Cryptocurrencies belong to a notoriously volatile asset class. Nevertheless, there are exceptions… a category called stablecoins. Its market value is pegged with an external asset like precious metals, fiat currencies, or other cryptos. During high volatility situation, it helps to stabilize the value in a bid because it is pegged with a more stable asset. The stablecoin values have escalated three times in the last couple of years.
In this post let’s get to know the difference between USDT [USD Tether] and other crypto stablecoins. USD Tether is pegged with the US dollar. BUSD [Binance USD] and USDC [USD coin] are also popular stablecoins pegged with the American dollar. These three stablecoins have a combined market cap of more than $140 billion.
What are stablecoins?
Stablecoins are designed to have a stable value against the pegged currency. Bitcoin is the mainstream crypto asset, which is beneficial. As there is no regulatory institution they are highly vulnerable to price oscillations.
While stablecoin is tied to another stable asset like euros or dollar, so this instability dilemma is eliminated. The coin issuer keeps a reserve against each stablecoin issued, which ensures that the buyer can redeem outstanding coins they bought.
USD Tether vs. USDC vs. BUSD
The significant difference between all these three stablecoins is their blockchains. Blockchain technology is a process that records transactions using unchangeable cryptographic signatures to reduce or eliminate cheating or hacking risk.
With different blockchains, there is some improvement like speed and transaction uses. USD Tether operates on a single blockchain, while the other two have several blockchain alternatives for buyers to use for trading and transferring.
The stability of stablecoins depends on the collateralization of reference assets. The fluctuation in token price is possible but gradually it retains its original value. USD Tether has maintained its stability and reliability at $1. Even USDC and BUSD have managed to stay stable at $1.
Unfortunately, Tether’s claim to have sufficient dollar reserves is a controversial topic. Investors and economists have doubts if the claim is right or not. However, BUSD and USDC are devoid of any controversy.
Stablecoin volume & circulating supply
Stablecoin volume indicates the total trades occurring. Liquidity refers to the number of coins available to trade at the predefined price of $1. An increase in volume will increase liquidity. Therefore, the stablecoin that is high in volume makes it simple for investors to trade.
Till today, USD Tether’s trading volume is 50 billion, while USDC is 5.8 million and BUSD is 5.1 billion. USD Tether is still the leading stablecoin with a total circulating supply of more than 69 billion followed by USDC with 54 billion, and BUSD accounting for 17 billion.
Benefits of stablecoins
- Quick transaction
- 24/7 availability
- Low or negligible transaction fees
- Better stability than Bitcoin or Ethereum or Dogecoins
- Immensely secure due to Blockchain technology
Any kind of stablecoin you prefer to invest in there is a need for the wallet to store, buy and sell coins. ZenGo’s crypto wallet security is different. It is keyless, so no concerns about seed phrases or manual private keys getting lost or stolen. Give it a try!