published financial reports (as of March 2025), its reserves mainly include:
US Treasury bonds: accounting for over 80% of reserves, these are highly secure short-term bonds.
Cash and cash equivalents: including bank deposits, etc.
Commercial paper, corporate bonds, etc.: slightly riskier than Treasury bonds, but their proportion has significantly decreased.
Emerging layout: gold reserves. In 2025, Tether announced that its reserves include physical gold and launched its own gold token XAUt, further diversifying assets and enhancing market confidence.
This model, supported by highly liquid, low-risk assets, has allowed USDT to maintain its peg to the dollar even after experiencing multiple market crises (such as the LUNA collapse in 2022 and the bank failure wave in 2023), demonstrating strong resilience.
Risks that cannot be ignored: Concerns behind stability
Although USDT is widely used, as a centrally issued stablecoin, it is always accompanied by several key risks.
Regulatory risk: Global regulatory agencies are increasingly focusing on stablecoins. The EU's MiCA regulation and legislative proposals in the US require stricter audits and reserve transparency. Any adverse regulatory policies could impact the issuance and circulation of USDT.
Decoupling risk: "Theoretically" it should equal 1 dollar, but panic or liquidity crises may lead to a temporary sell-off of USDT in the market, causing its price to drop to 0.98 or even lower. Although it usually recovers quickly, severe fluctuations may still occur.
Centralization risk: Tether controls the issuance and redemption of USDT. If the company encounters legal issues, hacking attacks, or mismanagement, the entire system's trust foundation may be shaken.
Audit controversy: Although Tether provides quarterly reports, fully independent, real-time third-party audits remain a focal point of community concern. The authenticity and redeemability of reserves need continuous verification.
That's basically it. For beginners, USDT is a practical tool that can help you participate in the crypto market more safely. The key is to understand the principle of its "stability" and the potential risks behind it, and not to let your guard down just because its price is stable. Treat it as "dollar cash" in the digital world while keeping an eye on the dynamics of its issuer and the overall regulatory environment.