Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Can USDC Topple Tether As The King Of Stablecoins?

CryptocurrencyApr 09, 2021 05:00AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
Can USDC Topple Tether As The King Of Stablecoins?

Stablecoins grew considerably last year, breaking the $20 billion market cap. Risk-averse investors flock to these coins because of their relative safety. Tether (USDT) and Coinbase’s USDC dominate the stablecoin market.

Currently, USDT makes up most of the market’s supply and value, with USDC lagging in second place. However, USDC has found a promising niche in decentralized exchanges.

What does that mean? Can USDC become the favorite stablecoin for investors one day?

What do you need to know about stablecoins?

Investopedia describes stablecoins perfectly: they’re crypto coins that use reserve assets to back their value. We can think about them as a combination between fiat and crypto.

As many know, fiat currencies are “technically” backed by gold or similar assets. They essentially act as statements of an individual’s ownership over a country’s gold reserve. These valuations allow fiat currencies to enjoy more stability than Bitcoin and other cryptocurrencies.

However, we must note that many currencies, like the US dollar, are no longer redeemable in gold. Does that mean stablecoins can be less volatile than fiat? Not exactly, but that’s primarily because of society being used to the currencies.

Different types of stablecoins

Experts categorize stablecoins based on what backs their value: fiat, assets, and even other cryptos. However, other stablecoins prevent price swings with algorithms like USDX. However, we’ll focus on the first three types.

  • Fiat-backed stablecoins, like Tether and USDC, are redeemable for fiat currencies. Companies developing these coins need extensive dollar reserves, and they implement static exchange ratios.
  • Cryptocurrency-backed coins are abstract for many. DAI is an excellent example since Ether backs it. Otherwise, they work just like fiat-backed coins, but they’re more volatile.
  • Finally, coins like G-Coin anchor their value on external assets, such as gold. They’re encrypted versions of regular fiat currencies.
  • Why are they famous?

    Supporters applaud the coins’ security regardless of crypto volatility. Their anchoring acts as insurance for investors, who can rest assured of their value. However, they still provide many features from cryptocurrencies.

    Nevertheless, not everyone likes these coins, and that’s because of their concept. Detractors state that stablecoins’ work against the original purpose of cryptocurrencies.

    USDC vs. Tether

    These stablecoins are the most famous investment options in the market, but their differences are considerable. Tether has been synonymous with stablecoins because of its fame and demand, but USDC is quickly gaining traction.

    While they’re still relative newcomers in the market, they already offer fantastic advantages. They allow you to enjoy blockchain’s efficiency without facing the same volatility as Bitcoin, Ether, and other cryptocurrencies.

    But which one is better? That’s a complicated question because we must assess market demand, features, and accessibility.

    USDC is famous because Coinbase powers it. It’s also the only stablecoin that’s accessible via Coinbase. It’s an ERC-20 token built on Ethereum’s blockchain.

    It’s also regularly among the top coins in all exchanges, holding a considerable share of all stablecoins in the market. It’s backed by a 1:1 USD ratio in reserve bank accounts.

    Tether

    On the other hand, USDT is the biggest stablecoin, and it enjoys the best liquidity of all stablecoins. It’s also more liquid than Bitcoin, providing excellent trading benefits.

    Because of its accessibility and anchoring, anyone can use it without worrying about considerable price shifts. However, it’s also one of the most controversial cryptocurrencies.

    Which one should you use?

    USDC’s main advantage over Tether, other than its lack of controversy, is its availability. It’s beloved by institutions using Coinbase, so it’s a lot more practical for B2B transactions.

    USDT is better for trading and investors, so it somewhat fails as a stable coin. USDC could topple it because it’s better for most financial transactions.

    On the flipside

    • Many crypto investors enjoy trading because of the market’s volatility. Stablecoins often provide a significantly less attractive investment option for them, which reduces demand.
    • Some experts question stablecoins’ transparency. For instance, Tether is often accused of not being honest about the alleged 100% USD backing for every USDT unit.
    • Stablecoins’ concept requires investors to trust third parties who control the reserve. For most crypto experts, that’s what cryptocurrencies aim to avoid. Many argue that stablecoins are a terrible concept because they defeat the tech’s initial goal.

    Continue reading on DailyCoin

    Can USDC Topple Tether As The King Of Stablecoins?
     

    Related Articles

    Add a Comment

    Comment Guidelines

    We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

    •            Enrich the conversation, don’t trash it.

    •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

    •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

    • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
    • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
    • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
    • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
    • Only English comments will be allowed.

    Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

    Write your thoughts here
     
    Are you sure you want to delete this chart?
     
    Post
    Post also to:
     
    Replace the attached chart with a new chart ?
    1000
    Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
    Please wait a minute before you try to comment again.
    Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
     
    Are you sure you want to delete this chart?
     
    Post
     
    Replace the attached chart with a new chart ?
    1000
    Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
    Please wait a minute before you try to comment again.
    Add Chart to Comment
    Confirm Block

    Are you sure you want to block %USER_NAME%?

    By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

    %USER_NAME% was successfully added to your Block List

    Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

    Report this comment

    I feel that this comment is:

    Comment flagged

    Thank You!

    Your report has been sent to our moderators for review
    Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

    Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
    Continue with Google
    or
    Sign up with Email