Cryptocurrencies are known for their volatility and can fluctuate rapidly in value. This makes it challenging to use them as a store of value or a medium of exchange. Stablecoins were created to solve this problem by offering price stability. They are digital currencies that are pegged to stable assets like fiat currencies, precious metals, or commodities. USDC and USDT stablecoins are the most popular representatives of this type of digital assets on the crypto market, but what exactly are they, and how do they compare? The comparison between USDC vs USDT offers insight into their unique characteristics and how they function within the crypto industry.
Key Takeaways
USDT has a higher market capitalization and significantly larger trading volume than USDC, making it the preferred choice for traders.
USDC is known for its transparency: regular audits and clear compliance with regulatory standards like the SEC and MiCA contribute to its reputation.
USDT’s backing includes diverse assets like U.S. Treasury Bills, but the stablecoin has faced criticism for historical opacity and regulatory challenges.
USDC benefits from a straightforward reserve structure, primarily backed by cash and U.S. Treasuries, ensuring transparency.
USDT is more battle-tested and widely adopted, while USDC stands out for its stronger compliance and transparency.
What Is Tether (USDT)?
Tether (USDT) is the oldest and most popular USD stablecoin that was launched in 2014 with the goal of creating a bridge between cryptocurrencies and traditional fiat currencies. It is pegged to the US dollar and backed by a reserve of fiat currency and other assets. Tether is the most widely used stablecoin, with a market capitalization of over $70 billion.
You can learn more about Tether tokens in this article.
USDT Stability
In 2017, Tether was hacked, and 31 million USDT tokens were lost. The project got criticized as many pointed out that instead of taking responsibility and demonstrating accountability, they initiated an “emergency hard fork” to save face.
In 2017, Tether was hacked, and 31 million USDT was lost. Instead of taking responsibility and demonstrating accountability, they initiated an “emergency hard fork” to save face. This caught the attention of the New York Attorney General when it was discovered that Tether was lending out its cash reserves without being able to adequately back their tokens with USD. They attempted to absolve themselves of responsibility by antagonizing the Attorney General instead of providing a rational defense.
USDT Volume
According to CoinMarketCap, the current market capitalization of USDT is around $111 billion, and it is the most widely used stablecoin in the world. This makes Tether the third crypto asset by market capitalization, only surpassed byBitcoin and Ethereum.
Suggested article: What is volume in cryptocurrency?
What Is a USD Coin (USDC)?
USDC, or USD Coin, takes second place in the list of the most popular stablecoins. It was launched in 2018 by Circle, a fintech company based in Boston.
The Centre consortium, which includes Circle and Coinbase, issues and manages USDC. Centre is the only entity that can control USDC supply, similar to the Federal Reserve controlling USD. However, there is a major difference between USD and USDC — Circle has full authority over USDC, which is not the case with USD and the FR.
USDC Stability
USDC Stability is considered to be more transparent than USDT because Circle provides monthly audits of its reserve assets. Additionally, USDC is regulated by the US Securities and Exchange Commission (SEC).
In March 2023, Circle reported that $3.3 billion of the cash reserves backing USDC tokens remained in Silicon Valley Bank, causing it to depeg and drop in value against the dollar to 87 cents. In addition, similar dollar-backed stablecoins such as DAI and USDD were depegged from their original value of $1. However, it only took USDC 2 days to return its peg.
USDC Market Capitalization
According to CoinMarketCap, the current market capitalization of USDC is over $34 billion, and it is the second most widely used stablecoin in the world after USDT.
