Both USDT and USDC are stablecoins. The value of both of them is pegged to the same currency - USD. Are they equally good? Let us check properly.
USDC Overview
USDC was launched in 2018 by Coinbase, one of the renowned cryptocurrency exchanges, and Circle Internet Financial.
Initially, USDC was available on Coinbase only, but now, it is listed on many cryptocurrency exchanges.
USDC is an ERC-20 token. It runs on the Ethereum blockchain but is also supported on several other blockchains such as Algorand, Solana, Stellar, Tron.
Every USDC is backed up by USD. Every USDC that circulates in the market means 1 USD stored in an audited bank account. Constant audits ensure that the amount of USDC coins in the market equals the amount of US dollars stored in reserve bank accounts. That’s why the coin value remains stable whatever happens.
The process of USDC creation looks like this:
- A specific amount of US dollars is sent to a reserved bank account.
- An equal amount of USDC is created through a smart contract.
- USDC coins are sent back to users.
Where Can USDC Be Used?
USDC is a stablecoin backed up by USD. While being a cryptocurrency, it preserves stable value. That’s why many institutions have adopted it as a payment method.
USDC as an ERC-20 token can be used by any DApp built on the Ethereum blockchain. It explains the USDC popularity in the DeFi community.
USDC has many benefits but it is not without drawbacks, either. Its centralized blockchain is considered to be one of the main disadvantages. Circle Internet Financial controls the stablecoin, and it contradicts the main idea of cryptocurrency – decentralization.
USDT Overview
USDT, or Tether, is the first stablecoin in the world. It was launched in 2014 and since then, it has been keeping the leading position in the market of stablecoins. The project was launched in 2014 by Bitfinex.
In the last few years, Tether was criticized for not being transparent enough. The main concerns were about whether Tether is backed with USD indeed.
However, the concerns and doubts were eliminated after Tether published their attestation report. In the report, the company gave a full decomposition of their reserves. So, the proof was provided that Tether is 100% backed. For more transparency, the stablecoin circulation can be checked on the Bitcoin blockchain via the Omni Layer protocol.
Where Can USDT Be Used?
Transactions in Tether are very fast, and the fee is almost absent. The coin is characterized by a high liquidity level. Therefore, USDT is very convenient for traders who want to have immediate access to their funds to enter and exit trades asap. They can secure their positions without leaving the crypto market.
USDT supports exchanges on a bigger number of blockchains than USDC (Bitcoin, EOS, Ethereum, Algorand, Tron, OMG, SLP). Depending on a trading pair, USDT might be more interesting to traders.
Tether is convenient as a medium of exchange. Many businesses use Tether for B2B payments.
USDT vs USDC: What to Buy in 2022?
Both coins’ value is pegged to USD. Both USDC and USDT can be used for making payments or for trading.
USDT is a coin that provides more liquidity, however, it has a history of some controversies. USDC is considered a very safe coin to buy though its liquidity is lower.
While the value of both cryptocurrencies is stable, there are companies behind each of the stablecoins. So, if a company gets bankrupt, you, most likely, lose your funds.
FAQ
What is the point of USDC?
USDC aims to provide stability in a highly changeable world of cryptocurrency. Each USDC is backed by USD and its value is pegged to the US dollar.
Is USDC actually backed?
Yes, every USDC is backed by USD.
Is USDC coin safe?
USDC is safe as long as the company behind it is doing fine.
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.
Stay tuned for further updates, crypto guides, and market insights from LetsExchange. You can also follow us on Twitter, Facebook, Reddit, Instagram, LinkedIn, Medium, Quora, Telegram, Steemit, and Bitcointalk for first-hand information from our team.