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Highlights
- Not every cryptocurrency, be it a stablecoin or a gaming token, needs to have its independent blockchain
- ETH (Ether), SOL, and ADA are native tokens of their respective independent blockchains
- Tether -- the biggest stablecoin by market cap -- ranks only below Bitcoin and Ether in the broader cryptoverse
The two terms -- blockchain and cryptocurrency -- are often mentioned together. Bitcoin, for example, popularised not only the concept of cryptocurrency but also that of the blockchain, which is claimed to have a variety of uses outside the cryptoverse. The second-biggest participant in the space, Ether, also has both blockchain and cryptocurrency features.
But what about the third-biggest crypto by market cap, Tether? Is Tether a regular cryptocurrency like Bitcoin, a native token like ETH (Ethereum), or a ‘stablecoin’? Tether’s (USDT) value is claimed to be pegged to the US dollar, which makes it a stablecoin within the broader cryptoverse. Controversies like any stablecoin losing its fiat currency peg aside, today, let us explore whether Tether also has blockchain and cryptocurrency attributes like Bitcoin and Ether.
Not a blockchain, but blockchain-enabled
Tether is a ‘blockchain-enabled’ platform. This implies even though the blockchain’s publicly distributed ledger system enables the functioning of the cryptocurrency, there is no independent and native blockchain of the Tether project. Many newer altcoins like SOL and ADA have their blockchains, of which the related cryptos are their respective native tokens. Blockchain users are normally required to pay the network fee using the native token.
In Tether, there is no such arrangement, and instead, the cryptocurrency’s use case differs from regular cryptos like Bitcoin. USDT is claimed to be fully backed by real world reserves like cash, and each token is supposed to have a value equal to one dollar. The issued tokens operate on multiple blockchains, including those of Ethereum and Polygon. The main stated purpose of USDT is to provide a digital alternative to fiat currency, which can also have a predictable and stable value at all times.
Data provided by CoinMarketCap.com
No use case for developers
Ethereum is one blockchain that supports the development needs of users. For example, one can deploy a new decentralised app (DApp) on top of Ethereum’s blockchain. Even new cryptocurrency tokens can also be floated using Ethereum. Non-fungible tokens (NFTs) also harness the blockchain of either Ethereum or other competing platforms like Solana. On the other hand, Tether provides no such services to developers, and it functions as a pure stablecoin.
Bottom line
Tether does not have its independent blockchain, but it is a ‘blockchain-enabled’ setup. The purpose, as claimed by the project, is to function as a cryptocurrency with a stable value. Many projects can add a native blockchain after launching their cryptocurrency, for example, Shiba Inu (SHIB) introduced Shibarium. As of now, Tether has not given any similar hint.
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