If you are interested in digital currencies and modern finance, chances are that you might have heard about USDT and USDC. Unlike Bitcoins or Ethereum, USDT and USDC are special digital currencies, known as stablecoins. USDT and USDC share many things in common, but they are two completely different stablecoins and surprisingly these two are the most popular stablecoins as of today. But what makes these two coins different and which stablecoin is the best for your business?
In this blog post on, “USDC vs USDT” we’ll cover all that you need to know about these two stablecoins to pick the better one among them.
What is USDT?
The USDT (also known as Tether) has been one of the most popular stablecoins (in terms of market cap) for a while now. The stablecoin was first introduced in the world of digital currencies in 2014 - the same year of the first stablecoin was launched. The coin derives its value from the US dollar and its value ratio with the US dollar remains 1:1.
The success of Tether was linked to many reasons but one of the prominent reasons for its success was that it operates on various blockchains, for example: Ethereum, Binance, etc.
A few years ago though, some controversy was born regarding the asset reserve of USDT but despite all its odds, it has still managed to stay in the top-list till date.
What is USDC?
USDC or USD Coin, the strongest competitor to Tether, was introduced to the market in 2018. USDC is also pegged to the US dollar and has been maintaining a 1:1 value ratio.
Although, in its initial days, the USDC used to run on the Ethereum blockchain, later it was made compatible with blockchains like Solana, Steller, etc.
Comparison Between USDC Vs USDT
Liquidity
The liquidity of the stablecoins is a major concern for individuals and businesses, particularly in case of a business emergency when a business needs to cash out a significant amount of digital currency.
USDT, being the most well-known stablecoin, is highly liquid, and many traders and business owners use this stablecoin due to it being tradeable on every major exchange.
On the other hand, the USDC, currently the second-most popular stablecoin, is liquid, though not as much as USDT.
Transparency
In terms of transparency, the USDC is the clear winner. Independent organizations have conducted several audits on USDC and from their report it was found that the USDC actually holds an equivalent amount of cash/treasury bond for a specific amount of the stablecoin issued.
In contrast, in 2021, USDT was questioned for its lack of transparency. So, if you’re looking for a highly transparent stablecoin, USDC is a better option.
Which is more Stable, USDT or USDC?
The reason why digital currencies like Bitcoin and Ethereum aren’t commonly used in businesses is because of their price fluctuations.
The aforementioned digital currencies do not have any asset class from which it derives its value, instead their value depends highly on the ‘demand and supply’. This is what causes the coin value to surge at-once and crash miserably the next day.
To battle this issue, stablecoins like USDT and USDC were introduced - they have a well-recognised asset with which they are pegged. The USDC and USDT - both are stablecoins that derive their value from the US dollar, in terms of price stability they are practically the same.
If the value of the US dollar rises, so does the price of these two stablecoins and vice-versa.
USDC vs USDT: Which Stablecoin is Better for Business?
From our discussion till now, it’s already clear that USDC and USDT both have their own advantages and disadvantages. Now we’ll clarify which among these two you should pick for your business.
If you’re in a business where transparency is the key and trust is your wealth, it will be better to go with USDC for its proven reserves against the issued stablecoins.
If you’re in a business where liquidity and volume play a vital role and you expect hundreds and thousands of transactions using stablecoins per day, it will be better to go with USDT. Also, if your business is going international or your business is involved in remittance services, USDT is a comparatively better option.
Comparison Between Transaction fees of USDT and USDC
The transaction fees on stablecoin differ on the basis of network and blockchain used.
Ethereum: USDT and USDC, both supports Ethereum, the most popular blockchain for stablecoin with the most trading volume. However, the transaction fee in both stablecoins on Ethereum blockchain is relatively quite expensive.
Solana: Solana is another widely used blockchain that both USDT and USDC supports. In terms of transaction fees, Solana is significantly cost-effective and is quite suitable for high-volume of transactions.
Tron: Tron is one of the best, if not the best network, charging minimal transaction fees. However, among these two, only USDT uses the Tron network and because USDT uses Tron, it makes USDT the winner in terms of transaction fees.
Pros and Cons of USDC and USDT
USDC Pros:
- USDC is highly transparent.
- Offers low-risk investment options.
- It has been reviewed by external auditors.
USDC Cons:
- Lower liquidity in comparison with USDT.
USDT Pros:
- Highly liquid - works on all top exchanges.
- Suitable for cross-border transactions.
- The most popular stablecoin.
USDT Cons:
- Questions over transparency.
- Was found to be sketchy about its reserves.
Benefits of USDT and USDC
Both USDT and USDC have their own benefits.
USDT offers high liquidity, extensive exchange support, and extremely low transaction fees. On the other hand, USDC also offers liquidity (but less than USDT). USDC and its governing organizations are very transparent about their reserves.
Conclusions
We hope that this article has been able to settle the debate between USDC or USDT for payments. Each stablecoin has its own edges and it’s up to you to pick the one that goes well with your business’s needs.
If you’re interested in digital wallets and digital payment systems, you should try using “Ramp: - a platform to buy and sell digital assets on different blockchains. We’ve built “Collections” to collect global payments. “Payout” helps you to make hassle-free global payments.
FAQs
1. What are the uses of USDT and USDC?
USDT and USDC are stablecoins designed to provide price stability by being pegged to the US dollar at a 1:1 ratio. It presents an opportunity for companies and persons to escape the volatility of traditional cryptocurrencies while facilitating speed and efficiency in digital commerce.
2. What is the difference in liquidity of the USDT to USDC?
USDT is the most popular stablecoin in circulation due to its high liquidity rate which fits all platforms and is the best for business with high traffic. Thus, USDC, though liquid tendency is a bit lower than USDT in trading volumes and platform support.
3. Which stablecoins offer higher levels of transparency?
Holding transparency is a significant factor since USDC is audited to ensure it holds an equivalent value in assets for each issued token, unlike USDT. While having odd positions on some occasions with doubtful revelation of reserves, USDT has come under criticism in the past and therefore, as a reliable, transparent and accountable currency, entrepreneurs prefer using USDC.
4. Which stablecoin has lower transaction fees?
Every transaction charges fees according to the type of blockchain network involved. USDT adopted cost-efficient networks such as Solana while also having a connection with the Tron network, which has extremely cheaper fees than Solana.
5. Which stablecoin should I choose for my business?
It all depends on your needs as a business. If these factors are critical, then it is better to buy USDT, as it has high popularity and is demanded. But for the firms that demand high transaction and ultimate control and standards, USDC is the most favorable choice. Reflect on your needs and goals, and make the right decision.
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