What a stablecoin is, and why USDT is everywhere
Stablecoins hold a fixed value instead of floating. How that works, why USDT became the default for transfers, and what to be aware of.
A stablecoin is a crypto token designed to stay at a fixed value — almost always one US dollar. Bitcoin's price moves; a stablecoin's point is that it does not.
That makes it the practical choice for moving money rather than betting on it. If you send $500 of Bitcoin and it takes an hour, the amount that arrives may not be $500. Send $500 of USDT and it is $500.
How the peg is meant to hold
USDT and USDC are backed types: the issuer claims to hold reserves — cash and short-term instruments — against every token in circulation, and redeems tokens for dollars at scale. The peg holds because arbitrage makes it profitable to close any gap.
Other designs have tried to hold a peg with algorithms and no reserves. The large ones have failed, sometimes to zero, which is worth remembering when something unfamiliar promises a stable dollar.
Why USDT in particular
It was early, and network effects compound. Nearly every exchange lists it, nearly every trading pair quotes it, and liquidity attracts more liquidity.
It also runs on cheap chains. USDT on Tron made small transfers genuinely viable at a few cents, which mattered enormously to people sending everyday amounts rather than trading six figures.
What to be aware of
A stablecoin is a claim on an issuer, not a dollar in a bank account in your name. Its stability depends on that issuer's reserves and its willingness to redeem. That is a different risk from price volatility, not an absence of risk.
The practical risk for most people is simpler and more mundane: the same stablecoin exists on several networks and only moves on the one it was issued on. Picking the wrong network loses the transfer, and that happens far more often than a peg breaks.