The crypto landscape is dynamic and famous for its fluctuating nature and rapid volatility, especially in terms of value. As a result, it is certainly difficult to use cryptocurrencies as a medium of exchange or a store of value.
Enter stablecoins, crypto’s solution to ensure price stability. Stablecoins are cryptocurrencies that are attached to stable assets such as precious metals, commodities, and fiat currencies.
Both USDT and USDC are popular stablecoins in the crypto industry. But exactly are these? How can you compare them?
The USDC vs USDT conversation is important since it provides insight into their unique traits and functionality within the crypto space.
Moreover, to understand the stable token better, it is vital to check out the two most well-known fiat-backed stablecoins. So, without wasting time, let’s dive in!
USDC Vs USDT: Comparative Analysis
Welcome to The Bitcoin Mag’s USDC vs USDT conversation! Instead of discussing stablecoins, the advantages of using them, and the associated risks, here’s the comparison you have been looking for!
Overview: What Is Tether USDT? And What Is USDC?
Tether USDT is the most popular and also the oldest USD stablecoin, first launched nearly a decade ago in 2014. The purpose? To create a bridge between traditional fiat currencies and cryptocurrencies.
Tether is pegged to the USD and is backed by a safe reserve of fiat money as well as some other assets. Also, Tether has a market cap of more than 70 billion dollars and is used widely.
First launched by a fintech company from Boston, Circle, in 2018, USDC, or the USD coin, is the second most popular stablecoin after Tether. The Centre consortium, including both Circle and Coinbase, is responsible for managing USDC. So, the Centre Consortium is the only authority that has control over the supply of USDC, just like the Federal Reserve exercises control over the USD.
But there is a huge difference between USDC and USD – while Circle has complete control over USDC, it’s not the same as the Federal Reserve’s control over the USD.
Stability: USDC Vs USDT
In 2017, USDT dealt with hacking, losing 31 million USDT tokens in the process. During this time, critics spoke against the Tether. To make matters worse, Tether’s team did not take responsibility or demonstrate accountability, initiating “an emergency hard fork” to save face.
Soon enough, the New York Attorney General found out about the same once it became clear that USDT was landing out its fiat reserves without backing their tokens with the same. In fact, instead of coming up with a logical defense, Tether was antagonizing the New York Attorney General and trying to absolve themselves of accountability.
Comparatively, the stability of USDC is relatively more transparent than Tether. This is because Circle offers audits of its reserve assets monthly. In addition, USDC is primarily controlled by the US SEC (Securities and Exchange Commission).
Moreover, in March 2023, Circle claimed that cash reserves worth 3.3 billion dollars backing the USDC tokens were in the Silicon Valley Bank. As per Circle, this caused the USDC tokens to debug and fall in value. And that, too, against the dollar to around 87 cents.
Additionally, there are similar dollar-backed stable tokens like USDD and DAI that also faced similar fates and dropped in value from their original value of a dollar. But USDC surprised everyone by returning to its peg in only two days.
Volume: USDC Vs USDT
As per the CoinMarketCap, the present market cap of USDT is around 72 billion dollars. Moreover, it is used mostly widely across the globe. As a result, you can say that Tether occupies the third spot among crypto assets in terms of market cap. The other two are obviously Bitcoin and Ethereum.
The present market cap of USDC is more than 40 million dollars. Moreover, it is the second most popular stablecoin in the world after Tether.
USDC Vs USDT: Similarities
We cannot have a USDC vs USDT discussion without talking about the similarities these two share. So, let’s take a quick look at some of the major similarities between USDC and USDT.
1. Both Are Stablecoins:
Apart from market capitalization, volume, and stability, it is almost impossible to distinguish between Tether and USDC. After all, both are stablecoins. As a result, both stablecoins come with a fixed value that is pegged to the USD.
As a result, this makes the stablecoins relatively less volatile as compared to other crypto assets. So that they can serve as a medium of exchange or a store of value. But you can’t treat them as the best substitutes for the USD since it is not possible to use them for regular payments or even deposit them in a bank.
2. Blockchain Variation:
Both USDC and USDT stablecoins solely function on the Ethereum blockchain. However, with time, the two stablecoins have now started gaining representation on more than one blockchain that allows low transaction fees and rapid transferrals.
3. Blockchain Transparency:
Both USDC and USDT stablecoins offer transparency in terms of their transactions on the blockchain. This enables users to monitor their transactions while ensuring that they get what they are paying for.
4. Quick Transferrals:
You can transfer USDC and USDT stablecoins quickly. As a result, these are perfect for both remittances and peer-to-peer transitions.
USDC vs USDT: So, Which Stablecoin Is A Better Alternative For 2024?
So, which stablecoin is a better option for 2024?
Both USDT and USDC stablecoins follow a comparative and centralized framework, but there are massive distinctions in these assets supporting each of the tokens, as we mentioned above.
Moreover, USDC is entirely collateralized, making sure that each USDC token is backed by an equal amount of USD held in reserve. Contrastedly, USDT actually follows a partial model of collateralization.
This basically means that it depends on a blend of loans, cash, and different assets for backing. In addition, USDC is controlled by NYDFS (New York State Department of Financial Services), while USDT is not regulated by any major financial entity.
Nonetheless, the option to choose between the two stablecoins depends upon your preferences after you have done a thorough research on both!