When a user puts fiat money into Tether’s reserve, using that money to buy USDT instead of fiat, Tether then issues tokens representing that same digital amount. The USDT can then be shared, stored, or traded.

According to a 1-to-1 dollar parity, if a customer deposits $100 in the Tether reserve, they will receive 100 Tether tokens. However, when users redeem Tether tokens for fiat money, the coins are destroyed and taken out of circulation.