USDC vs. USDT: Which Stablecoin is Better

17.09.2022

Stablecoins are cryptocurrencies whose values are pegged to fiat currencies in a 1:1 ratio. There are different types of stablecoins; USDT and USDC are two of the popular stablecoins. While many know what's the difference between USD and USDT, not everyone can differentiate between stablecoins. Stablecoins hedge cryptocurrency inflation, helping traders to lock in profits with USD-backed crypto tokens. This article examines USDC vs USDT to determine the best stablecoin based on certain criteria.

What Is a Stablecoin and Why Is It Needed?

What Is a Stablecoin

A stablecoin is a cryptocurrency that is stable against the volatility of the crypto market, allowing crypto owners to store the asset in a token whose value does not fluctuate randomly. The USD is the most common fiat that backs stablecoins; most stablecoins are USD-pegged. The difference between USD and USDT is that the former is minted and maintained by the US Mint, while the latter is a cryptocurrency backed 1:1 by the USD. Why were stablecoins introduced? For a long time, crypto users could only exchange Bitcoin and altcoins for other cryptos or directly for fiat. Crypto assets were subject to inflation and price fluctuations; traders could not switch to fiat-backed tokens without leaving the crypto ecosystem. The limitation led to the invention of stablecoins to combat inflation, reducing the risk of holding cryptocurrencies. Today, crypto users can choose from a wide range of stablecoins; the USDT vs USDC decision is important because they have unique advantages and applications.

What other stablecoins are there?

What is USD and USDT? Since the invention of stablecoins, the market has grown astronomically, moving from mere millions to billions of dollars. There are over 200 globally distributed stablecoins. All stablecoins fall into four categories based on their backing. There are commodity-backed, fiat-backed, crypto-backed, and algorithm-managed stablecoins. Although USDT and USDC have the larger share of the multi-billion dollar stablecoin market, they are not the only stablecoins in use today. Some other stablecoins are

  • Binance-issued stablecoin, BUSD
  • The Ethereum-based stablecoin, DAI
  • TrustToken-issued True USD.

Is USDT the same as USD? Although all stablecoins, like USDC and USDT, will always be equal to their fiat currencies, you cannot interchange each one for another. Your choice of stablecoin depends on the platform, application, and purpose. What is USDC vs USDT advantage? Both stablecoins are popular because they are used on many blockchains. Cross-chain stablecoins are useful due to the small transaction costs.

What is USDT?

What is USDT?

USDT is easily the biggest stablecoin in cryptocurrency, having a huge market cap. Although it is a stablecoin, USDT represents more for crypto users due to its availability across several blockchains. What is USDT crypto?

  • History of USDT: USDT is a stablecoin created and issued by Tether, a Hong-Kong-based company. Tether is a subsidiary of iFinex, owned by Brock Pierce, Reeve Collins, and Craig Sellars. The coin was previously known as RealCoin, launched in 2014 on the Bitcoin blockchain. USDT gradually became available on other blockchains, eventually becoming the biggest stablecoin in the market. The unique advantage of USDT is that physical deposits of USD back it in a 1:1 ratio. For every USDT minted, an equivalent USD is deposited in physical vaults.
  • USDT Capitalization: By capitalization, USDT is easily the biggest stablecoin, with a market cap. of $67 billion as of writing. USDT is also the third-biggest cryptocurrency today, providing millions of crypto users a hedge against inflation. 
  • Current Trends: Although stablecoins will always be pegged to their fiat currencies, price changes of about 0.01% typically occur but are smoothed out by market demand and supply. 
  • Pros and Cons of USDT: The advantages of USDT are inflation-proof, availability, and compatibility with many blockchains. All crypto exchanges accept USDT for deposits and withdrawals. USDT has no major disadvantages unless you consider regulatory issues. USDT, being a private-owned token, is subject to Tether’s internal mechanisms.

USDT Volume and Stability

The difference between USD and USDT is only seen when transaction fees are paid on USDT transactions. Although Tether charges no fees, the blockchain or exchange hosting the transaction may take trading or network fees, respectively. But the price of USDT remains stable to the fiat currency, only having little peaks and troughs based on market flow. But the price is immediately smoothed, ensuring it remains pegged at $1. USDT is the most traded stablecoin with a daily trading volume of $64.4 billion, according to CoinMarketCap, as of writing. Although it ranks third on the valuable crypto list, USDT's trading 24-hr volume is far bigger than second-placed Ethereum, with a $16.8 billion volume. Although USDT has the most stablecoin market share of about $78 billion, other stablecoins ensure healthy competition. The USDC vs USDT fees is a major determinant for crypto users who would rather use a stablecoin with fewer transaction fees. The volume, stability, and prices are important factors for stablecoins.

What is USDC?

USDC is another popular stablecoin, one of the most traded and valuable markets. It is also a strong competitor with USDT for the stablecoin market share.

  • History of USDC: USD Coin, USDC, was created in 2018 by Center, a consortium founded by Coinbase and Circle. The stablecoin is pegged by a mix of USD and short-term US bonds. Although USDC is primarily a stablecoin, the Center mentioned plans to build a payment ecosystem around it to facilitate crypto-crypto and crypto-fiat transactions. 
  • USDC Capitalization: USDC has a market cap of $51.5 billion and a daily trading volume of $6.8 billion as of writing. This makes USDC the second-most valuable stablecoin by market share, ranking number four on the crypto ranking list. USDC's market volume is growing. 
  • Price Fluctuations: As a stablecoin, the USDC price will always be equal to the USD. However, there are slight increases and decreases of negligible value caused by the effects of demand and supply. But the market smoothes out these fluctuations to keep the price stable.
  • Pros and Cons of USDC: Perhaps the most significant advantage of USDC, besides being a stablecoin, is its regulatory status. USDC has achieved regulatory compliance, and as Circle announced, the product is regularly audited to ensure matching fiat reserves and issued USDC tokens. The 2020 network upgrade improved USDC's progress; projections for the USDC payment ecosystem show a wider acceptance and adoption of the stablecoin. USDC has no significant disadvantages besides potential high transfer fees, being an Ethereum-based stablecoin.

USDC Volume And Stability

USDC Volume And Stability

USDC are similar to USDT in most aspects. Both stablecoins maintain a stable price of $1.00, which despite little fluctuations, remains correct. USDC is currently ranked eighth by market capitalization, having $51.5 billion and a 24-hr trading volume of $6.8 billion as of writing. The stablecoin remains significantly lower than USDT, revealing traders' choice in the crypto USDT vs USDC debate. One reason for this might be the potential transfer fees. As USDC is deployed on the Ethereum blockchain, it is subject to the notoriously high network gas fees that traders sometimes pay on Ethereum. The USDC vs USDT transfer fees comparison shows that USDT has a fairer network fee. Although neither stablecoin charges transaction fees, the networks are responsible for that. USDC volume is therefore impacted by traders' preference for stablecoins with low transfer fees. With a market dominance of 4.85%, the USDC stablecoin retains a valuable position as one of the most-traded cryptocurrencies by sheer volume.

USDT vs. USDC

This table shows the difference between USDT and USDC. The table provides helpful information about both currencies. If you are considering USDC vs USDT staking, a few factors are the base fiat and APY.



USDT

USDC

Launch date

2014

2018

Creator

iFinex

Center Consortium

Current price

$1.00

$1.00

Market capitalization

$67 billion

$51.5 billion

Base Fiat

US Dollar

US Dollar

Regulatory status

Unclear

Regulatory compliant

Auditor

BDO Italia

GrantThornton

APY

3.3% -12.3%

~5.81%

Crypto rank

Third

Fourth

Both stablecoins are close competitors, with USDT having the edge over USDC on market capitalization.

Commission USDC vs. USDT

A Cryptocurrency fee is essential for any crypto-related activity, whether crypto-crypto or crypto-fiat. There are two types of fees and commissions in cryptocurrency trading; gas or network fees and platform fees. Gas/network fees are the fees blockchain networks charge for sending and receiving cryptocurrencies. Some crypto exchanges charge platform fees for trading, deposits, and withdrawals. The USDT vs USDC transfer fee is often not an issue because the USDT and USDC tokens do not charge the fees but are only charged by the blockchain. For example, the Ethereum blockchain typically charges high gas fees compared to other blockchains such as Binance Smart Chain, Solana, Polygon, and Fantom. USDT vs USDC fees may be different on different blockchains. The fees also fluctuate depending on the crypto exchange. Commissions, therefore, change from time to time; traders transacting within the same period may observe different fees. USDC fees typically range from $0.01-$50. USDT, while typically lower, can reach $40 on the Ethereum blockchain.

Results - Which stablecoin to buy?

Considering the pros and cons of crypto USDC vs USDT, the choice of stablecoin to purchase and trade depends on personal preferences as traders. Other factors, such as trading fees, play essential roles. Although USDT has a higher market capitalization and is the most popular stablecoin, the unclear state of transparency and regulatory compliance is a critical factor in why most economists don’t consider it the best stablecoin. USDC, on the other hand, is more transparent than USDT in regulatory compliance. Thus, traders chose USDC or USDT based on volume, liquidity, and regulatory transparency. Traders looking for a stablecoin with the most significant volume and liquidity are likely to buy USDT, while traders that prefer a stablecoin with regulatory compliance will likely choose USDC. If you are confused about what is USDT vs USDC value, either stablecoin presents unique advantages for you. One way to earn either USDC or USDT without buying from any exchange is to engage in a profitable mining hosting service.

No, although both stablecoins are similar, USDT is different from USDC. Both are pegged to the USD in a 1:1 ratio, providing a stable hedge against crypto volatility. Both stablecoins are unique.
The choice between USDT and USDC depends on traders preferences. Traders consider trading volume and liquidity, regulatory compliance, and transfer fees. Based on these, USDT is better than USDC.
All stablecoins backed by physical fiat currencies are safe, to an extent. The safest stablecoin has mechanisms to stabilize asset prices and ensure that physical deposits match the number of tokens.
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