What is the principle of Tether currency?
Tether is a stablecoin pegged to the U.S. dollar that maintains stability through custodial reserves, minting/destruction mechanisms, price stabilization mechanisms, transparency audits, and decentralized technology. It offers the advantages of price stability and cross-platform compatibility, but also has disadvantages such as reliance on the U.S. dollar peg, audit transparency questions, and regulatory risks.
How Tether works
Tether is a stablecoin pegged to the U.S. dollar, which means Its value is designed to remain close to one dollar at all times. The working principle of Tether is based on the following core mechanism:
1. Custody Reserve:
Tether is custodian by Tether Limited, an entity company that holds assets of equivalent value in U.S. dollars. These assets include cash, cash equivalents, and traditional financial instruments such as Treasury securities.
2. Minting and Destruction:
When users wish to mint Tether, they must deposit the equivalent amount of USD into Tether Limited. The company will then issue a corresponding number of Tether coins. When a user wishes to redeem their Tether, they must return it to Tether Limited, which will destroy the Tether and return the equivalent value in U.S. dollars.
3. Price stabilization mechanism:
When the price of Tether is lower than one dollar, Tether Limited will purchase Tether, reducing the supply in circulation, thus increasing its price . When the price of Tether rises above one dollar, Tether Limited mints more Tether, increasing the supply in circulation and thereby lowering its price.
4. Transparency and Auditing:
Tether Limited regularly publishes audit reports detailing the U.S. dollar reserves it has in custody. This helps increase public confidence in Tether’s price stability.
5. Decentralization:
Tether is based on blockchain technology and circulates on multiple blockchains such as Ethereum, Tron and EOS. This makes it decentralized and not controlled by any single entity.
Advantages:
- The price is stable and pegged to the US dollar.
- Suitable as a value storage and settlement mechanism for encrypted assets.
- Cross-platform compatible and can be traded on multiple blockchains.
Disadvantages:
- The peg to the U.S. dollar relies on Tether Limited’s reserve management.
- Audit transparency has been called into question, with some critics claiming its reserves may not be fully backed.
- Subject to regulatory risks and may be subject to review by government regulatory agencies.
The above is the detailed content of What is the principle of Tether currency?. For more information, please follow other related articles on the PHP Chinese website!

Gate.io can be set as the Chinese interface through the following steps: 1. APP: Log in, enter the Personal Center, find "Settings", select "Language", select "Simplified Chinese" or "Traditional Chinese", confirm, restart. 2. Web version: Visit the official website, log in, find the language selection button, select "Simplified Chinese" or "Traditional Chinese", refresh the page, and improve the transaction experience.

The steps to register an Ouyi account are as follows: 1. Prepare a valid email or mobile phone number and a stable network; 2. Visit Ouyi official website; 3. Enter the registration page; 4. Select the registration method and fill in the information; 5. Obtain and fill in the verification code; 6. Agree to the user agreement; 7. Complete registration and log in, carry out KYC and set security measures.

The steps to register a Binance account include: 1. Prepare a valid email or mobile phone number and a stable network; 2. Visit Binance official website; 3. Enter the registration page; 4. Select the registration method; 5. Fill in the registration information; 6. Agree to the user agreement; 7. Complete verification; 8. Obtain and fill in the verification code; 9. Complete registration. After registering, it is recommended to log in to your account, conduct KYC verification, and set up security measures.

To register a Sesame Door account, you need to prepare a valid email or mobile phone number and a stable network. The steps include: 1. Visit the official website, 2. Enter the registration page, 3. Select the registration method, 4. Fill in the registration information, 5. Get and fill in the verification code, 6. Agree to the user agreement, 7. Complete the registration. After successful registration, you need to log in to your account, perform KYC identity verification, and set security measures.

The principles of choosing a cryptocurrency exchange include: 1. Security, 2. Compliance, 3. User experience, 4. Transaction fees, 5. Currency selection, 6. Liquidity. Tutorials include: 1. Register an account, 2. Identity authentication (KYC), 3. Security settings, 4. Recharge, 5. Spot transactions, 6. Withdrawal.

Can. The two exchanges can transfer coins to each other as long as they support the same currency and network. The steps include: 1. Obtain the collection address, 2. Initiate a withdrawal request, 3. Wait for confirmation. Notes: 1. Select the correct transfer network, 2. Check the address carefully, 3. Understand the handling fee, 4. Pay attention to the account time, 5. Confirm that the exchange supports this currency, 6. Pay attention to the minimum withdrawal amount.

Since its birth in 2009, Bitcoin’s price has experienced many fluctuations. 1. 2009-2010: From worthless to $0.3. 2. 2011-2013: From $1 to $1,000. 3. 2014-2017: From $200 to nearly $20,000. 4. 2018-2021: From bear market to highs of $64,000. 5. 2022-2024: From falling below $20,000 to the rise after the ETF is approved.

There is no "best" digital currency exchange, only the "most suitable" ones because everyone has different needs. 1. Newbies should choose simple and easy-to-understand exchanges, such as Coinbase. 2. Users who focus on security should choose Coinbase or Kraken. 3. Users who pursue rich trading options should choose Binance or Ouyi. 4. Users who like to trade derivatives should choose Bybit or Ouyi. 5. Users interested in new coins should choose Sesame to open the door.

Hot AI Tools

Undresser.AI Undress
AI-powered app for creating realistic nude photos

AI Clothes Remover
Online AI tool for removing clothes from photos.

Undress AI Tool
Undress images for free

Clothoff.io
AI clothes remover

Video Face Swap
Swap faces in any video effortlessly with our completely free AI face swap tool!

Hot Article

Hot Tools

MantisBT
Mantis is an easy-to-deploy web-based defect tracking tool designed to aid in product defect tracking. It requires PHP, MySQL and a web server. Check out our demo and hosting services.

Dreamweaver Mac version
Visual web development tools

SublimeText3 Mac version
God-level code editing software (SublimeText3)

PhpStorm Mac version
The latest (2018.2.1) professional PHP integrated development tool

WebStorm Mac version
Useful JavaScript development tools