Home > Cryptocurrency > Similarities And Dissimilarities Between Stablecoins USDC And USDT

Similarities And Dissimilarities Between Stablecoins USDC And USDT

Comments are Off

Stablecoins refer to digital tokens supported by reserve assets. Reserve assets can be either fiat currencies, digital assets, or gold. USDC and USDT are examples of stablecoins. Both have a combined market share of 80%, which makes them the most stable cryptocurrency currently available in circulation.

Key similarities between USDC and USDT

  • Both are stablecoins supported by a reserve asset – the US dollar.
  • Both maintain a 1:1 ratio with the US dollar. There will be the same amount of tokens and US dollars held and moving in circulation on the company’s network.
  • Operating both USDT and USDC is Ethereum compatible. Even if both are issued by different companies, they use the same major computing processes to confirm the transactions. Simultaneously, they keep their platforms secure and stable.
  • As both USDT and USDC operate on the Ethereum network, it allows blockchain transparency. Thus users can participate securely on the peer-to-peer network.
  • USDC and USDT are designed to transfer currencies across the border with ease and quickly. There is no need for a medium [like a bank] or concerns about the operative times [different time zones] for international money transfers.

The similarities between USDT and USDC are more than dissimilarities. However, some key differences need to be well understood before trading USDC or USDT. Ensure to visit ZenGo X for more learning resources about cryptocurrency trading and even get a digital wallet.

Key dissimilarities between USDC and USDT

Launch date

Tether or USDT has been around since 2014 and the first USDC or USD Coin was issued in 2018. This means that USDT has more popularity and financial backing, while USDC uses modern applications to sustain optimal performance.

Blockchain dissimilarity

USDT is based on a single Ethereum blockchain but USDC employs several blockchains including Ethereum, Stellar, Algorand, and Solana. It indicates that USDC uses the potential of several networks instead of just one, which can sometimes cause chaos.

Reserve asset stability

Both cryptocurrencies are pegged with the US dollar but there is a stability issue. USDC has managed to stay stable or maintain a 1:1 ratio with US dollars. There is a suspicion that USDT has experienced a little inflation in its token price that has destabilized the claims of genuine stablecoin. Investors and economists suggest that Tether may not possess sufficient dollar reserves to support its issued tokens.

Trade or liquidity volume

Volume means total trades taking place at a specific time. Liquidity refers to the number of stablecoins available for trading at a set price i.e. $1. If the volume is higher, trading USDT or USDC is reliable and quick. The trade volume of USDT is more than $54 billion, while USDC sits at $4 billion. The trade volume of USDT is much higher than USDC because of its high adoption rate.

For some, it may appear USDC is superior and a few may find USDT great. The choice of the correct token has to be based on your investment goals and the strategies you plan to use. In all kinds of cryptocurrency, transparency remains. If you plan to trade crypto then incline towards a high accountability level because it is decentralized finance.