With confidence, it works. Without, it fails. If we value it at 1 dollar, and everyone believes it's worth one dollar, and trades it as if it's worth one dollar, then it is worth one dollar. Btc is not backed by gold or fiat. Neither I believe is tether.
I beg to differ with you on this. You are probably mixing up vloatility of a cryptocurrency with its valuations. Why USD is stable with respect to Bitcoin is beacuse there are much less supply and demand imbalances. That means there are almost equal forces acting to buy on falls or sell on rises. The underlying reason for linking Tether with USD was to control the volatility and provide a safe cryptohaven in case the general crypto market is in downward trend or may be you want to make some payments which are averse to volatility.
How much is USDT valued: 1 USD as it is asset backed, opoosite to BTC which is not asset backed.
I hope I could convey my message in a lucid manner.
