Daily Post 5️⃣ 27 October 2024 (Sunday)
Cryptocurrencies are notoriously volatile and can fluctuate rapidly in value. This makes it difficult to use them as a store of value or medium of exchange. Stablecoins were created to solve this problem by offering price stability. They are digital currencies that are tied to stable assets such as fiat currencies, precious metals, or commodities. USDC and USDT stablecoins are the most popular representatives of this type of digital asset in the crypto market, but what exactly are they, and how do they compare? A comparison between USDC vs USDT provides insight into their unique features and how they operate in the crypto industry.
Key takeaways
USDT has a higher market capitalization and significantly higher trading volume than USDC, making it a preferred choice for traders.
USDC is known for its transparency: regular audits and clear compliance with regulatory standards such as SEC and MiCA contribute to its reputation.
USDT is backed by assets as diverse as US Treasury bills, but the stablecoin has faced criticism for historical opacity and regulatory challenges.
The USDC benefits from a simple reserve structure backed primarily by cash and US Treasuries, ensuring transparency.
USDT is more tested and widely adopted, while USDC stands out for its strong compliance and transparency.
What is Tether (USDT)?
Tether (USDT) is the oldest and most popular USD stablecoin launched in 2014 with the aim of creating a bridge between cryptocurrencies and traditional fiat currencies. It is pegged to the US dollar and is backed by reserves of fiat currency and other assets. Tether is the most widely used stablecoin, with a market capitalization of over $70 billion.
You can learn more about Tether tokens in this article.
USDT stability
In 2017, Tether was hacked, and 31 million USDT tokens were lost. The plan was criticized as many pointed out that instead of taking responsibility and showing accountability, they launched an "emergency hard fork" to save face.
In 2017, Tether was hacked, and 31 million USDT were lost. Instead of taking responsibility and showing accountability, they launched an "emergency hard fork" to save face. It caught the attention of the New York Attorney General when it was discovered that Tether was lending out its cash reserves without properly backing them with USD. Instead of providing a rational defense, he tried to absolve himself of responsibility by opposing the Attorney General.
USDT Vol
According to CoinMarketCap, USDT has a current market capitalization of about $111 billion, and is the most used stablecoin in the world. This makes Tether the third largest crypto-asset by market capitalization, trailed only by Bitcoin and Ethereum.
Recommended Article: What is Volume in Cryptocurrency?
What is USD Coin (USDC)?
USDC, or USD Coin, ranks second on the list of most popular stablecoins. It was launched in 2018 by Circle, a fintech company based in Boston.
The Center Consortium, which includes Circle and Coinbase, issues and manages the USDC. The center is the only body that can control the supply of USDC, just as the Federal Reserve controls the US dollar. However, there is a major difference between USD and USDC — Circle has full control over USDC, which is not the case with USD and FR.
USDC stability
USDC stability is considered more transparent than USDT as CIRCLE provides a monthly audit of its reserve assets. Additionally, the USDC is regulated by the US Securities and Exchange Commission (SEC).
In March 2023, Circle reported that $3.3 billion in cash reserves backing USDC tokens were left at Silicon Valley Bank, causing its value to fall to 87 cents against the dollar. In addition, similar dollar-backed stablecoins such as DAI and USDD were devalued from their original value of $1. However, it only took 2 days for USDC to return its peg.
USDC market capitalization
According to CoinMarketCap, USDC has a current market capitalization of over $34 billion, and is the second most used stablecoin in the world after USDT.