Key Takeaways:
- USDT, USDC, and BUSD are the big three stablecoins based on market capitalization.
- The similarity between the three stablecoins is the value is pegged 1:1 with US Dollar.
- One of the differences between USDT, USDC, and BUSD is the list of blockchains that supports them.
Tether (USDT), USD Coin (USDC) and Binance USD (BUSD) are some of the stablecoins in the cryptocurrency market. All three stablecoins are backed 1:1 by their respective reserve currencies, giving them value stability. However, there are a few key differences between them. This article will explore the similarities and differences between USDT, USDC and BUSD.
What Are Stablecoins?
Stablecoins are a type of cryptocurrency with a value pegged to another asset, such as fiat currency. There are three types of stablecoins that you can find on the crypto market, namely fiat-backed stablecoins, crypto-backed stablecoins, and algorithmic stablecoins.
Stablecoins have the same performance as other cryptocurrencies. The difference is that stablecoins do not have high volatility. The zero volatility from stablecoins allows digital asset investors to use stablecoins for many things, such as storing value in crypto investment portfolios and sending and receiving money strung without any boundaries from third parties.
Benefits of Stablecoins
The apparent benefit of stablecoins is that they are maintained by blockchain technology and can conduct international transactions in a much shorter time frame and for less cost than fiat currencies. The fast settlement times make stablecoins an excellent, cross-border medium of exchange. They are also easy to use as they operate from wallets similar to other cryptocurrencies.
List of Stablecoins
There are plenty of stablecoins that you can find on the crypto market. Currently, there are more than 100 stablecoins that you can find on the cryptocurrency market, but only the big three stablecoins that you can easily find on any crypto exchange. Here are the big three stablecoins based on market capitalization.
Tether (USDT)
Tether is a fiat-backed stablecoin issued by Tether Ltd. in 2014. This stablecoin has maintained excellent price stability since its launch, with only a few exceptional instances where it fell short. For a long time, the company stated on its website that every USDT had been backed 1:1 by US national currency held in the project's reserves. Thus, 1 USDT was equivalent to 1 USD in Tether's reserves.
USD Coin (USDC)
USD Coin (USDC) is a stablecoins made by Circle. Unlike USDT, USDC is fully collateralized and transparent, meaning they are very open about its ecosystem and reserves. USDC tokens can be redeemed 1:1 for USD through Circle's partnered regulated financial institutions, which must undergo monthly attestations and audits to ensure reserve adequacy. This promotes trust and transparency in the stablecoin's value.
Binance USD (BUSD)
Created by Binance and issued in partnership with Paxos, Binance USD (BUSD) is a stablecoin that is pegged on a 1:1 ratio to the US dollar and launched in September 2019. BUSD has been approved by the New York State Department of Financial Services (NYDFS).
The Difference Between USDT, USDC, and BUSD
Even though these three coins are similar, there are differences that you can find on these three.
One of the significant differences between USST, USDC, and BUSD is their blockchains.
Having different blockchains results in various advantages, such as the speed and utility of transactions. USDC and BUSD run on multiple blockchain options, which helps investors to trade and transfer across those blockchains. While USDT only runs on a single blockchain.
Also, not all blockchains support all these stablecoins. Here is the list of supported blockchains on each stablecoins.
Blockchain Networks that Support USDT
- Algorand
- Avalanche
- Ethereum
- Polygon
- Solana
- Tezos
- Tron
Blockchain Networks that support USDC
- Algorand
- Avalanche
- Ethereum
- Hedera
- Polygon
- Solana
- Stellar
- Tron
Blockchain Networks that support BUSD
- BNB Chain
- Ethereum
USDT vs USDC vs BUSD: Which One is Better?
Although USDT has a higher market capitalization, some traders and investors may not consider USDT the best stablecoin. This lack of trust is the gap in the transparency and auditing of USDT. With all the scandals that happened to USDT, USDC and BUSD have greater transparency than USDT. Moreover, they’re comparable to USDT in the exchange rate and blockchain.
USDT is suitable for investors who prefer investing in a cryptocurrency with a higher volume and liquidity, while USDC and BUSD are preferable if you value transparency.
Conclusion
You might consider putting stablecoins as part of your investment portfolio. USDC, USDT, and BUSD could be the ideal options for investors who want to dabble in the stablecoin market. Always remember to do your own research before making any investing decisions.
