Super unicorn, valued at 3.5 trillion

If you had the chance to travel back 10 years with today's memories, what would you choose to invest in to make yourself extremely wealthy?

The most tempting answer would probably be to buy Bitcoin. Over the past decade, although Bitcoin has experienced continuous ups and downs, cycling through "bull markets - bear markets," it has always managed to return to an upward - trending curve. The price of one Bitcoin has risen from $300 to around $110,000 recently, making it the "star performer" among all asset classes in the global market.

However, this answer has two very obvious operational problems. First of all, Bitcoin is neither a precious metal nor an equivalent security. In essence, it is a piece of calculated code. To obtain Bitcoin, you need sufficient computing power and electricity (i.e., "mining"), which is quite costly for ordinary people. Secondly, the cryptocurrency asset class has always been on the fringes of legal supervision and has had no real - world application scenarios for a long time. Its price fluctuates frequently and significantly. Under this premise, even if you can find a seller who holds Bitcoin, in what currency and by what means should both parties price and conduct the transaction?

So, if you had the chance to travel back 10 years to invest in Bitcoin - or even invest in Bitcoin now - you'll find that most people follow this process: First, in an exchange, convert their legal tender (Renminbi, US dollars, Euros, etc.) into USDT, a cryptocurrency directly pegged to the US dollar with a stable value, and then use USDT to buy Bitcoin, Ethereum, Dogecoin.

It's no exaggeration to say that if Bitcoin supports people's belief in cryptocurrencies, then USDT supports the framework of the current real - world cryptocurrency transactions.

Now, I'll pose a second question: Since Bitcoin has created countless wealth myths, how much is the company that issues USDT worth? No more suspense. Here's the answer: According to multiple media reports, Tether, the issuer of USDT, is seeking a round of financing worth $20 billion (approximately RMB 142 billion), and it is expected to sell about 3% of its shares. Based on this calculation, after this round of financing, Tether's overall valuation will exceed $500 billion (approximately RMB 3.5 trillion), far higher than the previous $3 billion valuation of Circle, another stablecoin giant.

USDT, Saving the Blockchain?

Although Tether was founded in 2014, their entrepreneurial story is better told starting from 2010.

Although the first Bitcoin was born in January 2009, and the legendary Bitcoin pioneer Satoshi Nakamoto wrote a paper titled "Bitcoin: A Peer - to - Peer Electronic Cash System" to elaborate on Bitcoin's application prospects, not many people believed in the Bitcoin story in the following year or so, let alone design a reasonable mechanism for Bitcoin transactions. But in May 2010, everything changed:

One day in May 2010 (allegedly May 22nd), a programmer completed an unprecedented takeout order, using 10,000 Bitcoins to buy two pizzas. From today's price perspective, the programmer suffered a huge loss, and those two pizzas were thus called "the most expensive meal in history." However, at that time, this was regarded as the first step for Bitcoin to participate in real - economy transactions, which directly led to the first significant surge in Bitcoin's value. The price per Bitcoin rose from $0.003 when buying the pizzas to over $0.5 by the end of the year. In 2010, the cryptocurrency market accelerated the formation of a "regulated market," and the world's first Bitcoin exchange, BitcoinMarket, was born.

By the time Tether was founded in 2014, Bitcoin had become a well - known "emerging asset" and even the primary hard currency in many marginal and gray industries. For example, the famous underground trading website "Silk Road" established by Ross Ulbricht, the king of the dark web, only accepted Bitcoin transactions, and even so, it achieved great success. The cumulative total of Bitcoin transactions exceeded $214 million within 30 months after its establishment.

Prosperity is, of course, a good thing, but as the saying goes, "Fame is a curse." Although the asset value of Bitcoin has been continuously expanding, as mentioned above, because Bitcoin inherently has the aura of "overthrowing the traditional market system" and constantly emphasizes security, encryption, and being difficult to trace, its image in the public's mind is very poor. People subconsciously think that Bitcoin holders have an unclear relationship with "scammers," "speculators," and "gray - industry participants."

Even worse, regulatory authorities have indeed confirmed people's suspicions through a series of actions. For example, in May 2013, the US Department of Homeland Security seized the Bitcoin exchange Mt. Gox, accusing it of not having legitimate financial transaction qualifications, being unable to guarantee users' transaction security, and being suspected of providing money - laundering and payment services for illegal transactions. In June 2013, the US Federal Bureau of Narcotics arrested a drug addict in an operation, claiming that this person was trying to use 11.02 Bitcoins to buy drugs.

2013 thus became the year with the most significant fluctuations in Bitcoin's history, experiencing two catastrophic crashes. One occurred on April 12th, when Bitcoin dropped from $260 to $110 within 48 hours. The second occurred in December 2013. Due to many countries, including China, successively introducing strict regulatory measures, Bitcoin dropped from $1,163 to $400 within two weeks, and the market was in an uproar.

Therefore, more and more industry insiders realized that if they wanted to continue the cryptocurrency story and promote the healthy development of the entire industry, it must be more regulated and secure. Tether and USDT emerged precisely in this context.

In 2012, JR Willett, the father of stablecoins, published a paper proposing the possibility of building a new cryptocurrency on the Bitcoin blockchain to specifically design a trading mechanism for Bitcoin, and named this new cryptocurrency Mastercoin. In 2014, Brock Pierce, one of the founding members of Mastercoin, hoped to take the entire concept a step further, enabling the new cryptocurrency to have a relatively fixed value anchor to completely solve the problems exposed in the current cryptocurrency market. So he joined forces with an advertiser named Reeve Collins and a software engineer named Craig Sellars to establish a new company called Realcoin.

And Realcoin is the later Tether. From its inception, Tether has assured the public that the cryptocurrency it issues (initially Realcoin, later USDT) will be pegged to the US dollar at a 1:1 ratio under auditable conditions. Collins, who serves as the CEO, said, "People confuse cryptocurrencies with Bitcoin technology, and they are completely different... What we are doing is digitizing the US dollar and connecting the digital US dollar to the Bitcoin blockchain."

To fulfill its promise, Tether signed cooperation agreements with several large - scale banks to obtain permission for direct currency flow with the US dollar. At the same time, Tether also guarantees that the company will record its US - dollar reserves in real - time. These reserves are all used for conservative investments to ensure the stability of assets, and these records are included in the blockchain's authentication system.

USDT, Entering the Venture Capital Field?

With forward - looking insights and a well - timed historical position, these two key factors have made Tether not short of money. According to a financial report officially released by Tether, in the first half of 2024, Tether's cash reserves were $118.5 billion, and its net profit reached $5.2 billion. It is undoubtedly a cash cow. At the same time, Tether's profit - making model is as perfect as a perpetual motion machine: If users exchange for USDT to trade freely in the cryptocurrency market, Tether uses the cash to invest in stable assets to earn interest; if users exchange their cryptocurrencies for USDT and then cash out through USDT, Tether charges a handling fee.

Then the question arises: Why does such a company need to raise funds?

The simplest answer is the desire for "money." In 2023, Paolo Ardoino became the new CEO of Tether. He is a typical tech - savvy person (he had been Tether's CTO for the previous six years) and a man full of a sense of crisis. After taking office, Ardoino instinctively began to calculate whether Tether's existing capital structure could continue to support the "stablecoin" story, and finally came to the conclusion:

It's quite difficult.

Ardoino believes that although Tether has accumulated a profit of $11.9 billion in the past two years, this performance is closely related to the US dollar's interest - rate hikes. Once the US dollar ends its interest - rate hike cycle and returns to an era of large - scale monetary easing, Tether's rate of return may drop to 0.5% - wouldn't it then become the "Nongfu Spring" in the cryptocurrency circle, just acting as a currency transporter?

So in 2024, Ardoino made a bold decision to push Tether into the primary market and use venture capital to hedge risks and achieve greater asset appreciation, mainly investing in the fields of artificial intelligence and brain - computer interfaces. In an interview, Ardoino fully demonstrated his ambition, saying, "The field of artificial intelligence has become highly 'politicized,' and now a challenger other than traditional giants like Microsoft and Google is needed to enter the arena."

(Paolo Ardoino, source: personal social media)

Doing venture capital obviously requires money. More importantly, as a cryptocurrency giant, it is difficult for them to provide support in other aspects besides money. When participating in investments in artificial intelligence and brain - computer interfaces, which are highly dependent on industrial resources, they often have to rely on their "financial power" to force things forward. For example, in April 2024, their investment in the brain - computer interface startup Blackrock Neurotech was to spend $200 million to directly buy a majority stake. In 2025, they invested in the artificial - intelligence data center Rumble, spending another $775 million.

Recently, there has been news that Rumble plans to acquire the German cloud - service provider Northern Data for $1.17 billion, and Tether will be one of the largest contributors in this acquisition. In short, based on various news, for Ardoino to firmly implement his venture - capital hedging strategy without hurting Tether's core, it is indeed necessary to seek external help.

It is reported that Tether is very confident and determined about this round of financing. The 3% of shares offered are not the transfer of existing shares but newly issued ones. Ardoino revealed on his personal social media that many "well - known investors" have expressed their intention to invest in Tether. Currently, the company is evaluating all the proposals, with the bottom line being "to maximize the company's strategic scale in all existing and new business lines."

However, seeking financing may also stem from a sense of "unease."

Since its establishment, there have been continuous accusations about whether USDT has the ability to fulfill its current role and whether Tether has too much power and is suspected of manipulating the cryptocurrency market. One of the biggest controversies is that Tether operates very much like a bank - receiving deposits and then holding them in the form of cash, securities, or loans, but it does not receive the same level of supervision as a bank.

Whether Tether can truly, as promised, strictly allocate US dollars at a 1:1 ratio within the auditable range is also an unsolved mystery. In October 2021, the US Commodity Futures Trading Commission (CFTC) accused Tether of falsely claiming to customers and the market from June 1, 2016, to February 25, 2019, that it held sufficient US - dollar reserves to ensure that each circulating USDT was supported by an "equivalent legal tender" and that the funds were "safely deposited" in bank accounts. In fact, the reserves did not achieve "full support" for most of the time and were never audited. As a result, Tether had to pay a fine of up to $41 million.

In 2022, Tether, which was facing a trust crisis, experienced a serious bank - run crisis. They processed over $20 billion in redemptions within 20 days. Although they managed to get through that storm, when stablecoins are getting official legal backing and becoming a new direction explored by various countries, Tether, which has been relying on its past achievements, will obviously wonder: Am I really irreplaceable?

In this regard, Tether's $500 - billion valuation is not only bold but also a declaration, a way for them to re - emphasize to the entire market: If you think Circle is full of potential, then I will undoubtedly be the more powerful champion.

This article is from the WeChat official account "China Venture Capital", author: Pu Fan. Republished by 36Kr with permission.