In the volatile world of digital currencies, traders need a tool to protect their funds from sudden price drops. This is where digital dollars or stablecoins come in, which are digital currencies pegged to the US dollar at a 1:1 ratio. But what is the difference between USDT, USDC, DAI, and TUSD? And what is the purpose of having more than one type?
In this article, we review the most prominent types of digital dollars and the benefit of each.
1. USDT (Tether)
Entity: Tether Ltd.
Goal: Facilitate trading with a stable digital currency.
Features:
High liquidity.
Supported on most platforms.
Low fees (especially on the TRC-20 network).
Potential drawback: Previous complaints about reserve transparency.
2. USDC (USD Coin)
Entity: Circle and Coinbase.
Goal: A stable currency with transparency and strict regulation.
Features:
Periodic reserve reports.
Reliable in decentralized finance (DeFi).
Backed by regulated institutions.
3. DAI
Entity: Decentralized project (MakerDAO).
Goal: A stable currency without a central authority.
Mechanism: Backed by digital collateral, managed through smart contracts.
Features:
Completely decentralized.
Flexible and integrated with DeFi applications.
4. TUSD (TrueUSD)
Entity: TrustToken.
Goal: Provide a stable currency with high transparency.
Features:
Daily reviews from third parties.
Fully backed by dollars in licensed accounts.
Why do we need more than one type?
Various options according to need: liquidity, security, or decentralization.
A tool to protect against market fluctuations.
A fast and secure global transfer method.
A foundation in modern digital financial applications.
Summary
Although all these currencies are linked to the dollar, their difference lies in how they are managed and their reliability. Whether you are looking for the highest liquidity (USDT), strict regulation (USDC), or independence (DAI), each type has its purpose.
