USDC and USDT: Which Stablecoin You Should Use in 2022?

Sharan Phillora

October 2, 2022

usdt and usdc

Volatility impacts almost every cryptocurrency you can think of, from Bitcoin to Shiba Inu, but not all of them. Stablecoins emerged as a reliable way for investors to remain in the crypto ecosystem at a lower risk, keeping their holdings stable.

Stablecoins are cryptocurrencies pegged to real-world commodities and fiat currencies like gold and the U.S. dollar. The most popular stablecoins are those pegged to USD, offering investors a haven from the value fluctuations of other digital assets.

Of the combined market cap shared by the top ten stablecoins, the top two account for 80% of the roughly $150 billion market. Tied to the dollar, Tether (USDT) and Circle’s USDC have emerged as the industry’s leading stablecoins, traded on nearly every major crypto exchange in volumes that make them the most utilized cryptocurrencies in the world.

In this article we’ll talk about the differences between USDC and USDT to help you determine which best fits your needs.

The stablecoin enables anyone to transact at a cheaper cost and earn interest on decentralized finance protocols. It also gives merchants a way to accept crypto payments denominated in fiat without taking on the market risk associated with accepting payments in the form of more volatile cryptocurrencies.

What is USDT?

Tether Limited, the organization responsible for the USDT supply, is a subsidiary of Hong Kong-based iFinex, which also owns the popular crypto derivatives platform Bitfinex. First issued in 2014, USDT was designed to bridge the gap between crypto and fiat, giving investors a permissionless way to send crypto-dollars to anyone with a focus on speed, stability and capital efficiency. This is done by keeping $1 in reserve for every USDT sold, ensuring the token’s stable price. 

Currently, there are over 65 billion USDT tokens in circulation, and these tokens are accessible on a number of blockchain networks, including Ethereum, Solana, Algorand, and more.

USDT

Many are quick to point out how advantageous the ability to print digital dollars would be for a cryptocurrency exchange, and accusations against Tether claiming the firm was sharing funds with sister-company Bitfinex have all been found true. Though Tether initially reported that each USDT minted is backed by a dollar, they have since gone back on this claim, stating the USDT supply is backed by many assets, and not just dollars.

As the cryptocurrency with the third-highest market capitalization, Tether is one of the largest financial institutions in the world, run by people with shady professional backgrounds, and with a history of lying to the public.

What is USDC?

USDC is a USD-pegged stablecoin managed by Centre, a consortium founded by peer-to-peer payments tech firm, Circle. The consortium is backed by US-based cryptocurrency exchange Coinbase, as well as Bitmain, a global leader in mining hardware manufacturing. The Centre Consortium, which oversees the stablecoin’s technical financial standards, ensures transparency around its 1-to-1 backing, and like any other USD-backed token, its price remains fixed at $1. 

USDC

There are currently more than 55 billion USDC tokens circulating across various blockchain networks and exchanges.

Circle itself is a regulated financial institution, and USDC’s managing consortium Centre posts 3rd party attestations (not audits) of their reserves every month. While an attestation is no guarantee of reserves (it is conducted on a single day decided in advance by the attested party), it does mean that in the event of an emergency, you’ll have much better luck exchanging your USDC compared to USDT.

USDT vs. USDC: What’s the Difference?

Both USDT and USDC stablecoins show many similarities, and the main difference lies in who controls them. While USDT is more popular, USDC is often described as a safer stablecoin, since Centre makes a greater effort to comply with regulations and provide more transparency to users.

USDT has received scrutiny due to Tether’s resistance to releasing complete and frequent updates on how the coin is backed. No reputed bank wants to do business with Tether, making it difficult for them to store reserves in the first place. 

USDT certainly has the larger market share, and despite the criticisms against them, the project only continues to grow. This could be due to a lack of accessible alternatives, which might explain why USDC has been so successful – it’s like USDT but from what is arguably a more reputable source.

The Centre Consortium has positioned themselves well in regard to regulations, releasing regular attestations of their reserves. That being said, Centre is heavily backed by Coinbase, a cryptocurrency exchange, and Bitmain, a Bitcoin mining hardware manufacturer. Both of these entities would benefit heavily from the ability to print money on demand, and as such, many have levied criticisms similar to Tether against Circle too.

Should you use USDC or USDT?

The choice between these two behemoths is less of an ‘either-or’, and more of an ‘all or nothing’ situation. Tether and USDC have embedded themselves deep within the cryptocurrency ecosystem, making it almost impossible to participate without them. Additionally, these two tokens are available across almost every network, and projects often prioritize accepting USDC and USDT to gain traction from users.

Algorithmic stablecoins are an option, but they fail too often to be considered stable. These are decentralized stablecoins whose peg is maintained by a smart contract, and if the recent Terra UST crash has taught us anything, it’s that this technology has a long way to go before it touched mainstream use.

The longest-running decentralized stablecoin, DAI, differs from algorithmic stablecoins in that it’s overcollateralized, making it less susceptible to market crashes. However, even DAI is nearly 50% backed by USDC. If you had to pick one between USDT and USDC, the latter is undoubtedly the less risky option, but it’s practically impossible to interact with the DeFi ecosystem without exposure to at least one of these stablecoins.

The Bottom Line

If you’re thinking about getting paid in crypto, but don’t want to deal with the volatility of tokens like Bitcoin and Ether, stablecoins are a great solution to staying within the crypto ecosystem while hedging against potential market crashes. Binamite lets you get paid in any ratio of USD (fiat), BTC, ETH, and USDC, while your employer pays using whatever currency they prefer.

Cryptocurrencies have been around for over a decade now, and while digital assets have a wide range of use-cases, mainstream adoption will take time. At Binamite, we believe the best way to discover more utilities for cryptocurrencies is by making it simpler for people to get their hands on it. Sign up here to start getting paid in the currency of the future – did we mention it’s free?

How Binamite Can Help

Binamite is a borderless payments platform that gives businesses the flexibility to pay their employees, contractors, and freelance workers using their preferred method, while ensuring recipients can split their pay between fiat and crypto in any ratio. If you’re looking for the most flexible, comprehensive, and convenient solution to paying and getting paid in digital assets, head over to Binamite and Sign Up for free!