As a new type of asset, the value of cryptocurrencies are highly volatile. Crypto prices can experience an ATH (all-time high) and then plunge to zero virtually overnight.
Related: What is Cryptocurrency?
Which is why stablecoins have risen in popularity due to the stability it offers. Stablecoins are cryptocurrencies that peg their value to external assets, such as the US Dollar. These provide a relatively safe way for traders to remain in the crypto ecosystem amidst price fluctuations of other crypto assets.
Two of the most popular stablecoins are USDC and USDT, which are both backed by the US Dollar. Here’s a quick rundown on the difference between USDC vs USDT:
WHAT IS USDC?
USDC or USD Coin is an ERC-20 token that is currently the second-largest stablecoin by market capitalization. The USDC system has dollar reserves for each token created and is audited monthly in a report that is publicly available. This tokenized form of USD allows for a representation of the fiat currency to be put in the blockchain, making it easier and cheaper to transfer.
WHAT IS USDT?
USDT is also known as Tether, referring to its ties to the US Dollar. Similar to USDC, USDT is also an ERC-20 token pegged 1:1 to USD. Each time a new USDT is created, Tether will save one USD in reserves. This provides assurance to the investors that they can always trade their USDT to USD.
USDT has been around since 2014 and, as of March 2023, has grown into an $71B market cap. With Tether, you can easily switch from holding other crypto to holding USDT without withdrawing your funds to fiat account.
USDC VS USDT
While both USDC and USDT are stablecoins backed by USD, some of their features may vary. Here’s a quick snapshot of the differences:
The main difference between these two stablecoins is their audit frequency. The frequency of USDT audits is not disclosed. This means that it can be trickier to find out whether the dollar reserves match the amount of tokens created, or if the tokens are truly backed by USD or some other asset.
USDC, on the other hand, is audited monthly by Grant Thornton LLC and these audits are also reported monthly in the Circle website.
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