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USDT vs USDC: Which one is the Better Investment?


February 2023

When you start trading crypto, you often hear the term “stablecoin.” Furthermore, you will learn that there is more than one out there, but the two biggest ones to consider will be USDT vs USDC. While both serve similar functions, there are some differences that you need to be aware of as well. A stablecoin is a cryptocurrency designed to have a stable price, generally pegged to a commodity or currency or even having its supply regulated by an algorithm. Most of them are based on fiat currency such as the US dollar. However, there are some others out there that are pegged to gold and other commodities. USDT and USDC are both coins that are pegged to the US dollar, for example. 

The two stablecoins that we are looking at in this article are mainly used as a replacement for the US dollar on the blockchain. Still, it is worth noting that Tether also has a handful of other currencies and gold, while USDC (USD Coin) also has introduced the USDE, which is the same thing, only  backed by euros. 

Why invest in stablecoins? 

There are a handful of reasons why you might be interested in owning or investing in stablecoins, and depending on your situation, you may hold them for a short time or a longer period. For example, suppose you are living in an economy that is suffering from massive amounts of inflation. In that case, you may use them to keep your savings the equivalent of the US dollar, thereby avoiding some of the punishment that inflation can bring. USDT and USDC can often be used for this function in some places worldwide, such as Argentina and Venezuela. 

It’s also possible that traders will hold them to earn interest. There are a lot of different places where you can make interest on stablecoins, acting very much like a traditional savings account, although generally with higher interest rates. 

Finally, the most common use is for trading. As these cryptocurrencies live on the blockchain, buying other cryptos with one of these stablecoins is much quicker than trying to go through the traditional banking system. USDT and USDC both offer plenty of liquidity for trading needs.

What is USDT? 

To take advantage of the use case scenarios of Tether, or USDT, you need to understand a handful of things about the coin before you put money into it. 

What is Tether, and how does it work? 

Tether tokens are assets used on the blockchain that behave like other digital currencies but are pegged to real-world currencies on a one-to-one basis. These tokens are referred to as “stablecoins” because they maintain their value without much fluctuation. Offering stabilitymakes transactions easier between parties. 

Advantages of USDT 

To begin with, Tether is by far the largest stablecoin in the world, so it has a significant advantage because it is accepted in so many different places. It offers the stability and simplicity of fiat currencies coupled with blockchain technology, and you can earn a yield on it like a savings account. While anything pegged to fiat currency offers an easy way to transact, Tether has the advantage of being among the most-trusted stablecoins. 

The Disadvantages of USDT 

Tether have not made a significant attempt to show their inner workings to the public. There have been several issues waiting for an accurate accounting and forensic investigation into their holdings. There have also been accusations that Tether has been used to manipulate the price of Bitcoin or that it has been used to launder money for criminals. Furthermore, Tether is not divisible, which limits its functionality.

What is USDС? 

Looking at the USDC stablecoin, you will spot many similarities to Tether, and quite frankly, it is used in the same capacity. However, there are some nuances that you should probably be aware of. 

What is USDC, and how does it work? 

US Dollar Coin (USDC)is a stablecoin that functions like Tether, with a few minor differences. That being said, it is pegged to the US dollar, allowing for simplicity of transactions on the blockchain. USDT and USDC are both used quite extensively in this manner. 

Advantages of USDС 

USDC stablecoin has a couple of advantages, not the least of which is the ease with which you can transact in US dollars on the blockchain. It offers reliable value, pegged 1:1 to the US dollar. You can also earn a yield on it, just like you can with Tether. Furthermore, Circle, the company that issues USDC, has a longer history of transparency and regulatory compliance than Tether, its primary competitor. 

Disadvantages of USDС 

There are, of course, some disadvantages to USDC. For example, fees for withdrawing from exchanges can be high, as it is not as widely used as Tether. Furthermore, it is based on the Ethereum network, so you must be cautious. Also, although USDC is widely accepted, Tether is accepted at more venues.

The difference between USDT vs USDC 

While both of these coins serve similar functions, there are some differences between USDT and USDC that you should  be aware of. Regardless, you will find that they both suit various blockchain needs quite well. 

USDT vs. USDС: Comparison 

USDT and USDC are similar in their use overall, but the following table gives you a high-level view of the differences and similarities between both Tether and USD Coin. While they serve similar functions, they are used in different places and have other market capitalisation characteristics. 

Feature USDC USDT
Developer Circle Tether
Type of stablecoin ERC-20 ERC-20
Market Cap (Oct ’22) $68.45 billion $44.5 billion
Backing A mix of cash and bonds Cash and short-dated US Treasuries
Trading Volume $36 billion daily $3 billion daily
Blockchain Ethereum, Hedera, Algorand, Avalanche, Solana, Stellar, and Tron. Algorand, Ethereum, EOS, Liquid Network, Omni, Tron, Bitcoin Cash, and Solana.

 USDС vs USDT: Which one is the better investment? 

The first question you need to ask yourself is, what blockchain do you plan to operate with? If one coin cannot work on the blockchain of your choice, but the other one can, it makes the choice easy. Both of these coins are reliable, but it must be noted that USDC is much more transparent about what it holds to maintain its currency peg. They only hold US Treasuries and US dollars. On the other hand, Tether has been less than transparent about everything it owns, and auditors have been frustrated by trying to “peek behind the curtain.” Because of this, if you are looking to protect your currency from inflation or perhaps even store it somewhere securely, you may be better off using USDC longer term. 

Conclusion

Stablecoins offer plenty of uses and are often built atop Ethereum, although there are other networks that can be used as well. If you choose to use one of those networks, then the choice will be made for you as to which token you should be using. One thing that traders do not like it’s the fact that Tether has been so opaque with some of its “cash equivalents” that back USDT tokens This has been a major problem, and there’s even been legal action taken against Tether in New York State.

On the other hand, Tether has handled millions upon millions of transactions and is by far the biggest stablecoin out there. It is widely accepted and has had no real issues making transactions. 

A lot of what you will be looking at is simply facilitating trades, which both do quite easily or trying to earn a yield on the currency. Both offer plenty of opportunities, which at this point are relatively interchangeable regarding their functionality. In other words, if you are looking to trade a currency pair, you will need to see what is available and which coin you should use. On the other hand, if you want to earn yield, explore the options at PrimeXBT and see which coin you will get a better return on due to the supply and demand of lendable tokens. USDT and USDC both fluctuate with yield potential like most other investment products. 

FAQ: Frequently Asked Questions

Top Cryptocurrencies with Price Predictions

# Crypto Prediction Accuracy CVIX Price 24h 7d Market Cap 7d price change
1 Bitcoin (BTC) BTC Bitcoin predictions 74.8% 44 $65 236.35 3.83% 11.07% $1 286 904 144 589 BTC 7 days price change
2 Ethereum (ETH) ETH Ethereum predictions 76.4% 50 $3 483.12 3.19% 12.82% $418 745 103 273 ETH 7 days price change
3 Tether (USDT) USDT Tether predictions 94.8% 1 $1.000616 0.04% 0.05% $113 294 326 133 USDT 7 days price change
4 Binance Coin (BNB) BNB Binance Coin predictions 78.8% 43 $579.07 3.20% 11.00% $85 460 275 696 BNB 7 days price change
5 Solana (SOL) SOL Solana predictions 80.8% 36 $162.09 5.20% 12.68% $75 238 706 990 SOL 7 days price change
6 XRP (XRP) XRP XRP predictions 77.2% 41 $0.615935 14.09% 40.49% $34 372 438 638 XRP 7 days price change
7 USD Coin (USDC) USDC USD Coin predictions 95.6% 1 $1.000157 0.03% 0.01% $33 991 611 940 USDC 7 days price change
8 Toncoin (TON) TON Toncoin predictions 88.4% 14 $7.27 -1.31% -1.07% $18 273 152 177 TON 7 days price change
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11 TRON (TRX) TRX TRON predictions 74.8% 44 $0.134539 0.93% 3.58% $11 719 593 309 TRX 7 days price change
12 SHIBA INU (SHIB) SHIB SHIBA INU predictions 80.8% 36 $0.000019 3.17% 15.78% $11 356 605 188 SHIB 7 days price change
13 Avalanche (AVAX) AVAX Avalanche predictions 78% 42 $28.72 6.68% 7.40% $11 336 759 087 AVAX 7 days price change
14 Lido stETH (STETH) STETH Lido stETH predictions 94.4% 1 $2 941.39 -0.40% -3.32% $10 258 752 564 STETH 7 days price change
15 Wrapped TRON (WTRX) WTRX Wrapped TRON predictions 92% 1 $0.116354 -0.46% 0.23% $10 171 995 609 WTRX 7 days price change

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