What are Stablecoins? USDT vs. USDC Which stablecoin to go with?

Published 09 Sep 2021 by Radhika Aggarwal

Table of Content

  1. What are Stablecoins?
  2. What Keeps Stablecoins Stable?
  3. What is Tether?
  4. How does Tether Coin Work?
  5. Who is the Founder of Tether USDT?
  6. What Makes a Tether Unique?
  7. Controversy Surrounding Tether
  8. How to Convert USDT to INR?
  9. Where to Buy Tether in India?
  10. Conclusion

USDT vs USDC has been a feud for a very long time now. Regulated financial institutions allow for near-instantaneous transactions without requiring users to preload their accounts with dollars. It also supports fiat deposits from banks, which means it can be used as an onramp into crypto for consumers who don’t have access to credit cards or other banking instruments.

These two cryptocurrencies have fixed exchange rates, in contrast to the usual volatile natures of cryptocurrencies. For example, the USD Coin(USDC) is backed by USD, which means if you hold 1 US dollar in a digital wallet with this cryptocurrency, then your funds will be worth $1 at all times; it’s called “stable money.”

Despite being a cryptocurrency, stablecoins can have problems because they depend on trust in third parties like banks, credit card companies, and other institutions. For example, USDC is pegged 1:1 to actual U.S. dollars (USD) and held in reserve bank accounts.

Tether USDT has been criticized since its developers cannot currently provide information about how many coins exist.

What are Stablecoins?

Cryptocurrencies are taking the world by storm, and there’s a new kind of crypto on the market called stablecoin. Stablecoin is more like a traditional currency with its price stability. It has tangible assets to back up its value, such as fiat currencies. First, of course, you need to choose which support you want your coin backed by, but also look at what ratio the cash will back it at - for example, USDT uses US dollars in a 1:1 ratio!

Stablecoins are quickly becoming a standard in the crypto-world, especially for traders who hedge their positions and minimize volatility. In addition, trading with stable coins can help you exchange your other cryptocurrencies into fiat currency without having to worry about price fluctuations when moving between different currencies.

What keeps Stablecoins Stable?

Fiat-backed

The value of these stablecoins is determined by the backing currency held by a third-party regulated financial entity. Fiat-linked stablecoins can be traded on the exchange, and redemption is made via issuers. Examples: TrueUSD ( TUSD ), USD ether (USDT ), USD TS (TrueUSD), and Diem ( Diem) The cost of maintaining the instability of the stabilizing cryptographic. The most common cryptocurrency is backed by fiat money - these are the first stablecoins on the market.

Cryptocurrency-backed

Instead of fiat currency, stablecoins are backed by cryptocurrencies. The smart contracts on blockchains provide decentralized collateralization without regulations or oversight from banks or other intermediaries.

Due to the nature of cryptocurrency markets and their volatile price fluctuations and lack of direct backing for stablecoin’s value, it may be difficult for users to comprehend how a coin can maintain stability. In addition, substantial collateral must also back each token to ensure that they always retain their face value.

Commodity-backed

The cost to maintain the stability of the stablecoin is the cost of storing and protecting the commodity backing. Stockholders of branded commodity bonds can use the redeemed shares as leverage against tangible assets at the revaluing rate.

What is Tether?

Blockchain-based cryptocurrency Tether has a value equivalent to traditional currencies and was developed by Bitfinex. According to Bitfinex, each token is backed up with an equal amount of fiat currency held in separate bank accounts designed for this purpose. The native tokens, USDT, can be traded on the market, but they cannot exist Independently as most cryptocurrencies do; nevertheless, USDT is easy to buy and sell and is universally accepted across crypto exchanges.

How does tether coin work?

Tether is built on three main layers: The first layer is the bitcoin blockchain, in which the Tether transactional ledger is embedded. The second layer is under the Omni protocol, enabling creation, disappearance, tracked and reported circulation, negotiation, and saving USDT. The third layer is Tether Limited. The firm is responsible for accepting the fiat deposits from the users and circulating cryptocurrency correspondingly. All in all, Tether Limited makes determinations and integrates cryptocurrencies in numerous exchanges, wallets, other projects, etc.

Who is the Founder of Tether USDT?

The creators of Tether, Brock Pierce, Craig Sellars, and Reeve Collins have created a way to keep your money safe. They make it impossible for their currency (USDT) to go down in value using blockchain technology.

Tether (USDT) Tether Holdings does not release publicly verifiable audits showing that the stablecoin is held in segregated bank accounts. Multiple cases have been filed against Bitfinex and Tether holdings in 2019. Two years before that, their systems were hacked, and $30M was stolen. Tether’s defense team admitted in court that the stablecoin was only 74% backed by cash and related assets in April of 2019. According to Tether’s website, the Hong Kong-based Tether Limited is a wholly-owned subsidiary of Tether Holdings Limited.

What makes a tether unique?

Tether promises USDT’s value to stay fixed in the US dollar. Traditional cryptocurrencies like Bitcoin, Etherum, on the other hand, have shown massive volatility in the past. Days, where valuation has varied over 20%, are not rare. BTC and ETH volatility Index hovers around 100 for the expected 30 days implied volatility measure.USDT is one of the safe havens for crypto investors. During periods of high volatility, investors can place Tether as an alternative deposit and withdraw it immediately.

The Market Cap of tether USDT is $65,255,644,841. Both coins maintain substantial trading volume, but USDT ATW has the highest global trading volumes as most cryptocurrency exchanges use USDT as their go-to choice. The market cap of USDC is $27,537,095,772.

The big competition to Tether (USDT) comes from another digital coin called United States Dollar Coin or USDC; currencies are federally regulated according to issuers who claim these tokens back every single token on a real-time basis held at central banks across the USA.

USDC and USDT have been listed on Binance, which provides the coins with trading pairs for the most suitable cryptocurrencies. This gives investors more confidence in maintaining stable prices when other currencies are experiencing volatility because of external factors like regulatory announcements or political unrests/conflicts abroad.

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Controversy surrounding tether

Surprisingly, one of the most well-known cryptocurrencies in existence is not as secure or stable as many might believe. USDT has had suspicious incidents that make people think they actively have stopped audits from taking place — and as a result, they must not be solvent and have adequate USD reserves for all the tokens issued by them. For example, new information revealed during an audit showed only 70% to 75% available to cover coins valued at $1 per token.

The company that created the cryptocurrency token USDT - tether- received scrutiny from regulators recently after it was accused of printing money out of thin air to artificially inflate bitcoin’s price during 2017’s bull market cycle. Now, they have competition in the form of their U.S dollar counterpart: The USD Coin (USDC).

How to Convert USDT to INR?

USDT to INR

The value of Tether reserves is published daily on their website. The value of these reserves matches or exceeds the value of all Tethers in circulation. This makes stablecoins incredibly secure and transparent. If you have USDT on cxihub other than the several major cryptocurrency exchanges, it’s simple to convert your USDT back into fiat and withdraw to your bank account.

Where to Buy Tether in India?

Several major cryptocurrency exchanges help in keeping your centralized stablecoin secure. Many trusted exchanges help you buy digital currencies like Bitcoin, Ether, Tether, USD Coin, and many more. We at cxihub make your experience simple but focus on the robust security measures of your crypto wallet. You can easily buy and sell your stablecoins at our website cxihub.com.

Conclusion

There has been a feud for quite some time now, with USDT vs USDC at the center of it all. Regulated financial institutions allow for near-instantaneous transactions without requiring users to preload their accounts with dollars; this means that crypto can be used as an onramp into crypto for consumers who don’t have access to credit cards or other banking instruments like wire transfers. If you’re interested in getting started trading cryptocurrency but are unsure where to go, sign up, and cxihub will walk you through everything!

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