Tethers are a type of digital currency built on blockchains, allowing it to be freely transmitted between participants. Each tether is backed 1-to-1 by traditional currency held in Tether Limited’s reserves. Accordingly, 1 USD₮ is always equivalent to 1 USD. Bitfinex lets you receive USD₮ from a Bitcoin or Ethereum blockchain address and treat them as a USD deposit. Similarly, you can withdraw funds to a Bitcoin or Ethereum blockchain address as USD₮.
Learn more about the benefits of using Tether here.
Since Tether is currently available using two different transport protocols (Bitcoin and Ethereum), users withdrawing from Bitfinex to 3rd party applications or exchanges need to carefully check the destination address to confirm whether it is in the standard Bitcoin or Ethereum format and select the correct transport protocol from the available withdrawal options.
Bitcoin (Tether using the Omni Layer)
Tether was originally created to use the Bitcoin network as its transport protocol, specifically using the Omni Layer to allow transactions of tokenised traditional currency.
Since this original version of Tether uses the Bitcoin blockchain it inherits the inherent stability and security of the longest established blockchain network.
Ethereum (Tether as an ERC20 token)
Tether on the Ethereum blockchain as an ERC20 token is a newer transport layer, which now makes tether available in Ethereum smart contracts or decentralised applications on Ethereum.
This version of tether on average has lower transactions fees and lower confirmation times than on the Bitcoin network. As a standard ERC20 token it can also be sent to any Ethereum address and handled by 3rd party clients as any other token would be on Ethereum without special integration.