This page collects the foundational concepts that come up most often when learning about USDt, XAUt, USAt, stablecoins, and the wallets and blockchains they run on. Each section is a self-contained explanation, written in plain language.
The fundamentals of money
It helps to start here, because a lot of what makes stablecoins useful is just that they do the basic jobs of money better in some situations than the alternatives.
Money is anything two people agree to use to settle a trade. Economists usually describe it as serving three jobs:
- A store of value: it keeps its worth over time so you can save.
- A medium of exchange: it is easy to hand over for goods and services.
- A unit of account: prices can be expressed in it, so you can compare things.
When the money you use does all three well, you can save, plan, and trade with confidence. When it does not (for example, when high inflation eats away at your savings), people start looking for alternatives. That is why digital dollars (USDt) and digital gold (XAUt) have become useful tools in many countries.
What is USDt?
USDt, sometimes written USD₮, is a stablecoin issued by Tether.
A stablecoin is a kind of digital money that aims to keep the same value as a regular currency. USDt is designed to always be worth about one US dollar, so 1 USDt is approximately equal to 1 USD.
People use USDt to save in dollars when their local currency is losing value, to send money to family in another country (often faster and cheaper than a bank or money-transfer service), and to get paid for freelance or remote work when receiving dollars through a bank is hard.
USDt is a digital token that lives on a blockchain: a public, shared ledger that records who owns what. USDt runs on several blockchains, including Ethereum and Tron. The same one US dollar of value can be moved between them, but the network you choose affects fees and speed.
USDt is not investment advice, not anonymous (transactions are public on the blockchain), and not the only stablecoin (USDC, for example, exists too, with a different issuer and different trade-offs).
For a deeper explanation of USDt, see the dedicated USDt page in this knowledge base.
What is XAUt?
XAUt is a token issued by Tether that represents physical gold. One XAUt represents one troy ounce of gold. Tether holds the actual gold in custody and issues XAUt against it. That means you can hold "digital gold" in a wallet, send it like a regular blockchain transaction, and (subject to Tether's terms) redeem it for physical gold.
People use XAUt to save in gold without dealing with a vault or a bank, to move gold quickly (settling a gold trade through a bank wire can take days, while an XAUt transfer settles in minutes), and to split gold into very small fractions, unlike a physical bar. A whole ounce of gold is out of reach for many people; a fraction of an ounce represented as XAUt is achievable in the digital realm.
XAUt is not USDt: USDt tracks the US dollar, XAUt tracks gold. The two have very different price behaviour. XAUt is also not the same as owning a gold bar in your hand: Tether holds the gold, you hold a claim against Tether per the terms of service.
For a deeper explanation of XAUt, see the dedicated XAUt page in this knowledge base.
What is USAt?
USAt is a stablecoin in the Tether family. Like USDt, it is designed to keep a stable value against the US dollar, so one USAt is intended to be worth about one US dollar.
Detailed USAt-specific information (the issuing entity, supported networks, and redemption process) is still being finalised. Until then, USAt is conceptually similar to USDt for day-to-day purposes. The current product page is usat.io, and the USAt page in this knowledge base has the latest overview.
What is a stablecoin?
A stablecoin is a kind of cryptocurrency designed to keep a stable value, usually relative to a regular currency (most commonly the US dollar) or a commodity (such as gold). USDt is a US-dollar stablecoin. XAUt is a gold-backed stablecoin.
Unlike Bitcoin or Ether, stablecoins are not held primarily as an investment expected to rise in price. They are held to use: to save, send, or receive value without the volatility of other crypto.
There are three broad approaches a stablecoin can use to stay close to its target value:
- Fiat-backed: the issuer holds cash and cash-equivalent reserves so that the supply of tokens is matched by an equivalent amount of the underlying currency. USDt is in this group.
- Commodity-backed: the issuer holds a physical commodity (most often gold) and issues tokens against it. XAUt is in this group.
- Algorithmic: the supply of tokens is adjusted by software rules in an attempt to keep the price stable. No purely algorithmic stablecoin has yet held up under stress at scale, and several have collapsed, so most people in practice use fiat-backed or commodity-backed stablecoins.
What is a blockchain?
A blockchain is a shared public ledger that records transactions. Many computers around the world keep copies of the same ledger and agree on its contents, so no single party can secretly change history.
For our purposes the key things to know are:
- A blockchain transaction is final once confirmed. There is no "undo".
- The ledger is public. Anyone can look up a transaction by its ID on a block explorer.
- Different blockchains have different speeds and fees. Sending USDt over Tron is usually cheaper than over Ethereum, for example.
What is a wallet?
A wallet is the app or device that holds the keys to your funds on a blockchain. A self-custodial wallet is one where you, and only you, hold the keys. A custodial wallet is one where a company (an exchange, for example) holds the keys for you.
Self-custodial means full control and full responsibility. If you lose your access (your seed phrase), no company can recover it for you. Tether Wallet is a self-custodial wallet.
For more on the trade-off, see Custodial vs self-custodial below.
What is a network?
When people talk about "what network" to send USDt on, they mean which blockchain. USDt runs on several blockchains (Ethereum, Tron, and others). The same one dollar of value moves between them, but:
- Fees vary. Sending USDt on Tron typically costs a fraction of a cent. Sending on Ethereum can cost several dollars at busy times.
- Speeds vary. Most networks confirm a transfer in seconds to minutes.
- Compatibility matters. The receiver's wallet must support the network you choose, or the funds can be lost. Always check that sender and receiver use the same network.
What is a seed phrase?
A seed phrase (also called recovery phrase or mnemonic) is a sequence of 12 or 24 ordinary words that a self-custodial wallet generates when you create it. Whoever has the words controls the wallet.
You should write your seed phrase on paper, store it somewhere safe (and a second copy somewhere safer), and never share it with anyone. Not Tether. Not "support". Not a friend. Anyone asking is trying to steal from you.
For the full backup procedure, see "how to back up your wallet" in the how-to guide.
What is a private key?
A private key is the cryptographic secret that controls an address on a blockchain. It is what actually signs transactions. The seed phrase is a human-readable way to back up your private keys: from the seed phrase, your wallet can reconstruct every key it needs.
Whoever has the private key (or the seed phrase) controls the funds. That is the whole security model. No reputable company will ever ask you for either.
What are network fees?
Every blockchain transaction pays a small fee to the network that processes it. This fee is paid in the network's own token (ETH on Ethereum, TRX on Tron, and so on), not in USDt. That means you usually need a small amount of the network's native token in your wallet to send USDt on that network.
Tether Wallet and many other wallets handle this for you, but if a send fails with an error about gas or fees, the most common cause is not having any of the native token in the wallet.
On-ramps and off-ramps
An on-ramp is any service that lets you convert local currency into USDt. Regulated exchanges, P2P platforms, and some local agents are all on-ramps.
An off-ramp is the opposite: a service that lets you convert USDt back to local currency.
A curated directory of country-specific on-ramps and off-ramps is maintained separately and is queryable by country and type. The public version is at usdt.directory.
P2P (peer-to-peer)
P2P, short for peer-to-peer, refers to platforms or arrangements where individuals trade directly with each other rather than through a centralised exchange. P2P USDt trades are common in countries where bank-based exchanges are limited.
P2P is also where most retail scams happen. Use only platforms with proper escrow (the platform holds the seller's USDt until you confirm payment), check seller ratings, and never release escrow before payment is confirmed. See the safety page in this knowledge base for more.
KYC
KYC ("Know Your Customer") is the identity-verification step exchanges and regulated services run before letting you trade. It usually means uploading an ID document and a selfie. KYC is a legal requirement in most countries; it is not a Tether-specific rule.
Custodial vs self-custodial
In a custodial arrangement, a company holds your keys for you. An exchange account, for example. Convenient, but you depend on the company being honest, solvent, and available. Several high-profile crypto custodians have gone bankrupt or been hacked over the years.
In a self-custodial arrangement, you hold the keys yourself, usually via a seed phrase. Tether Wallet is self-custodial. The trade-off is full control versus full responsibility: lose the seed phrase, lose the funds. No one can reset it for you, because there is no "company" with a master key.
A common middle path: use a custodial account (an exchange) to buy and sell, but move anything you want to actually hold into a self-custodial wallet you control.
What is a confirmation?
After you send a blockchain transaction, the network takes a short moment to include it in a block and then add more blocks on top. Each additional block is a confirmation. Most receivers accept a transaction after one or a few confirmations, depending on the network. Tether Wallet shows the status while a transaction is pending.
Primary market vs secondary market (for stablecoins)
This is a useful distinction if you ever see a stablecoin trading slightly above or below its target price on an exchange.
- The primary market is between the issuer (for example, Tether) and the large exchanges and counterparties who can mint or redeem tokens directly. This is the layer that keeps the supply of tokens matched to the underlying reserves.
- The secondary market is where regular users buy and sell on an exchange. Prices here can drift a little above or below the target price for short periods, usually because of supply and demand on that particular exchange rather than anything wrong with the stablecoin itself.
When a USD-stablecoin like USDt briefly trades at, say, $0.998 or $1.003 on one exchange, that is almost always a secondary-market liquidity quirk, not a sign that the token has lost its peg.
What is a smart contract?
A smart contract is a small program that lives on a blockchain and runs automatically when called. USDt itself is implemented as a smart contract on each network it runs on. You do not need to interact with the contract directly; your wallet does that for you. The concept matters mostly because some scams trick people into "approving" malicious smart contracts that can drain their wallet.