usdc vs usdt

USDC vs. USDT: Which Is the Best Stablecoin for You?

Stablecoins are cryptocurrencies tied to an external reserve such as the US dollar to keep its value less volatile and minimize fluctuations. To ensure sufficient reserves of stablecoins are usually pegged on external assets like cash and gold.

US Dollar stable coins are pretty popular since they offer traders a way to enter and exit from more volatile cryptocurrencies as they are a store for value. USDC and USDT are the most popular stable coins in the market currently.

USDC is the best stable coin currently in terms of transparency and integrity. It has always been focused on transparency and regulation since it was launched, which gives credibility to the issuing company, Circle.

USDC and USDT: What are The Similarities and Key Differences?

USDC and USDT are backed by dollar-denominated assets with equal value to the cryptocurrency in circulation and are regulated by US-regulated financial institutions. Stablecoins are very stable and minimize the chances of losing your investment.

Stablecoins are also cheap and easy to transfer from one exchange to another. They are also easy to convert to fiat. Additionally, they are global, open, accessible to anyone on the internet, and digitally native to the internet hence programmable

Similarities

Both USDC and USDT are stablecoins that currently share the most share of the stablecoin markets. They are the least volatile stablecoins in the crypto ecosystem. USDC and USDT have their distinct features, but they are also quite similar to each other.

Here is a look at how:

  • Both Have A One-to-One Value Ratio and Are USD Stablecoins

The USDC and the UDT hold a one-to-one ratio with their reserve asset, the US dollar. This means there can never be more stablecoins in circulation than the US dollar in the company’s network.

  • Both Are Stablecoins

The USDC and the USDT are both pegged on reserve assets. Stablecoins can be pegged against other digital currencies and fiat currencies, but both the USDT and YSDC are pegged on the US Dollar. This means that their prices remain stable among other crypto assets fluctuations in the market.

  • Both Are Ethereum-Based Tokens

USDC and USDT are both Ethereum (ETH) compatible. While a separate company issues each stablecoin, they both use the same computing system to verify their transactions to enhance stability and security in their platforms.

  • Both Are Fully Transparent

Both USDC and USDT operate on the Ethereum network, meaning they are fully transparent, allowing their users to participate in their network security.

  • Both Offer Fast Transferal

USDT and USDC are designed to transfer money across borders easily and quickly. They can both be transferred without the need of a middleman or having to worry about each other’s time zones due to the fast Ethereum fast blockchain network.

Key Differences

While the similarities between USDC and USDT are more than their differences, you must first understand their differences before you decide to start trading with either:

  • Blockchain Variation

USDT uses the Ethereum blockchain, while USDC uses several blockchains for operations. While USDC is based on the Ethereum blockchain, it is also based on the Solana, Stellar, and Algorand blockchains as well.

USDC is in a better position than the one operating on just one blockchain. It also means that the USDC currency is less localized than the USDT.

  • Different Launch Dates

USDT was launched in 2014, while USDC was established in 2018. USDC uses more modern technology for its performance, while USDT has a broader range of financial backing and widespread adoption.

  • Their Reserve Asset Stability

While both coins are based on the wealth structure of the US Dollar, there have been issues in the system. USDC has maintained a stable 1:1 ratio but investors and economists are suspicious about whether USDT (Tether) has enough dollar reserves in their account to back their currencies. Consequently, this has led to slight inflation of the USDT token price, destabilizing the company’s claim of being a stablecoin.

  • Liquidity and Trade Volume

Volume refers to the total number of trades in a certain time, while liquidity is the number of coins available for trading at a set price. Therefore, the higher the volume, the easier it is to trade the coins in a fast and reliable fashion. USDT has a higher trading volume than USDC due to its higher adoption rate

USDT (Tether) and USDC (Coin) are stable coins pegged on the US dollar. USDT currently has a supply of 79.4 billion tokens, and its current value is $1.0006 resulting in a market cap of 79.38 billion. USDC, on the other hand, is a supply of 52 billion, and its current value is $1.000.

Comparison Table

  USDT USDC
Creator Tether Limited Center Consortium (By Circle
Time 2014 2018
Backing Mostly Assets of Equivalent Value Cash & Cash Equivalents
Market Capitalization $78 Billion $50.9 Billion
Liquidity and Availability Highest Second Highest
24h Trading Volume $35.9 Billion $2.7 Billion
Price Peg to USD US$1:1 USDT US$1:1USDC

 

Stablecoin

Stablecoins are digital currencies or cryptocurrencies pegged on a stable asset such as gold or the US Dollar. They are designed to be more steady compared to unpegged crypto assets like Ethereum and Bitcoin.

Since Stablecoins are pegged on cryptocurrency and regular fiat currency, their prices are less volatile. They are the best option for ordinary day-to-day commerce and making your transfers between exchanges.

Key Features

  • USDC and USDT are backed by dollar-denominated assets with equal value to the cryptocurrency in circulation.
  • USDC and USDT are regulated by US-regulated financial institutions.
  • Stablecoins are very stable and minimize the chances of losing your investment.
  • Stablecoins are also cheap and easy to transfer from one exchange to another.
  • Stablecoins are global, open, accessible to anyone on the internet, and digitally native to the internet hence programmable.

Pros and Cons of Stablecoins

There are many benefits of choosing stablecoins as your preferred choice of trading in the ecosystem. They are cheap, transparent, and borderless, but just like anything else, it comes with their disadvantages. 

Here is a look at some advantages and disadvantages of investing in stablecoins:

Pros

  • Transparency

Stablecoins aims to solve the common complaint about institutional banking where it lacks proper independent auditing conducted by impartial authorities. It allows users and other interested parties to look through their blockchain information.

  • Stability

As their name suggests, stablecoins are more stable than other cryptocurrencies. The crypto community is always concerned about the high level of volatility compared to fiat currencies. Stablecoins are backed by the physical reserves of gold or the dollar, making them relatively stable.

  • Interchangeability

Converting crypto assets like Bitcoin to fiat currency is often expensive and difficult. Stablecoins quickly solve the problem by giving investors an easy option to cash out when they choose to do so. Changing the digital currency to fiat through stablecoins is often quick and easy and does not incur extra charges or taxation.

  • Digital Currency

Stablecoins are maintained by blockchain technology, can conduct international transactions in a shorter period, and is cheaper than fiat currencies. The fast settlement makes them a great medium of exchange across borders. They are quite easy to use, similar to traditional cryptocurrencies.

Cons

  • Stablecoins Lack Transparency and Accountability

Increased transparency and accountability are crucial for the success of any form of decentralized finance success. Some stablecoins, like the USDC, issue monthly audits to remain transparent, but the USDT has problems with auditing, which is a great reminder that stablecoins can avoid any scrutiny if they do so.

  • Stablecoins Are Centralized

Digital currency prides itself on the notion that they are decentralized, but these are centralized based on how they back the assets. An equal reserve of its value backs each stablecoin in circulation.

  • There Is Uncertainty in Its Regulatory

There is a lot of uncertainty surrounding the implementation of stablecoins, and the industry is constantly evolving. A study by Coalition Greenwich shows that the uncertainty surrounding stablecoins stops many investors from investing in them.

  • Stablecoins Lack Real-World Adoption

There is no real-world adoption in stablecoins, making them challenging to spend or use. They are pretty tricky to us outside a crypto exchange.

usdc coin symbol table with glasses pen cash calculator

More on USDC (USD Coin)

USDC (USD Coin) was created by Circle and Coinbase in 2018 and is a USD-backed token. Its prices, therefore, always remain at $1. USDC is governed by the Centre Consortium, responsible for the technical and financial standards of the stablecoin, and oversees its transparency around 1-to-1 backing, which means that every USDC created is backed by $1 held in reserve.

It is one of the largest USD stablecoins, with a current supply of 34.6 billion. USDC can only be issued by regulated financial institutions that meet Cirlce’s membership framework. It is also available on major cryptocurrency providers and exchanges.

USDC can be sent and received by any exchange or wallet that is ERC-20 compatible. This includes blockchains such as Stellar, Algorand, Hedera, Binance Smart Chain, Solana, and Tron.

USDC Volume

USDC has a market cap of $34.7 billion. Its 7-day trade volume is $5.5 billion, and $90.5 billion traded in the past 30 days.

Previous Close 1.0002
Open 1.0002
Day’s Range 0.9997 – 1.0007
52 Week Range 0.9874 – 2.3496
Start Date 2018-10-08
Algorithm N/A
Market Cap 55.551B
Circulating Supply 55.55B
Max Supply N/A
Volume 6,112,990,720
Volume (24hr) 6.11B
Volume (24hr) All Currencies 6.11B

 

USDC Stability

USDC has remained stable at around $1, with only a few fluctuations, as with any stablecoin. However, the fluctuations are always quickly corrected to return to the same $1 price.

tether usdt symbol phone woman hand

More on USDT

USDT was issued by Tether Limited, a Hong Kong-based financial institution, in 2014 to bridge the gap between fiat and cryptocurrency. It is one of the USD stablecoins Tether offers to its users. It is a block-chained crypto asset with high liquidity but less volatility when compared to other digital currencies.

When USDT was released, many trading pairs listings against the USDT gave the coin a first-mover advantage among other stablecoins. The stablecoin is currently circulating at 74.7 billion on most blockchains, including Ethereum, Bitcoin, Algorand, EOS, and others. It is the most popular trading pair in the crypto ecosystem and is used in blockchains to swap or buy hundreds of cryptocurrencies.

USDT allows you to trade quickly and cheaply while earning interest on the decentralized financial protocols. The stablecoin also gives merchants a way to accept crypto payments denominated in fiat while eliminating the need to take the risk associated with accepting payments in the form of volatile cryptocurrencies.

USDT Volume

USDT has a market cap of $74 billion and is 4th among other crypto coins. The stablecoin is the most heavily traded coin, with a 7-day trade volume of $93.9 billion and $2.3 trillion in the past 30 days, which is double that of Bitcoin (the most popular cryptocurrency)

Previous Close 0.999414
Open 0.999414
Day’s Range 0.999300 – 0.999574
52 Week Range 0.948486 – 1.033019
Start Date 2015-02-25
Algorithm N/A
Market Cap 65.958B
Circulating Supply 65.99B
Max Supply N/A
Volume 64,053,301,248
Volume (24hr) 64.05B
Volume (24hr) All Currencies 64.05B

 

USDT Stability

USDT is designed to stick to the value of $1. There can often be slight fluctuations with a few cents, but the market quickly corrects itself to the $1.

How to Earn Interest on USDC and USDT?

Decentralized Finance (DeFi) offers similar services as those you can get with a bank account. Among the services is earning interest by lending tokens on different platforms. When you have stablecoins are part of your investment portfolio, you will enjoy a higher APY on a less volatile crypto coin.

The interest rates keep changing, but you will earn more when lending stablecoins in a regular dollar savings account. You also have complete control over where your money unlike when you put your money in a standard bank account.

You can view your current APY on different coins through DeFi Rate. You will notice that the top lending providers here offer interest rates ranging between 2-9% on a USD Coin and with an average of 4.4% monthly APY.

You can also view the current USDT lending rates from Staking Rewards. The tool has a higher average APY than USDC. There are risks to high returns, so it is important to ensure you do your research and understand the financial instrument you decide to put your money on.

How to Buy USDT or USDC

Purchasing USDT and USDC is relatively easy. You can buy either stablecoins from any platform they are offered on with a bank transfer, credit/debit card, Samsung Pay, Apple Pay, or Google Pay.

Closing

While, at first, it might appear that the USDC is superior to the USDT in terms of price, it’s up to you to choose which stablecoins best suit your investment objectives. You must research by viewing the up-to-date market data and comparing USDT against the USDC. It is also essential to see how often they are reviewed and disclosed to the public for enhanced transparency.

Key Takeaways

  • Stablecoins are backed by other reserves, including gold and fiat currency.
  • USDT and USDC are both backed by US dollar reserves.
  • Stablecoins are less volatile than the usual cryptocurrencies and ideal for investors with a moderate risk appetite.
  • USDT and USDC are the most popular stablecoins in the crypto ecosystem.

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