The plain reply to "How does usdt work?" starts with what a stablecoin promises. USDT, the ticker of the Tether token, is a stablecoin: a crypto token built to hold a steady value equal to one unit of a major traditional currency. Players use it to move money into and out of casinos without the daily price swings of bitcoin. What USDT is, how it works, whether it is safe and how people get it are separate questions, and each has an honest answer with its own limits.
How does USDT work? An issuer, Tether, creates new tokens when clients deposit traditional money and destroys tokens when clients redeem them. The issuer says each token is backed by reserves of cash, short term government debt and other assets, and it publishes regular reports on them. Redemption at full value is offered mainly to large verified clients; everyone else trades USDT on exchanges at whatever the market pays, which usually sits very close to the target value. The tokens live on public blockchains, so USDT can be sent like any other coin.
What are stablecoins? They are crypto tokens designed to keep a fixed value against an outside asset, usually one unit of a traditional currency. The most widely used stablecoins, USDT and USDC among them, are backed by reserves that a company holds. Others are backed by other crypto locked as collateral, and some, called algorithmic stablecoins, try to hold their value through code alone. Several algorithmic coins have collapsed completely in the past, so the kind of backing tells a reader most of what can go wrong.
Questions readers ask
Can USDT lose its value?
Yes, in part: during a crisis the price can slip below its intended level, and well known stablecoins have traded below it for hours or days.
Why keep person to person deals inside the platform?
Inside the platform the coins sit in escrow and disputes can be raised; a deal finished outside it has no protection at all.
Why must the network match on both sides of a USDT transfer?
The same coin runs on several networks, and coins sent on a network the receiver does not support can be stranded.
Why are high interest offers on USDT a warning sign?
A stable token earns nothing by itself, so a promise of high interest on it means high risk or, often, a scam.
Who publishes reports on USDT reserves?
The issuer publishes periodic reports on the cash, short term government debt and other assets it says back each token; ordinary holders cannot inspect the reserves themselves.