What is USDC? Comparing USD Coin (USDC) and Tether (USDT)

Stablecoin is one of the most interesting things in the cryptocurrency space right now. Tether (USDT) is the most famous stablecoin, but it has many points of doubt. Therefore, other stablecoin projects have been launched such as: TrueUSD, Paxos Standard, Gemini Dollar…, and it’s impossible not to mention USDT’s most formidable rival, which is USD Coin (USDC).

So what is USD Coin? What makes it special? Should you buy USDT or USDC? Let’s find out more about this coin in the article below with invest286.com.

What is USD Coin?

USD Coin (USDC) is a stablecoin, pegged to the US dollar. USDC is a token based on the Ethereum ERC-20 standard, so any two Ethereum wallets can receive and send USDC to anyone in the world instantly.

As a stablecoin, 1 USDC = 1 US Dollar.

To understand more about what USD Coin is, let’s learn about Stablecoin:

Stablecoin is a type of cryptocurrency characterized as “stable,” meaning its price does not fluctuate, as its value is always equivalent to an external fiat currency (like USD, EUR, Gold…).
You might be interested: What is Stablecoin?

With a market capitalization worth billions of dollars, USDT and USDC are the two most popular stablecoins at present. However, they are not the only ones. Binance has its own stablecoin (BUSD) and Dai (DAI) is an Ethereum-based coin, designed to operate on that platform. Like USDC and USDT, both of these coins are always equal to one dollar.

How USD Coin Works

USDC is backed by an equivalent amount in US dollars and operates on the TrustToken platform. Each USD Coin is equivalent to 1 USD and can be exchanged for cash. The Tokenization process is the act of converting US dollars into USD Coin.
The issuance and exchange of USDC tokens are guaranteed by smart contracts on the Ethereum network. Circle Ltd ensures that each USD Coin is backed by a unique US dollar.

With USDC, you can easily send and receive payments in USDC. Payments are made directly into a Coinbase account.

• The USDC system does not disrupt the money as the direct margin accounts handle them.

• It is audited monthly and publicly disclosed to maintain a high level of legal transparency.

History of USD Coin (USDC)

On October 23, 2018, the famous US-based cryptocurrency exchange Coinbase announced support for USD Coin, a type of stablecoin that they collaborated with Circle Internet Financial to create.

Circle owns the competitive cryptocurrency exchange Poloniex and is one of the cryptocurrency companies that have received over $3 billion in funding from investors including Goldman Sachs and Baidu.

USDC will be issued by Circle, while Coinbase will be the platform where users can access and convert fiat currency into USDC tokens, and it will facilitate transactions using USDC and the conversion of USDC to fiat currency.

USDC is created on the Ethereum blockchain and is compatible with ERC-20. This means it can support fast USDC transfers on the Ethereum network. It also leverages the security of the Ethereum blockchain, making USDC easy to store and exchange.
USD Coin is the first stablecoin supported by Coinbase. Although Circle first issued this currency in September, it did not attract investors until it was listed on Coinbase. Since then, it has quickly climbed to become one of the most valuable cryptocurrencies in the cryptocurrency market.

Comparing USD Coin (USDC) and Tether (USDT)

As mentioned earlier, Tether (USDT) and USD Coin are both stablecoins. Both are popular cryptocurrencies pegged to the US dollar. However, they also have some differences, so let’s compare them.

Basic Information about Tether (USDT)

• Tether (USDT) is issued and managed by Tether Holdings, a division of iFinex, and the main company is Bitfinex. Tether is the largest stablecoin by trading volume and market value.

• Tether Holdings does not publicly disclose verifiable evidence that the stablecoin is backed 1:1 by USD held in bank accounts.

• The Tether network was attacked, and $30 million was stolen in November 2017.

• Tether has been entangled in a notorious lawsuit, a serious security breach, and questions about whether Tether is fully backed by US dollars. Additionally, its company Bitfinex is also controversial.

• Tether started in 2014 but had unclear legal licensing, and it was not until 2017 that it was licensed to exist.

• The legal team of Tether admitted in court that the stablecoin was only 74% backed by cash and similar assets in April 2019.

• Tether Holdings switched Tether (USDT) from its native Omni blockchain to the Ethereum blockchain in 2019. This opened up greater transparency related to the company’s wallets, transactions, and circulating supply.

=> You can see more details at: What is USDT?

• USDC is issued and maintained by Circle Ltd. The company has been legally licensed to operate.

• Circle, Ltd has proof that they have the equivalent amount of US dollars to back USDC coins, as they always publicly audit monthly, showing that USDC coins are always supported 1:1 by USD, and that USD is stored in the bank.

• Circle, Ltd. and the USD Coin smart contracts have never been compromised or attacked.

• USDC started in 2017 and has seen a significant increase in the number of users, making it the second-largest stablecoin by trading volume and market capitalization.

• All USD Coin (USDC) ecosystem and transaction details (such as circulating supply, market capitalization, etc.) can be publicly verified on the Ethereum blockchain.

• USD (USDC) Coin is the authorized Stablecoin of Coinbase, the most tightly regulated cryptocurrency exchange in the world.

=> Similarities between Tether and USD Coin:
♣ Both Tether and USD Coin offer stability in the volatile cryptocurrency market for investors.

♣ Both USDT and USDC are backed by the US dollar and are convertible at a 1:1 ratio.

♣ Both can be easily purchased on many major cryptocurrency exchanges.

=> Differences between USDT and USDC:

♣ USDT has a higher market capitalization and liquidity than USDC.

♣ USD Coin is not as popular as USDT, perhaps because it is a relatively new cryptocurrency.

♣ USD Coin is often considered safer than USDT as it regularly publishes monthly USDC data audits.

♣ USD Coin has transparent legal licensing, while USDT has been mired in controversy over this issue.

Should you buy USD Coin (USDC) or Tether (USDT)?

Should you invest in USD Coin?

The answer is NO. Because it is a stablecoin, its price is always 1 US dollar, it’s not an instrument for profit-making investment.

You should only use USD coin when you want to store your assets in the form of cryptocurrency but do not want its value to fluctuate.

Whether to buy USD Coin or Tether (USDT) depends on your preference, needs, and the exchange you use.

• Although Tether (USDT) has a controversial history due to a lack of legal transparency and risk issues, it is still widely accepted by many investors and has become the most popular coin, used by many people.

• Meanwhile, USD Coin is safer, but less popular than Tether. However, one thing you need to remember is that USDC is very popular in the US, where Coinbase is the strongest.

Due to its higher transparency and legality, USD Coin is often the choice of large organizations and businesses. Meanwhile, Tether (USDT) is more suitable for individual investors because it is popular and has more trading pairs compared to USD Coin.
Unless you are trading on Coinbase, USD Coin is a better choice than Tether. If you use another exchange, like Binance, you should buy USDT, as USDT has higher liquidity and is easier to buy and sell.

Above is the information about USD Coin. I hope that through this article, you have somewhat understood what is USDC, and assessed how it is similar to and different from Tether (USDT). If you have any questions, please leave a comment below for me to answer. Thank you for reading the article.