What is the difference between USDT and USDC?
September 19, 2023
Cryptocurrencies are known for their volatile nature. The market is so unpredictable many avoid the cryptocurrency market due to High price fluctuations. Stablecoins were the best possible answer to solve this problem by offering price stability. Stablecoins are cryptos pegged to fiat currencies, commodities, and precious metals.
Two of the most populist stablecoins are Tether and USD coin. But what exactly are they, and how do they compare?
At Aron Groups, we have decided to provide a guide to tell you how to differentiate them and choose the best one.
Read on to learn more about the differences between Tether and USD coin in detail.
Table of Contents
What is USDC?
USD coin, with a $26 billion market cap, was created in 2018. It is the product of the Circle and Coinbase partnership. USDC is a USD dollar-backed token, so its price remains $1 all the time. Stablecoins are stable as there was one dollar of USD in held reserve for every USD coin. It is an ERC-20-compatible token and can be stored in Ethereum-compatible wallets, and you can transfer it through several blockchains, including Binance Smart Chain, Solana, Algorand, Hedera, Stellar, and others.
USDC is the 6th coin in terms of market cap, with a circulating supply of $26 billion. The 24-hour trading volume of this stablecoin is $ 1.5 billion at the time of writing. And there are 26,164,101,930 USDC in circulation.
Although the price of USDC is backed by US dollar, the price might fluctuate in value, but if it is corrected, brings it close to $1.
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What is USDT?
USDT, or Tether, was created by the Hong Kong-based Tether Limited in 2014. It acts as a bridge between fiat and cryptocurrencies. Tether was the first stablecoin to offer a solution and provide users with a US dollar-backed crypto. It has the advantage of accessing Ethereum and another blockchain network without having to experience the high volatility of the market.
Investors were looking for a safe and cheap way to make international transfers benefit from the Tether. Besides, users can use this stablecoin to buy other crypto products on decentralized exchanges.
Tether is the 3rd crypto based on market cap, with a circulating supply of $67.5 billion. The 24-hour trading volume was $26 billion at the time of writing.
Advantages of stablecoins
The first and the most important Advantages of using stablecoins is their stability. You can consider stablecoins as virtual Fiat currencies that benefit from the transparency and Efficiency of blockchain. Stablecoins are perfect for storing values and can be used as a medium of exchange.
Due to the decentralized nature of stablecoins, they can be transferred quickly and with fewer fees around the world. On the other hand, as they are using blockchain to store information, the records are immutable, and investors’ funds are protected against theft.
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Tether vs USDC: Comparative Analysis
In order to understand the differences between Tether and USD coins, we provide you with an analysis. First, we discuss the similarities they share.
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They are both stablecoins.
Both of them are backed by the US dollar with different market cap. $1 in reserve for every Tether or USD coin stablecoin; their value is fixed.
1:1 value ratio
For every Tether and USD coin in the market, there is a one-to-one (1:1) value ratio with the US Dollar.
Blockchain transparency
Both Stablecoins use blockchain to store transaction information and allow people to attract their money.
Availability
Tether and USD Coin Are two of the most legitimate and famous in the cryptocurrency market. They are mostly available on centralized and decentralized crypto exchanges. As they are both Erc20 tokens, you can find different software and hardware wallets supporting them.
They have been created on the Ethereum blockchain, giving them more versatility throughout the market. This is a key reason why so many different wallets support them.
Intentions
Tether was created to allow people to conduct cross-border financial services with digital assets that can reserve value like Fiat currencies. On the other hand, they will reduce the cost of conducting international transfers.
USD Coin vs. Tether: Key Differences?
Here, we discuss the differences between the USD coin and the USDT.
Launch date
Tether was created in 2014, while the USD coin was launched in 2018. Tether is the oldest stablecoin in the market and has had more time to establish itself.
Reserve of assets
As previously mentioned, both assets are backed by the US dollar with a 1:1 value ratio. But Tether lacks transparency about how USDT is backed. On the other hand, Circle has earned public trust.
Liquidity
As Tether has been around since 2014, it has much larger trade and liquidity compared to the USD coin. The daily trading volume of Tether is around $80 billion, while the daily trading volume of USD coins is around $11 billion.
In the end
Cryptocurrency is a volatile market, which makes it hard for some investors to participate. Investors who don’t want to get involved with a volatile market but at the same time want to benefit from new opportunities find stablecoins more interesting. As the US dollar backs the value of the stablecoins, you can use them to transfer money or to buy crypto products from decentralized and centralized exchanges.
By doing so, you will benefit from blockchain advantages, including fast transfers, low commissions, and a store of information. On the other hand, you don’t need to worry about volatility and price fluctuations. If you are new to the cryptocurrency market, we recommend you use a demo account and trade stablecoins in a safe, accessible environment. Remember that no matter what type of asset you choose to trade on Forex, you need a strategy with specific instructions for unexpected market movement.
The price of stablecoins is one dollar most of the time, and you can use them for trading cryptocurrencies and keeping your funds out of the volatile market of cryptocurrencies.
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