USDT and USDC are stablecoins pegged by the same amount of USD (U.S. Dollar). Stablecoins were created to reduce the volatility of the crypto market. Stablecoins help to keep the value steady and minimize fluctuations. They are not always backed by cash but can be backed by other assets such as gold.
Investors can enter and exit positions in the volatile crypto market using USD stablecoins. USD stablecoins have a fixed value and work as a store of wealth. Almost 90% of forex trading involves the U.S. dollar, making it the reserve currency of the world. Similarly, USD-backed stablecoins are dominating the stablecoin space.
Stablecoins are becoming very popular these days, you can read more about top 10 stable coins to invest in 2022 . Since 2021, the demand for these cryptos has steadily risen. The market cap of stablecoins exceeded $151 billion in January 2022. This article will explore the differences between the top two stablecoins, USDT and USDC.
What is USDC?
USDC was invented in 2018 by Circle and Coinbase. Similar to other USD-backed cryptos, USDC remains fixed at $1. The technical and financial standards are governed by the Centre Consortium. The transparency of 1-to-1 backing is secured by the Centre Consortium. This consortium ensures that $1 is held in reserve for every USDC created.
Financial institutions approve the creation of each USDC that fulfills the membership structure of the Circle. This is how the Circle expands the USDC ecosystem. Most crypto exchanges have USDC available on their platforms. USDC can be received or sent using any ERC-20 wallet or exchange. Blockchains like Solana, Algorand, Binance Smart Chain, Stellar, Hedera, and others support USDC.
Volume
USDC has a circulating supply of $46 billion and currently ranks 4th in market cap. USDC is only one place behind USDT in market cap and is steadily increasing. USDC’s 24-hour trading volume was $2.4 billion at the time of writing.
Stability
The USDC is stable at around $1. Like other stablecoins, fluctuations are quickly corrected to bring USDC to $1.
What is USDT?
USDT was issued by Hong Kong-based Tether Limited in 2014. The idea behind USDT was to create a link between crypto and fiat currencies. Tether Limited was the first company to offer users a platform to trade in a US Dollar-backed crypto. USDT has many technical advantages, such as high liquidity and less volatility compared to Bitcoin and Ethereum.
Tether Limited was able to offer the best of the fiat and crypto worlds. It created a simple method to send crypto with low cost, transparency, and speed. USDT has created many use cases for crypto in remittances, payments, and more. Many crypto trading pairs began listing against USDT as soon as it was introduced in the crypto market. When USDT was released, it had a first-mover advantage in the stablecoin space. Major blockchains like Bitcoin, Ethereum, EOS, Algorand, and many others can be used to trade in USDT.
Volume
At the time of writing, USDT has a circulating supply of $68 billion and currently ranks 3rd in market cap. The 24-hour trading volume of USDT was $37.8 billion at the time of writing.
Stability
By design, the value of USDT is around $1. The value of each USDT is quickly corrected if there are any fluctuations.
USDC vs USDT
Blockchain
There are various advantages when trading with different blockchains. These benefits could be from transaction speed to utility. USDC can be traded on platforms like Ethereum, Solana, and Algorand. USDT can be traded on Algorand, Ethereum, Tron, SLP, EOS, and USDT Bitcoin.
Savings inspection
Many users would ponder questions like “Is USDC and USDT safe to invest in?” Well, these two stablecoins are audited by some of the top accounting companies.
USDC saving accounts are inspected by Grant Thornton, one of the top five accounting firms in the world. Every month, USDC saving accounts are inspected and announced on the Circle website.
USDT saving accounts are evaluated by Freeh, Sporkin, and Sullivan LLP. But there is one issue with USDT: investors are not informed about the number of times these savings accounts get audited.
Founders
USDT was invented by Tether Limited in 2014. Coinbase and Circle introduced USDC in 2018.
USDT vs USDC Fees
The transaction fee for USDC and USDT varies depending on the trading platform. USDC and USDT can be bought and traded on most crypto exchanges like other crypto coins.
Use cases
USDC and USDT are used to store value, make payments, and access yield in the crypto market. Read on to check out some prominent use cases for these stablecoins.
Defi for lending
Defi, decentralized finance, is an ecosystem without a central monitoring body or third party. Defi functions on a peer-to-peer model and consists of many crypto-based financial applications. Users can lend their stablecoins to earn interest. Users obtain lower-interest loans compared to other decentralized exchanges. Stablecoin lenders can receive stable long-term interest from their stablecoins.
Crypto pairs
Users can trade one crypto asset for another using an exchange. This process is known as trading crypto pairs. With crypto pairs, investors can easily compare the value of various crypto assets. For example, in a BTC/USDT pair, you will know how many USDT coins are equal to one BTC.
Liquidity
Users of AMM DEX or other decentralized exchanges can provide liquidity to users of their stablecoins. For example, on top pairs like ETH-USDC, investors can provide liquidity using their USDC. Investors can also earn many incentives and trading fees.
Earning Interest
Investors can earn interest on their USDC and USDT coins by lending these coins for a fixed duration. Users need to check first if their exchange provides lending services.
Final thoughts
Many of us will ask ourselves, should I use USDC or USDT? Many analysts do not regard USDT as the top stablecoin despite having a larger volume and a higher market cap. This low consideration is because of the issues of transparency and auditing of USDT.
USDC stablecoins are more transparent in their processes compared to USDT coins. Additionally, USDC is similar to USDT in terms of its exchange rate and the blockchain they operate on. USDT stablecoins are the preferred choice for users investing in large volumes of crypto and liquidity. Users who value transparency prefer USDC-stablecoins.
Along with Binance USD, USDC and USDT form the majority of the stablecoin market cap. Both these stablecoins are good options for users who want to be a part of the stablecoin market. Recently, Visa has partnered with Circle, which helps vendors feel more comfortable using these stablecoins.
USDT and USDC are available on ZebPay. Start your crypto trading journey today with the best in class features available on ZebPay.
