The world of crypto is usually a wild and unstable place. Still, in this high-risk market, stablecoins, as their name suggests, remain an inherently stable medium of exchange. The reason is simple. Stablecoins are pegged to the price of another asset — USD, gold, or public stock backed through algorithms or vast reserves, which greatly minimizes their volatility.
The stability and convenience that stablecoins offer to the users has led to their dramatic market cap increase exceeding $150 billion. Today, we’ll compare the two most popular stablecoins pegged to the US dollar — USDT vs USDC. We’ll see what their similarities and differences are and understand which works best for most traders.
As of October 2022, Tether(USDT) is the third largest cryptocurrency after Bitcoin and Ethereum. Tether Limited from Hong Kong started trading Tether in 2015, and since then, it has become the stablecoin with the largest market cap of $68 billion.
Tether is based on the Bitcoin blockchain and supports Omni and Liquid Protocols. That makes it flexible and provides the user with the possibility of using its tokens on Ethereum, Tron, EOS, Bitcoin, and others. It offers speed, liquidity, and widespread adoption, so it’s no wonder why USDT is the currency mainly associated with a stablecoin.
Still, since its launch, the company has faced criticism from users for being a centralized project. Tether has also dealt with fines by US regulators for misstating its value. Despite that, USDT remains relevantly stable and secure.
Created with combined forces of Coinbase and Circle, USD Coin (USDC) is the second-largest stablecoin on the market. Like any other stablecoin, it was created to evade wild price swings, but unlike some of them, it’s quite stable and transparent.
USDC runs with a programmable Ethereum and is available on any ERC-20 compatible wallet, along with Solana, Tron, Stellar, and others. USDC gives its users transparency on how the coin is backed. It actively follows all regulations releasing regular reports on the reserves. USD Coin aims to reach the confidence of the users by being as transparent as possible.
Both Tether and USDC allow investors to earn interest in Defi protocols. USDCoin remains the most popular token in Compound and Aave.
USDT and USDC are quite similar in their characteristics, and the winner mostly depends on your goals. Still, we’ll try to compare both according to general crypto characteristics to make the differences clearer.
USDT is the most heavily traded stablecoin, though its market cap is only 20% bigger than USDC. The latter has been successfully decreasing the gap since its launch, but still, we should give the point to Tether.
Both cryptocurrencies are relatively stable as they are pegged to the US dollar at a 1:1 rate and the deviations are often insignificant. Still, in 2021, Tether was fined $41 million for reportedly misstating its reserves, while USDC has lost its market share to rivals in recent months hitting the lowest since January.
Since 2021, Tether has been trying to improve its transparency issues by making daily reports. Nevertheless, USDC’s approach to being transparent about its reserves and compliant with the law all of the time is a key to a victory here.
USDT is the most popular stablecoin so far, and even its competitors such as USDC haven’t managed to gain as much credibility as Tether.
5. Use Cases
USDC is great for people who value transparency and exchange crypto anonymous. USDT lets you invest in higher volume crypto fast and at a lower cost. These are few examples of USDT vs USDC.
While Tether has gained more points in our comparison, we hope that you’ve got the point. The investment, both in USDT vs USDC, is a good decision for investors who want to be a part of a crypto market. Tether will provide you with convenience and liquidity. USD Coin is a great choice to keep it safe with the law and potential government stablecoin regulations. The future looks bright and stable for both currencies.