Stablecoins attempt to be fiat currencies among cryptos. They can be a medium of exchange, a means of storing value and a unit of account. Unlike other digital coins, stablecoins are tied to some kind of stable asset — such as the United States dollar, euro or even gold. Linking to such assets confirms the coin’s stability and mitigating the volatility of cryptocurrencies.
With this type of a token, an equal amount of fiat currency should be stored by the issuing company to back the value of the token. The owner of this token should be able to exchange it for cash at any time.
An idea to make cryptocurrencies stable and tie its exchange rate to a traditional asset appeared in 2012, three years after Bitcoin (BTC) first emerged. The project was called Mastercoin, which was later renamed as Omni.
Now, developers tie stablecoins not only to the U.S. dollar, but also to the euro and the Japanese yen. However, some of these currencies have so far not received as much attention as the most recognized stablecoin right now — i.e., Tether.
The first stablecoin is currently the most popular and has the largest capitalization of all stablecoins. According to Coin360, USDT is ranked sixth of all cryptocurrencies with a capitalization of over $4.1 billion.
The coin was created in July 2014 under the name “Realcoin” by Starbucks vice president Stanley Hainsworth. Some time after the launch of the project, the cryptocurrency was added to the Bitfinex cryptocurrency exchange. Initially, the companies did not disclose their relationship. However, in 2017, thanks to a leak of documents called the Paradise Papers, the crypto community learned that Tether Ltd. and Bitfinex had the same owners.
Early on Tether struggled to gain popularity among crypto traders. Therefore, in November 2014, the company decided to conduct a complete rebranding, as a result of which Realcoin was renamed as Tether. The managing company and sole issuer of Tether is Tether Ltd. The first block in the Tether network was generated on March 12, 2015.