Stablecoins are quickly becoming big things in the crypto space. You see, there are good things and bad things regarding cryptocurrencies. Some of the bad ones are among the issues that are preventing them from achieving more widespread adoption as currencies. An ideal currency should not lose value due to inflation and have low price volatility. This means that a currency’s price shouldn’t go wildly up and down like some sort of roller coaster. Cryptocurrencies are notorious for their high volatility.
Variations of over 10% in just a few hours are common in the crypto world. While companies and individual users all over the world appreciate the speed, ease, and security of blockchain transactions, they are still hesitant to adopt such high-volatility currencies. Enter stablecoins. Cryptocurrencies that can bridge the fiat and crypto worlds; they offer the benefits of blockchains and the stability of fiat.
The two largest stablecoins are Tether (USDT) and USD Coin (USDC). But what’s the difference between them? Which one is better? If you want to know the answers, read on for this USDT vs USDC full comparison and review.
USDT vs USDC Comparison Table
|Ranking: 6||Ranking: 13|
|Network Fees: Low||Network Fees: Low|
|Market Capitalization: $35,187,104,904||Market Capitalization: $8,931,542,433|
|Circulating Token Supply: 35,054,434,546||Circulating Token Supply: 8,925,175,573|
|Regulated: No||Regulated: Yes|
The main differences between USDT and USDC are that the former is an older coin with a higher market cap and trading volume while the latter is newer but more regulated and with monthly public audits, which makes it more trustworthy.
What Is USDT?
USDT, or Tether, is a stablecoin launched by Tether Holdings in 2014. It is a fiat-backed stablecoin pegged to the US Dollar. This means that USDT’s value should always be 1 USD, and the price remains fixed because the issuing company has enough actual US Dollars so that each USDT token can be exchanged for 1 dollar upon demand.
Low-volatility cryptocurrencies are a powerful tool because they are more suited for use as a medium of exchange and store of value than traditional cryptocurrencies, which are more suited for speculative investment.
Tether was originally launched as RealCoin in mid-2014 but was rebranded as Tether later that year. The actual trading of Tether tokens began in early 2015.
USDT is among the oldest stablecoins, being launched in 2014. There are currently several different versions of Tether. Some are running on the Bitcoin blockchain, some are ERC-20 tokens running on Ehtereum, and there is even a version running on TRON. It has the highest market cap, and 24-hour trading volume among all stablecoins and is listed on all major exchanges. Over 57% of all bitcoins traded into any fiat currency or stablecoin are traded into Tether.
Tether transactions are, like all operations executed on a blockchain, secure and speedy. However, there has been controversy regarding the USDT token itself. First of all, being a fiat-backed token, there is supposed to be a 1 dollar collateral for each token in circulation. Tether Holdings, the issuing company, claims that is the case, and users can withdraw US dollars at any time. They also claim to be regularly audited. However, they were unable to fulfill all withdrawals requested in 2017.
Moreover, a complete public audit has never been performed, and reports say that the company’s actual backing is closer to 74% of all circulating tokens. Even worse, they have been accused of price manipulation and of using USDT’s backing dollars to hide a loss of over 850 million USD. Tether also has a patchy history with hacks.
31 million USDT were stolen in November 2017, forcing Tether to halt all trading a perform a hard fork on the blockchain. Trading was resumed by December 19th.
Between 2014 and 2017, the stablecoin market was, for all practical purposes, a monopoly with Tether as undisputed king. And USDT is still the world's largest stablecoin both by market cap and trading volume. It's also the one listed on the highest number of exchanges and trading pairs, so it's a very versatile trading option.
However, there have been some doubts about the token's stability. For a stablecoin to have its value pegged to any fiat currency, the developer of that token must hold enough fiat currency so that all token owners can trade in all their tokens for actual currency at any time. There are currently over 35 billion USDT tokens in circulation, so Tether holdings should be holding at least 35 billion US dollars.
The problem is that Tether holdings have never submitted to a full audit to make sure this is true, and what little information we do have in that respect says that the token isn't really fully backed.
Pros & Cons
What Is USDC?
USDC, also called USD Coin or Circle USD, is a stablecoin launched in 2018 by a collaboration between Boston-based financial services company Circle, Ltd., and Coinbase. It’s an ERC-20 cryptocurrency running on the Ethereum blockchain. Like USDT, USDC is a fiat-backed stablecoin pegged to the US Dollar.
USDC has been around for just over two years and has managed to become the world’s second-largest stablecoin by both market cap and trading volume, although they are still a long way behind USDT in both. On the plus side, USDC is backed by Coinbase to the point of being that exchange’s official stablecoin. Being an ERC-20 token, there will be no shortage of wallets or DeFi applications you can access with USDC.
This is probably the issue where the two featured tokens in this article differ the most. Although Tether Holdings originally announced they would have audits to prove full backing, those audits have never actually happened, and Tether even severed ties with their auditor in 2018. Circle, on the other hand, has monthly public audits. Generally speaking, Circle is a lot more regulation-friendly than Tether and can thus be perceived as more secure.
USDC may have come to the game later than USDT, but it came in swinging hard. It quickly became the world’s second-largest stablecoin and has kept gaining momentum. As for the token itself, it’s not too different from USDT. They are both fiat-backed, pegged to the US Dollar, and run on Ethereum (well, one version of USDT runs there). The key difference between them comes down to audits and regulation.
USDC is audited regularly to prove they are 100% backed, meaning that all USDC holders could withdraw their tokens to fiat right now, and Circle would have enough money for all of them. So, in a nutshell, the difference between these two coins comes down to trust. You can trust that there actually is one dollar for each USDC token in circulation because Circle has frequent public audits that prove it.
Pros & Cons
Stablecoins are a really clever idea. Cryptocurrencies with all the benefits of blockchain technology but sans the high volatility of conventional tokens. Just as an example of how volatile crypto prices can be, Bitcoin hit its latest all-time high of over 58,000 USD on February 21. Two days later, on February 23, the price had dropped about 20% to around 46,000 USD.
This kind of extreme price variation makes cryptocurrencies interesting as potential investments but hinders their usability as day-to-day money. Stablecoins were created to bridge the gap between fiat currencies and cryptocurrencies. Both tokens covered in this article are pegged to the US Dollar, but stablecoins can be pegged to any fiat currency like the Euro, British Pound, or Japanese Yen or even to commodities like gold or oil.
Stablecoins can be used for day-to-day transactions and can also serve as a shield against cryptocurrencies’ price fluctuations. Do you own some Ether and see that the price is going down? Trade for a stablecoin to prevent further damage to your finances. Is BAT starting to go up? Buy some BAT tokens with your stablecoin. Or just hold on to your stablecoins for later use.
We hope this USDT vs USDC comparison guide has given you a better picture of these two tokens. But which of these two stablecoins is better than the other? It depends. Tether is on more exchanges and has a far higher trading volume. USD Coin is regularly audited, and 100% backed. It really depends on what you want to use your stablecoin for.
If you want it to have an in-between token for quick trades and protection against short-term volatility, USDT is more versatile. But if you want to hold your funds for the long run, then USDC is the better choice. So our USDT vs USDC match doesn't end with a knockout. The result is a split decision, but the winner is up to you.
But what are your thoughts? What do you think of Tether's refusal to do regular public audits? What would you use a stablecoin for? As everyday money? For trading? Holding? Let us know in the comments below.