What to Choose? USDT vs USDC

Andrew Gray | Updated: 21-09-2022 10:32 IST | Created: 21-09-2022 10:30 IST
What to Choose? USDT vs USDC

Stablecoins have become an integral part of the crypto space due to the convenience they offer to users. Their non-volatile nature has led to a rapid increase in their popularity, which has led to their combined market capitalization exceeding $150 billion.

At the top of the stablecoin ladder are Tether (USDT) and USD Coin (USDC), fighting each other for supremacy. Although USDT takes first place in the duet, his rival USDC breathes down its neck. This article will help you determine what differences USDT and USDC have and choose which stablecoin is perfect for you.

What Is USDT?

Tether (USDT) is the most popular stablecoin and the most heavily traded cryptocurrency. And this is not a typo. USDT 24 trading volume is about $64 billion, against $28 billion for Bitcoin. The USDT rate is pegged to the US dollar rate at 1:1. Simply put, the price of 1 USDT = $1. This is usually the case, although there are minor deviations. It would be fairer to say that USDT targets a tight band of around $1 per token. 

Tether Holdings Limited, the company that launched USDT, claims that the circulating USDT supply is always 100% backed by their reserve. Tether publishes a quarterly report showing the breakdown of its reserve assets by class and updates the total value of these assets daily. 

One of the main reasons for the popularity of USDT is the flexibility of the protocol used, which provides the possibility of using USDT tokens on several blockchains, including Ethereum, Bitcoin (via Omni), Tron, Algorand, EOS, and others. Due to this, USDT is widely used for remittances and payments, as well as for earning interest in DeFi protocols. 

However, even though Tether boasts the largest capitalization and the best liquidity among all stablecoins, some users consider this asset unreliable. In the past, the USDT issuer publicly lied about its reserves, for which the company was repeatedly fined by US regulators.

What Is USDC?

USD Coin (USDC) is a stablecoin issued by Circle Internet Financial Ltd, a company registered in the USA. At the same time, the entire process of functioning and development of the USDC is managed by the Centre consortium, founded by Circle and Coinbase crypto exchange representatives. Just like USDT, the USDC price mirrors the US dollar price, and minor deviations are quickly corrected due to arbitration.

The crypto community treats the USDC as a more reliable and transparent project since the USDC issuer is initially very sensitive to compliance with regulatory requirements and publishes monthly reports regarding its reserves from the well-known accounting firm Grant Thornton LLP. In addition, Circle also has a state money transmitter license and uses established banks to hold its reserves.

The circulating supply of USDC has always lagged behind USDT, but this gap is gradually decreasing. For example, if at the beginning of 2020 the capitalization differed by about ten times, now the USDC market cap is only 20% less than USDT ($52 billion versus $67 billion).

USDC token is also present on several major networks (Ethereum, Solana, BSC, Algorand, and so on). It is widely used for fast and cost-effective transfers and for earning in DeFi protocols. It is appropriate to note that DeFi lending protocols make up the bulk of USDC users. For example, USDC is the most popular token in Aave, Compound, and other lending protocols.

USDT VS USDC: What to Choose?

As it became clear, USDT and USDC have approximately the same characteristics and can be used for payments, remittances, trading, and passive income. Which stablecoin perfectly suits you depends primarily on your goals:

  • If you want to convert or trade cryptocurrency, use USDT, as it has the best liquidity. However, it is not recommended to keep large amounts of money in it for a long time is not recommended.
  • For longer-term storage, it is worth using a more reliable and transparent USDC stablecoin.
  • If you want to earn high interest in DeFi protocols, USDT is more suitable for you. Although USDC is an extremely popular token in the DeFi sphere, most lending protocols provide a more profitable APY for USDT users. For example, Aave offers 0.38% APY for USDC and 1.02% APY for USDT; Compound provides 0.72% APY for USDC and 1.44% APY for USDT.

How to Store USDT or USDC?

You can store USDT or USDC on a wallet directly in your exchange account or a separate crypto wallet. Each centralized exchange has its built-in crypto wallet. That is, you can store stablecoins on Binance, Kraken, ByBit, etc. This is convenient if you regularly use stablecoins for trading. However, a more reliable way to store stablecoins is to have a separate wallet that does not depend on the exchange.

There are different types of wallets: hot and cold, hardware, desktop, mobile, web wallets, etc. All types have their pros and cons. If speed and convenience are crucial, use the web or mobile wallets. The best choice will be non-custodial services, that is, those that do not have access to your keys. Also, pay attention to the platform’s interface, the list of supported currencies, ease of use, and security.

A good example of a light crypto wallet is a SimpleHold wallet, which works as an add-on for a browser or mobile app. The wallet is effortless to use. You just need to download a mobile app or browser extension, configure your account, click on the “Plus” icon, and select, for example, Tether to activate the USDT wallet generator. Next, Simplehold will create your USDT address, with which you can seamlessly and efficiently store, receive, send, and swap your USDT tokens.

(Devdiscourse's journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)

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