Tether (USDT) vs. USD Coin (USDC): A Tale of Two Stablecoins

Stablecoins are cryptocurrencies that are designed to maintain a stable value relative to a fiat currency or a commodity. The two largest fiat-backed stablecoins in the market are Tether (USDT) and USD Coin (USDC), both of which are pegged to the US dollar. However, despite their similar function and design, these two stablecoins have different histories, features, and challenges. 

USDT and USDC, the Two main Characters 

USDT was launched in 2014 by Tether Limited, a company affiliated with the crypto exchange Bitfinex. It was the first stablecoin to achieve widespread adoption and liquidity in the crypto market, and it remains the most dominant one to date.

USDC was launched in 2018 by Circle, a fintech company backed by Goldman Sachs, and Coinbase, one of the largest crypto exchanges in the world. It was created as a more transparent and compliant alternative to USDT to bridge the gap between traditional finance and crypto. 

The Rise of USDT as a Stablecoin Champ

Tether has faced transparency issues and legal challenges over its reserves and operations. 

Despite these controversies, Tether has seen a surge in popularity among crypto users, especially in Asia. Tether USDT has also maintained its peg to the dollar even during market volatility and economic crises. Moreover, Tether USDT recently announced a new policy of investing up to 15% of its net profits in Bitcoin as a reserve asset, which could boost its appeal among Bitcoin enthusiasts.

The company revealed that it had acquired $1.5 billion worth of Bitcoin by the end of the first quarter. This move benefits both parties as Bitcoin gains more market access and the company leverages BTC’s positive long-term outlook.

The most dominant stablecoin in the crypto market is Tether USDT, which has a market share of about 66 percent. Its closest competitor is USD Coin USDC, which has a market share of about 23 percent. The total value of all stablecoins is around $128.612 billion, of which Tether USDT accounts for roughly $83.13 billion and USD Coin USDC for about $29 billion. Both stablecoins have a high trading volume, with Tether USDT at $82.94 billion and USD Coin USDC at $3.2 billion in the last 24 hours.