Two of the most popular stablecoins are Tether (USDT) and USD Coin (USDC), designed to maintain a stable value by pegging themselves to a fiat currency—in this case, the US dollar. While they share the common goal of providing a stable digital asset for trading and investment, there are key differences between Tether and USDC.
In this article, we will explore the unique features and differences of each, and disclose their potential impact on the cryptocurrency market.
Which Stable Coin is a Better Investment?
Before we dive into the hot topic of Tether (USDT) vs. USD Coin (USDC), first, read more about stablecoins to discover how they work and why you may need one of them. Furthermore, you should note that Tether and USDC are not the only stablecoins out there. However, they are two of the safest stablecoins that you can buy without any concerns. But, which one to buy? Let’s find the answer to this question by looking deeper into each of them.
What is Tether?
Tether (USDT) is a popular cryptocurrency that was created in 2014. It is a stablecoin, meaning its value is pegged to a more stable asset, in this case, the US dollar. The idea behind Tether was to create a cryptocurrency that could be used for transactions and investments without the unstableness of other cryptocurrencies like Bitcoin.
Tether is built on the Bitcoin blockchain and is issued by Tether Limited. The company claims that each USDT is backed by a corresponding US dollar held in reserve. This means that the total supply of USDT should be equivalent to the total amount of US dollars held in Tether’s reserve.
Note: There are stablecoins that are pegged to other stable assets, such as gold, known as gold-backed cryptocurrencies.
Tether’s Key Features
Some of the key features of Tether are:
- Stability: as mentioned, USDT is almost always equal to 1USD. However, in the history of Tether, we can see slight fluctuations in some occasions that changed its price for only a few cents.
- Accessibility: Unlike traditional banking systems, which can be difficult for some people to access, Tether can be accessed from anywhere in the world with an internet connection. This makes it an attractive option for people who are unbanked or underbanked.
- Ease of Use: Tether can be traded on a variety of cryptocurrency exchanges, and it can also be used for transactions and payments.
- Market Cap: Tether is the oldest stablecoin. Therefore, it has a large market capitalization, which was over $88.5 billion as of late 2023.
Overall, Tether’s main features are its stability, accessibility, and ease of use. These factors have contributed to its popularity and widespread use in the cryptocurrency market.
What is USD Coin (USDC)?
The other popular stablecoin on the crypto market is USD Coin (USDC), which was created in 2018 by Circle Internet Financial and Coinbase. Like Tether, USDC is also pegged to the US dollar, meaning that each USDC token is backed by a corresponding US dollar held in reserve. USDC is also built on the Ethereum blockchain, which offers faster transaction times compared to Bitcoin.
USDC Key Features
Some of the key features of USDC are:
- Transparency: The company behind USDC, Circle, publishes monthly attestation reports that verify the number of US dollars held in reserve to back the USDC in circulation. This level of transparency is important because it reassures investors that the stablecoin is truly backed by the US dollar.
- Regulatory Compliance: Circle works with various regulatory bodies to ensure that USDC complies with all relevant laws and regulations. This is an important feature because it helps to reduce the risk of USDC tokens involved in illegal activities.
- Ease of Use: USDC is also widely accepted and can be used for a variety of purposes, including transactions and investments. The stablecoin can be traded on many cryptocurrency exchanges and can be used to purchase other cryptocurrencies or to make purchases at merchants that accept USDC.
- Stability: USDC is known as a stablecoin with the highest stability. However, like Tether, USDC also has seen slight fluctuations which were quickly covered.
In summary, USDC’s main features include its transparency, regulatory compliance, and wide acceptance. These features have contributed to its fame and universal use in the cryptocurrency market.
Important Criteria to Consider When Comparing USDT vs. USDC
Tether (USDT) and USD Coin (USDC) are two of the most popular stablecoins in the cryptocurrency market. While they share some similarities, there are also some key differences between the two that investors should be aware of.
When comparing Tether and USD Coin, there are several important criteria that investors should consider. These include:
- Stability: Both Tether and USDC are pegged to the US dollar, which means they are designed to maintain a stable value. However, it is important to ensure that the stablecoin you are investing in is indeed stable and not subject to sudden fluctuations in value.
- Transparency: Transparency is necessary in the world of stablecoins. Investors should look for stablecoins that are transparent about their reserves and are regularly audited by reputable third-party firms.
- Usage: Investors should also consider the usage of each stablecoin. Tether is currently the most widely used stablecoin, but USDC is gaining popularity and acceptance on an increasing number of exchanges.
- Regulatory compliance: Investors should look for stablecoins that are compliant with relevant laws and regulations. USDC, for example, is famous for its regulatory compliance and works closely with regulatory bodies.
- Market capitalization: Market capitalization refers to the total value of a coin in circulation. A higher market capitalization can indicate greater stability and popularity, but investors should be careful not to rely solely on this metric when making investment decisions.
In summary, investors should carefully consider each of these criteria when set side by side with Tether and USD Coin, as well as other stablecoins, to ensure they make informed investment decisions. Now that we learned this, it’s time to move on to the main differences between Tether and USDC.
The Main Differences Tether vs. USDC
Let’s check out different factors between Tether and USDC to see which one wins:
USDT vs USDC: Transparency
The first differing area between these two coins is their level of transparency. While both stablecoins are backed by US dollars held in reserve, Tether’s level of transparency has been questioned in the past. The company has been criticized for its lack of transparency regarding the number of US dollars held in reserve and the auditing of its reserves.
In contrast, USDC is known for its transparency, with Circle (the company behind the coin) regularly publishing reports verifying the number of US dollars held in reserve. Therefore, in this case, USDC wins.
Note: If you want to buy USDC, you can sign up on Blocktrade and choose different payment methods. On Blocktrade, you can buy USDC with credit cards or paypal. Furthermore, buying USDC with GooglePay and ApplePay are also possible.
USDC vs USDT: Launch Date
Tether is the older stablecoin compared to USDC. It was launched in 2014. On the other hand, USDC was launched in 2018, showing that Tether had more time to establish its market.
Tether vs USDC: Usage and Market Capitalization
Another difference between the two stablecoins is their popularity and usage. Tether is currently the most widely used stablecoin, with a market capitalization of over $30 billion. It is popular on more cryptocurrency exchanges than USDC and is also a trading pair for many cryptocurrencies.
However, USDC has been gaining popularity in recent years. It’s now accepted on many cryptocurrency exchanges and is used for a variety of transactions and investments.
USDC vs Tether: Stability
Both coins claim they are 100% stable. However, both had some fluctuations over time but in the end, they became stable at 1 USD. On the other hand, Tether was hacked in 2017, which affected its security level and stability.
Conclusion
When it comes to which coin is a better investment option, it ultimately depends on the investor’s preferences. Tether’s stability and widespread usage make it a popular choice for investors looking for a stable asset. However, its lack of transparency may be a concern for some investors. On the other hand, USDC’s transparency and regulatory compliance make it a more trustworthy option for investors. However, its lower market capitalization may make it a riskier investment for some investors.
Ultimately, both coins are among the most popular and trusted stablecoins. You should note that after buying either of them, you need to prepare a secure wallet to keep your coins safe. Therefore, learn more about choosing the best crypto wallet.
As a trader, you’ll need to look for the best ways to buy Tether. Try reading How to Buy Tether to learn about different methods and services available for you to buy Tether (USDT) including Credit Cards, PayPal, and more. Also, you’ll need to research different wallets to keep your Tether crypto investments secure. Read The Best Tether Wallet to find out.
In conclusion, while Tether and USDC share some similarities, they also have key differences that investors should be aware of. Ultimately, the decision of which coin to invest in depends on the investor’s individual preferences and budget, as well as careful consideration of the coin’s features and the company behind it.
FAQs
A stablecoin is a type of cryptocurrency that can maintain a stable value. It’s typically pegged to a fiat currency like the US dollar. This makes stablecoins more predictable and less volatile than other cryptocurrencies.
While both Tether and USD Coin are stable coins pegged to the US dollar, they differ in terms of transparency, usage, and regulatory compliance. Tether has been criticized for its lack of transparency, while USD Coin is known for its regulatory compliance and transparency.
Both stablecoins can maintain a stable value and can provide a stable asset in a volatile market. However, the suitability of Tether and USD Coin as investment options ultimately depend on the individual investor’s preferences.
