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USDC vs USDT – A Complete Overview

Aug 8, 2024

Benefits of Stablecoins

Stablecoins facilitate easy onboarding to the cryptocurrency realm, removing the volatility-related tribulations. Seasoned crypto investors use stablecoins to hedge against volatility. Also stablecoins are used for hedging against inflation of other currencies (for instance, people in Russia can hold USDT to hedge against inflation of Russian ruble).

You won’t earn via holding stablecoins as their price (against the pegged asset) won’t change with the time. However, you can think of stablecoins (such as Tether and USD Coin) as digital dollars. So you can utilize them whenever you use dollars while not depending on the banks. That’s why remittance in stablecoins can be easier than sending actual USD to a person in another country. Raising money from donors across the globe is much easier with stablecoins than fiat money.

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With stablecoins you find yourself in a buffer zone between the cryptocurrency realm and the world of traditional money. You already can enjoy whatever benefits of cryptocurrency you want but still your investment never changes its value. If you’ve spent $100 on Tether, you will always have $100 worth of crypto no matter what happens on the crypto market.

People who want to get advantage of the USD price fluctuations can find it easier to use USD-pegged stablecoins instead. Some of these people don’t have the opportunity to use banks altogether.

What is USDT (Tether)?

Tether (USDT) is a cryptocurrency pegged 1:1 to the USD price, meaning that at any given moment, the USDT price should be equal to one US dollar. The crypto market volatility shouldn’t affect the USDT price. In fact, negligible fluctuations are possible depending on a market you are using to trade USDT pairs. On top of this, there were separate instances where USDT was losing its peg for short periods.

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Tether was launched in 2014 by Tether Limited Inc. The founders are Brock Pierce, Reeve Collins, and Craig Sellars. Pierce was always involved in creating block.one, a company behind EOS. Sellars is involved in such projects as Omni Protocol, Bitfinex, Factom, and others.

In theory, each Tether coin can be redeemed for $1. However, some have concerns This stablecoin has the highest market cap and one of the most popular cryptocurrencies of all time. As of July 2024, Tether occupies the third position on the charts of cryptocurrencies sorted by market cap. Tether is available on various blockchains including Ethereum, EOS, Avalanche, Tron, and many others. No other token is presented across blockchains better than Tether.

Allegedly every USDT unit is backed by USD and other traditional assets. However, the company is not fully transparent and some believe that it doesn’t have sufficient reserves. The company behind Tether was subjected to investigations and fines for not providing necessary audits and proof of sufficient reserves. As of July 2024 there are over 110 billion USDT tokens in circulation. According to one of the latest audits Tether had over $86 billion in its reserve in 2023.

Another controversy is associated with the alleged involvement of the Tether staff in the Bitcoin price manipulation during the late 2017 rally.

What is USDC (USD Coin)?

USD Coin (USDC) is the second biggest stablecoin after Tether (USDT) in terms of market cap. As of July 2024, USDC ranks 7th on the market cap chart among all cryptocurrencies. USDC is pegged to the American dollar.

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Just like Tether, most USD Coin units are backed by fiat money. A portion of this cryptocurrency is backed by short-term US Treasury bonds.

USDC was launched in 2018. The companies responsible for creating USD Coin are the biggest US crypto exchange Coinbase and the P2P payment service Circle founded by Jeremy Allaire and Sean Neville. Circle is usually named the company behind USD Coin. It makes sense because Coinbase is no longer involved.

In line with the best principles and practices of Coinbase, the USD Coin team strives to keep their product as transparent as possible. The third party audits conducted by Deloitte ensure the company’s sufficiency. The segregated reserve of the Circle is stored in the Back of New York Mellon. Every time someone exchanges some USDC for fiat money, the USDC units are sent to the address with no keys that could release the coins.

USDC is supported on several blockchains including Ethereum, Polkadot, Algorand, Stellar, Solana, and a few others.

USDC vs USDT

Now, let’s compare these stablecoins by several factors. If you need a short version, USDC is a more trustworthy crypto than Tether as the Circle is a transparent and legit company. However, Tether has an advantage over USDC as the former is presented in a higher number of exchanges’ and wallets’ rosters.

Now, let’s take a more detailed look.

Type: Both stablecoins are off there same type, fiat-backed stablecoin pegged to the USD.

Stability: Both Tether and USDC have a history of short-term loss of the peg. Happily it didn’t take long for any of these tokens to regain the standard $1 value.

Accessibility: Both tokens are pretty easy to buy or sell (just like any top10 crypto coins). Tether is a bit more accessible as it is supported on a higher number of blockchains.

Security: As Tether is not fully transparent and already was fined for not having sufficient reserves and is being investigated for the alleged involvement in the Bitcoin price manipulation in 2017, we have reservations about its safety. USDC is much safer.

Legal status: Unlike USD Coin which is legally considered a pre-paid access or stored value, Tether doesn’t have a clear legal status.

Volume and circulating supply: Although Tether and USD Coin are only three positions away from each other, their market presence statistics differ dramatically. Whereas USDT has a market cap of over $113 billion and the daily trading volume exceeding $61 billion (as of July 2024). The USDC metrics are $35 billion as a market cap and the trading volume over $7.2 billion. As you can see Tether is a much more popular asset among investors and traders.

Conclusion

Stablecoins are the cryptocurrency type characterized by a stable price against a certain asset (often just currency or a commodity). Hence the name. Stablecoins have serious advantages over fiat money and regular cryptocurrency as well. They are easier to send than fiat currencies and unlike regular cryptocurrencies have stable prices.

Tether (USDT) and USD Coin (USDC) are two most popular stablecoins. Both cryptocurrencies are pegged to the American dollar 1:1. In terms of market cap both these stablecoins are among the top 10 cryptocurrencies.

As both USDT and USDC are adopted for various blockchains and available for trading on many exchanges. However, Tether is more available than USD Coin. Nevertheless, the latter has a strong advantage of being a more transparent and trustworthy project (Tether in contrast is pretty shady despite being one of the most popular cryptocurrencies in the world).

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