Crypto Basics: Bitcoin & Tether

A blockchain records transfers under its rules for authorisation and transaction ordering. A token’s market price, custody and redemption promise are separate financial questions; recording it on a network does not establish what it can be sold or redeemed for. Bitcoin and a dollar-referenced stablecoin are different instruments: a dollar target is a promise whose reserve, issuer and redemption conditions need scrutiny. Trading a token for another asset is not the same as redeeming it with an issuer. Check network compatibility and service access; a technology’s availability does not settle the legal or financial risks of using it.

Bitcoin’s original design uses signatures to authorise transfers and proof-of-work blocks to order the transaction history and resist double spending under its security assumptions. This ledger mechanism does not peg Bitcoin’s market price. Tether instead targets a currency value under issuer terms; direct issuer redemption has verification, minimum-size and fee conditions, distinct from selling a token on a market.

Worked example (hypothetical)

A token targeted at one dollar trades at 0.97 dollars. Holding 1,000 tokens has a quoted value of 970 dollars, before fees. The target alone cannot turn that quotation into 1,000 spendable dollars.

Check your understanding

Ask who owes redemption, to whom, and under what restrictions. If those terms are absent, do not substitute the word stable for a verified claim.

Sources, reviewed 5 October 2026

• Considerations for the Use of Stablecoin Arrangements in Cross-border Payments
• Caution With Alternatives to Financial Statement Audits
• Bitcoin: A Peer-to-Peer Electronic Cash System
• Issuer Acquisition and Redemption Terms