Put a Peg on it

Let’s start with some word definitions to help you along the way.

Fiat – the word given to traditional money that is issued by the government.
Stablecoin – a crypto coin whose market value does not change
Peg – the term given to a crypto asset that is attached to a different asset which normally is not crypto based.

We can basically all agree that the crypto-verse is highly bi-polar (up one day and down the next). You never know if the money you put in today is still going to be there tomorrow. Enter the stablecoin. The stable coins discussed in this post are both pegged to the US Dollar.

USDT, commonly known as Tether, was created in 2014 and is the older of the two coins. At the time of writing Tether has a market capitalization of $101.811B. The value of each Tether is typically $1 (although it can fluctuate 1c or 2c). In the past, USDT received some scrutiny due to Tether’s hesitance to release complete and frequent updates on how the coin is backed. In the past, Tether was also fined for misleading users about its reserves. While they claimed to have ‘100% reserves at all times’, an investigation found that Tether had only 27.6% of its value in reserves. 

USDC, commonly known as USDC was created in 2018 by Circle and Coinbase. It is the smaller of the two coins – having a market capitalization of $29.97B. The value of each USDC is also typically $1. Circle oversees the technical and financial standards for USDC stablecoins and claims a true 1-to-1 backing. Which means, that for every USDC created, $1 of USD and other fiat equivalents is held in reserve. Circle releases monthly audits into their reserves by accounting firm Grant Thornton LLP. They also pledged to only own US dollars and short term treasury bills.

In March 2023 when Silicon Valley Bank failed – the value of USDC became unpegged from the US Dollar and lost about 10 US cents, setting its value at 90c. This in one of the major risks of assets that are pegged to only one asset type.

In summary, the benefits of each coin are:
Tether is more established and has may users, USDC is highly regulated and their audits are frequent and transparent creating a higher level of trust.

Since 2014Since 2018
$101 B Market Cap$29 B Market Cap
Available on 130 ExchangesAvailable on 94 Exchanges
Quarterly Audits
Monthly Audits