Tether Vs USD Coin: Which Coin Should You Add To Your Portfolio Immediately?

Last Updated September 14th 2021
16 Min Read

In today’s world, having a cryptocurrency portfolio is necessary for your financial growth. While there are many people who are still sceptical about the long-term future of cryptocurrencies, smart investors are already making a lot of money by mining, staking, and trading cryptocurrencies.

To succeed in the cryptocurrency universe, you need to invest strategically. For real players in the online investing world, it is all about building a solid portfolio – the sort of portfolio that can bring reasonable profit and also protect you in times of trouble. Tether (USDT) and USD Coin are examples of cryptos that can protect you in times of trouble.

Truth be told, the cryptocurrency universe is often seen as a risky investment arena. This is primarily because cryptocurrencies are highly volatile. Even some of the most powerful and popular coins like Bitcoin and Ethereum are very volatile. Volatility can benefit or hurt your investment, depending on when you bought and when you sold your digital assets.

Enter Stable Coins

Stablecoins were developed to help combat the challenges posed by extreme volatility in the cryptocurrency market.

Tether and USD Coin are good examples of stablecoins, and we are going to consider the best one you can add to your portfolio immediately.

The aim of this post is not just to discuss the coin that can save you in times of trouble. We are going to compare the two coins carefully and determine the one that will be a better fit for your portfolio.

You should know that we may not pass a verdict in a single sentence or paragraph. It is important, therefore, that you read every part of this post to determine what will be the best stablecoin you can add to your portfolio.

What Are Stable Coins?

A stable coin is a type of cryptocurrency with a stable price, and the value is backed by another asset price, like the US dollar, Euro, Yaun, or Gold. Stable coins are a means to hold tokens in crypto exchanges to reduce losses during trading. Presently, a stable coin presents the easiest and quickest way to transfer funds from fiat currencies to cryptocurrencies without tampering with the true monetary value.

As mentioned earlier, Tether (USDT) and USD coin are both stable coins. They are both popular cryptos pegged against the US dollar. There are several other stable coins pegged against fiat currencies and real assets like gold. Here, however, we are restricting our discussion to Tether (USDT) and USD Coin (USDC).

How Stable Coins Works

Ideally, stablecoins are backed by fiat currencies like the US dollars, Euro, and others. They can also be backed by precious metals like Gold, or algorithmic function. The most popular stable coins are those backed by fiat currencies. They are often more stable because they are linked to a centralized financial system.

Being backed by a fiat currency means the price of a stable coin is always equal to the value of the currency backing it. There might be minor price fluctuations from time to time, but the value is always never farfetched from the value of the backing currency.

Stablecoins are mostly kept stable because of real reserves in banks. The two coins we are considering here, for instance, have dollar reserves in banks that help to protect the value, even in the highly volatile cryptocurrency market.

Quick Facts About Tether (USDT) and USD Coin (USDC)

Now that we have established what stablecoins are and how they work, it is time to look at the two stable coins we are comparing. At this point, we will focus on core facts that can influence your investment decision:

Tether

  • Tether (USDT) is issued and managed by Tether Holdings, a division of iFinex, and the primary company is Bitfinex; Tether is the largest stable coin by trading volume and market value.
  • Tether has a high-profile lawsuit, a significant security breach, and questions about whether Tether stable coin is fully backed up by the US dollar; these are the controversies surrounding Tether, and its primary company, Bitfinex.
  • Tether started operating in 2014 and preserve a not-so-clear legal licensing on the stable coin market until 2017 until other clear legal licensing stable coins began existing.

USD Coin (USDC)

  • USDC coin is issued and maintained by Circle Ltd. The company has obtained a legal license that enables them to operate. Circle, Ltd has solid evidence that proves that US dollars fully back USDC Coin in isolated bank accounts by publicly submitting a monthly report audit.
  • USDC began operating in 2017, and there has been a regular increase in the way users adopt and use it to carry out transactions. USD stable coin is presently the second-largest by trading volume and market cap.
  • USD coin is a stable cryptocurrency backed by the US dollar and operates on the TrustToken platform. Each USD Coin is equivalent to $1 and can be exchanged with cash. The process of Tokenization is the act of turning US dollars into USD Coin. USDC can be sent anywhere without charges and can hold without a central channel.
  • Issuance and redemption of USDC tokens are ensured by intelligent contracts in the Ethereum network. Circle Ltd ensures that each USD Coin is backed with a single US dollar. The coins are trusted cryptos and backed by assets that make it possible for them to be purchased and sold worldwide. It is easily accessible too.

More About Tether

Tether is a stable coin that is back by several currencies. Tether issues Tether (USDT), back by the US Dollar. Investors or traders can transfer the equivalent of fiat value between trading or without the regulation of fiat currency.

Jean-Louis van der Velde, the founder of Tether Ltd and Bitfinex(the primary company), is the only one that issues and backs Tether coins with its equivalent in US dollar.

One Tether is backed by one US dollar for every token given. Tether is also called USDT, which is giving as an exchange using the Omni Layer on Blockchain.

How To Buy Tether (USDT)

The most common method of buying Tether (USDT) is to exchange it with another cryptocurrency. Various exchanges offer Tether (USDT) and USD Coin (USDC) trading pairs. Examples of such exchanges include Bitfinex, Exmo, and Kraten.

It is also possible to buy Tether through brokerages. In fact, eToro, which is a full-service brokerage, is one of the best places to buy Tether and other cryptocurrencies.

How To Use USDT

Traders or investors can use it to transfer funds, entering and exiting trades is possible without a big change in price like it is done in Ethereum or Bitcoin; when trading between various digital currencies, the tax liability is nearly non-existent.

More About USD Coin (USDC)

USDC is an ERC-20 token, so any two Ethereum wallets can receive and send USDC to anyone in the world immediately. ERC-20 token can be used by any new decentralized application (dApp) built on the Ethereum blockchain.

With USDC, it is easy to send and receive payments using USDC; users send invoices priced in US dollars or other currencies to their customers and then accept payments in USDC. Payment using USDC, the fees are lower, the payments are quicker, and no intermediary is needed. Payments are made directly to a Coinbase account.

How USD Coin System Works

  • USDC system doesn't tamper with funds because escrow accounts directly handle them.
  • A monthly audit is published publicly and maintains a high level of legal transparency.
  • USDC account holdings are published monthly to the public, and USDC undergoes expert authentication.

Tether (USDT) vs. USD Coin (USDC)

Though they are both classified as stablecoins, Tether and USD Coin are different in many ways. We will briefly discuss their similarities and differences here:

Similarities between Tether and USD Coin

  • Both Tether and USDC coins provide security to investors or traders, especially when the market becomes very volatile. They stay true to their value in the face of volatility.
  • Both coins are backed by US dollars, and each provides 1:1 conversion as each coin is redeemed by US dollar.
  • Both can be bought from the same platform. Etoro is one wonderful brokerage that offers both coins and several other digital assets.

Differences between USDT and USD Coin

  • USD Coin is not as popular as USDT probably because it is a relatively new cryptocurrency.
  • USD Coin (USDC) is considered by many to be more secure than USDT simply because it regularly publishes monthly USDC data auditing. USD Coin has transparent legal licensing; transparent legal licensing is not maintained by USDT. Tether did not keep the promises they made about legal transparency.
  • USD Coin (USDC) token is built on the Ethereum network while Tether (USDT) has a fully-developed ecosystem originally built on top of Bitcoin’s blockchain through the use of Omni platform.

Key Comparison Between USDT and USDC

Liquidity

Liquidity is one of the most important factors to consider when choosing a crypto coin to trade. Between the two coins we are discussing, Tether is the better option when liquidity is the benchmark. Here are a few points to stress Tether’s edge over USD Coin in terms of liquidity:

Tether

  • Tether is available on most top cryptocurrency exchanges.
  • The largest consistent coin by circulating, supply, and market cap.
  • Highest trading volumes in comparison with other stable coins.

USD Coin (USDC)

  • Available on the majority of cryptocurrency exchanges.
  • Second largest stable coin by circulating supply and market cap.
  • Above-average trading volumes compared to other stable coins.
  • An above-average amount of trading pairs across all cryptocurrency assets types.

Redemption and Purchase Process

Investors and traders need a secure, transparent, and efficient, stable coin purchase and redemption process. The factors below make USD Coin (USDC) the clear winner in this area of comparison.

Tether (USDT)

  • Minimum issuance is $100,000 through Tether Limited.
  • The minimum redemption requirement is $100,000 through Tether Limited.
  • Users are charged a verification fee before they can purchase (with fiat) or redeem (for fiat) Tether (USDT).
  • One fiat transaction is redeemable once each week.

USD Coin (USDC)

  • USD Coin can be purchased with a credit card or debit card through Coinbase.
  • Can be purchased through a bank account through Coinbase or directly through the issuer, Circle Ltd.
  • No minimum redemption requirements when redeemed through Coinbase.
  • No maximum redemption limit when redeemed through Coinbase.
  • Redemptions directly to users' bank account mostly take one to two working days.

Loan Availability

Most traders, investors, and blockchain businesses obtain crypto loans in the form of Stablecoins. Below are different available loan options for Tether and USD Coin to determine which Stable coin wins in this section:

Tether (USDT)

  • Lockup terms available are flexible
  • Users receive funds immediately
  • Competitive APR rates.
  • High maximum and low minimum loan amounts are available.
  • Loans available are based on centralized cryptocurrency lending platforms such as Celsius Network and Nexo
  • Tether is not supported by decentralized finance
  • Tether doesn’t have a privacy-focused loan available.

USD Coin

  • Lockup terms available are flexible
  • Users receive funds immediately
  • USDC has a very competitive APR rate.
  • High maximum and low minimum loan amounts are available.
  • Always available on centralized cryptocurrency lending platforms like Celsius Network and Nexo, and more.
  • Readily available on decentralized finance channels.
  • USD Coin (USDC) have privacy-focused available Loans.

Trust and Transparency Factors

Below are a comparison between the issuers (Primary companies) of Tether (USDT) and USD Coin (USDC). Regulatory standings, historical events, verifiable audits, and more are included as important factors in this section:

Tether (USDT) Coin

  • Tether Holdings does not publicly release a verifiable audit showing that the stable coin is backed 1:1 by USD held in isolated bank accounts.
  • Tether’s network was hacked, and $30million was stolen in November 2017.
  • New York State Attorney General (NYSAG) filed several cases against Bitfinex and Tether Holdings in 2019.
  • Tether's legal team admitted in court that the Stable coin was only 74% backed by cash and similar assets in April 2019.
  • Tether Holdings changed Tether (USDT) from its native Omni blockchain to the Ethereum blockchain in 2019. This open more transparency with regards to company wallets, transaction’s and circulating supply.

USD Coin (USDC)

  • Circle, Ltd. monthly issues a publicly verifiable audit report, showing that the Stable coin is backed 1:1 by USD held in isolated accounts.
  • Circle, Ltd. and the associated USD Coin (USDC) smart contracts have never been compromised or hacked.
  • Circle, Ltd. is fully licensed legally to offer its services in all operating districts.
  • All USD Coin (USDC) ecosystem and transaction details such as circulating supply, market cap, etc.) are publicly verifiable on the Ethereum blockchain.
  • USD (USDC) Coin is the authorize Stablecoin of Coinbase, the most heavily regulated crypto exchange worldwide.

Who Should Use Tether (USDT) and USD Coin (USDC)

Tether and USD Coin are both good stablecoins, but there is a good chance that what works for investor A may not work for investor B. Here are a few points about the suitability of both coins to different types of investors.

Tether (USDT) Coin

  • Expert investors or traders who use advanced exchange features such as margin funding and future trading.
  • Long-term investors/traders who are actively trading and looking to shield themselves from market shocks.
  • Investors who want to enter or exit the cryptocurrency market with US dollars.

USD Coin (USDC)

  • Borrowers who want to get cryptocurrency loans in the form of stable coins.
  • Traders or investors looking for a temporary hedge against market volatility.
  • Traders and investors looking to exchange Bitcoin and other Cryptocurrencies assets for fiat currency.
  • Traders or investors looking to enter the market with fiat currency.

Read Also: 9 Cryptocurrencies That Could Make You A Millionaire

Which Of The Coins Should You Add To Your Portfolio Immediately?

Choosing whether to buy USD coin (USDC) or Tether (USDT) depends on specific preferences, needs, and customer profiles. USDT's controversial history and lack of legal transparency create a high risk or low reward scenario for most investors and traders, but it is still the biggest stablecoin by market capitalization and trading volume.

USDC has failed to achieve the level of popularity Tether has achieved. Liquidity is an important factor to consider when you want to invest in any coin at all. For the regular, experienced trader, Tether (USDT) is the more attractive of the two. USDC, on the other hand, is also great, especially for businesses and individuals who may need crypto loans in the near future.

Always Choose To Invest the Smart Way

Here, we have discussed some of the most important things to know when you want to choose between Tether and USD Coin. As we’ve maintained, both are good stablecoins but both may not suit every investor. Ultimately you have to decide the one to choose when it is time to invest.

It is also important that you don’t rush any cryptocurrency investment decision until you have enough information to make a sound decision. Research properly and use your discretion once it is decision time.

It is also important that you buy and sell crypto assets from a safe platform. eToro has shown time and time again that it is the most reliable brokerage for social trading, and you can benefit a lot by using it for your online investments.

eToro – The Best Platform to Buy Cryptocurrencies

eToro have proven themselves trustworthy within the Crypto industry over many years – we recommend you try them out.

Virtual currencies are highly volatile. Your capital is at risk.

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