GUSD vs. USDC: Key Differences

Stablecoins are cryptocurrencies with a steady value. This type of cryptocurrency minimizes price fluctuations, which is common in other cryptocurrencies. A stablecoin’s price is pegged to an external reference point such as the US dollar (USD) to keep a constant value. Other stablecoins mirror the value of commodities like gold or other fiat currencies. However, USD-backed stablecoins are much more common due to the status of the US dollar as the world’s reserve currency.

Gemini Dollar (GUSD) and USD Coin (USDC) are two USD-backed stablecoins popular among crypto traders. Stablecoins offer traders an effective way to store value as they enter and exit positions in more volatile cryptocurrencies. But how do these two cryptocurrencies compare? What are their differences and similarities? Which of these two stablecoins should you use for your trading activity? Let us discuss it in detail in the following GUSD vs USDC comparison.

USD Coin Overview

USDC was launched in 2018 by the Centre Consortium, a collaborative effort between Circle Internet Financial and Coinbase. USDC’s value is pegged at 1:1 with the US dollar. Although Circle is the central issuer of this stablecoin, other members of the Centre Consortium can issue and redeem it too. Only regulated financial institutions can issue this coin.

All USDC tokens are backed by fiat USD reserves in a mix of cash and short-term US Treasury bonds, and issuers must supply monthly proof of reserves. This approach assures users that they can withdraw 1 USDC and receive $1 in return without problems. As of June 9, 2022, there were over 53.8 billion USDC tokens in circulation. USDC ranks fourth according to market capitalization among all cryptocurrencies.

Gemini Dollar Overview

GUSD is a stablecoin issued by the Gemini Trust Company, a digital currency exchange and custodian. It was launched in October 2018. This stablecoin is an ERC-20 token built on the Ethereum platform. Its smart contracts are audited by Trail of Bits Inc., a security company that ensures GUSD is adequately backed. The Gemini Trust company holds US dollar deposits corresponding to the number of GUSD tokens in circulation.

GUSD was the first USD-backed stablecoin to be approved by a regulatory body in the United States (The New York Department of Financial Services). As of June 9, 2022, over 253.9 GUSD tokens are in circulation. Gemini Dollar ranks as the #126 most valuable cryptocurrency by market capitalization, according to CoinMarketCap.

USDC vs. GUSD: Similarities

Both USDC and GUSD are backed by fiat money reserves, which help keep the 1:1 peg to the US dollar more effectively. The prices of these stablecoins are pretty stable. While there are occasional dips and highs, the price quickly returns to the $1 value. However, these stablecoins are centralized, which may be a disadvantage since governments can take control of your funds.

Another similarity is the consensus mechanism used by these stablecoins. Both utilize proof-of-work (PoW), the same mechanism used by Bitcoin. Finally, both cryptocurrencies were launched in 2018; USDC was launched on August 8, whereas GUSD on October 6 of that year.

GUSD and USDC: Differences

These two stablecoins have significant differences that a trader or investor should know. We will discuss them in detail so you can decide which of these stablecoins is more convenient for you.

Reserves and Liquidity

One of the most critical aspects of a stablecoin is the reserves that back it. Grant Thornton released an attestation in 2021, indicating that only 60% of USDC reserves are in cash. The other 40% of the reserves consist of debt securities and bonds. This type of reserve poses a disadvantage. If a big crash in the crypto market happens and everyone tries to cash out their USDC holdings for USD, you may not be able to do so.

On the other hand, Gemini audits the GUSD reserves monthly. The audit conducted in December 2021 found that the USD balance of the reserve was equal to the GUSD circulating supply. GUSD has one of the most trusted reserves for a stablecoin. In case of a crash in the crypto market, you can always redeem your GUSD holding in its entirety.

Market Capitalization

USDC has the fourth largest market capitalization of all cryptocurrencies and the second-largest among stablecoins, just after Tether (USDT). As of June 9, 2022, the USDC market cap was above $53.8 billion. Such a large market capitalization shows the faith that investors have in this stablecoin. In contrast, the GUSD market cap is significantly lower, slightly above $254.7 million as of June 9, 2022.

Availability on Exchanges

Most traders and investors use stablecoins to convert volatile cryptocurrencies into more stable digital assets. As such, it is imperative to have the possibility to exchange any cryptocurrency for a stablecoin at any moment. As the second-highest stablecoin in terms of market cap, USDC has many trading pairs on different exchanges. In contrast, GUSD is not listed on many platforms compared to USDC.

LetsExchange.io lists these two stablecoins for trading. Whether you want to swap cryptocurrencies to USDC or GUSD, you can do it quickly and at competitive rates on our platform. Our instant exchange supports more than 640 cryptocurrencies, and you do not need to register to transact.

Conclusion

As a trader or investor, you may wonder, which of these stablecoins is better? It depends on your preferences. If you look for convenience, USDC is the better option. Its availability of trading options makes it very convenient to buy/sell cryptocurrencies on multiple platforms. However, remember that USDC is not entirely backed by cash reserves, which poses a risk in case of a major crash in the crypto market.

But if you prefer trusted reserves, GUSD is a better option. This cryptocurrency is better regulated, and its monthly audits add credibility to the GUSD reserves. If you want to hold large sums in stablecoin, GUSD can give you more peace of mind.

FAQ

What Is the Best USD Stablecoin?

It depends on what features we compare. By market capitalization, the highest-ranked USD stablecoin is USDT. However, thinking about the best USD stablecoin for you is better. Depending on your particular needs, you can choose USDT, USDC, or GUSD if it matches your requirements.

Which Crypto Stablecoin Is Best?

As in the previous question, the answer depends on the features we compare. All stablecoins have pros and cons, and we cannot single out one of them as the best in all aspects.

Is GUSD the Same as USDC?

No, they are different stablecoins. Although both were launched in 2018 and are backed by USD reserves, they have essential differences. USDC has a larger market capitalization and trades on more platforms than GUSD. However, GUSD is backed by cash reserves, representing a lower risk for your investment in this coin.

Disclaimer

Please keep in mind that the above information is based exclusively on our observations and is provided for informational purposes only. It doesn’t constitute any kind of financial advice nor represents an official forecast. Cryptocurrency is a highly volatile asset, and you are investing in it at your own risk.

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