There are currently two stablecoins vying for the title of the top stablecoin — USDT and USDC . Both aim to provide a stable cryptocurrency that is pegged to the US dollar, but there are some key differences between the two. USDT was created in 2014 by Brock Pierce, Reeve Collins, and Craig Sellars with a mission to provide the world with a stable digital token ecosystem. Originally named Realcoin, the token could not compete with popular altcoins. However, after a series of updates, it changed its name to Tether and altered its issuance technology. The transformation was necessary to survive in the world of digital money.
USD Coin is a stablecoin that is fully backed by U.S. dollars and dollar-denominated assets. Tether tokens can be bought and sold on cryptocurrency exchanges, including Binance, CoinSpot, Bitfinex, and Kraken. As of January 2023, Tether was the third-largest cryptocurrency after Bitcoin and Ethereum and the largest stablecoin with a market capitalization of nearly $68 billion.
What Is the Difference Between Bitcoin and Ethereum Blockchains?
Blockchain networks like Bitcoin use a lot of electricity to validate transactions, leading to environmental concerns. For example, Bitcoin consumes more electricity than a small, medium-sized European country, and Bitcoin mining is threatening China’s climate change goals. The network is much more than a payment system—it was primarily created to deploy decentralized applications and smart contracts.
- Tether has stated that as of 19 December 2017, it has re-enabled limited cryptocurrency wallet services and has begun processing the backlog of pending trades.
- Tether and Bitfinex agreed to pay $18.5 million in the settlement and were barred from operating in New York state, however the companies didn’t admit to any wrongdoing.
- Blockchain technology has been instrumental in the growth of cryptocurrencies.
- Dapps are simply ‘decentralized apps,’ or computer programs that interact with the Ethereum blockchain.
- USDT, which has grown its total supply to as much as 4.7 billion tokens, is utilizing networks with the capability of creating secondary assets.
In the past there has been some speculation regarding blockchain technology and usdt‘s backing, however, this has not affected the stablecoin’s increasing popularity and buying power. Importantly, every token is backed by assets held in reserves so that anyone wishing to redeem their cryptocurrency for the underlying asset can do so. The company releases quarterly reports detailing the reserves and posts them on their website where anyone interested can see it.
Decentralized exchanges are peer-to-peer, and there’s no intermediary. Examples of CeFi exchanges include Binance, Kraken, Bittrex, Bitfinex, Luno, and Coinbase. Examples of DeFi exchanges include Uniswap, Compound, KyberSwap, Airswap, IDEX, SushiSwap, Balancer, and Totle.
Who Sent and Received the First Bitcoin Transaction?
Both Tether’s USDT and Circle’s USDC are backed by real assets and issued by a centralized entity, but the key difference between them is in the composition of reserves. USDC only holds cash and short-term U.S. government bonds, according to its monthly report. It has a central entity, the company Tether, that issues and destroys USDT tokens to adjust the supply of coins to user demand. Backed against fiat currencies and expanding support for different blockchain networks, Tether has grown at a staggering rate.
Hardware wallets can involve a bit more of a learning curve and are a more expensive option, however. As such, they may be better suited to storing larger amounts of USDT for more experienced users. Basecoin, also known as Basis, was a cryptocurrency whose protocol was designed to keep its price stable. Tether also issues tokens pegged to the euro, the offshore Chinese yuan, the Mexican peso, and gold, none with more than a small fraction of the market cap of its U.S. dollar-pegged USDT tokens. Similarly, when a business wants to exchange their USDC for U.S. dollars, the business can deposit USDC into their Circle Account and request to receive U.S. dollars for free. Businesses can open a Circle Account to exchange U.S. dollars for USDC.
