A stablecoin is a cryptocurrency whose value is pegged to a stable asset, mainly fiat currencies. Tether (USDT), USD Coin (USDC), and Binance USD (BUSD) are three of the most popular stablecoins by combined market cap. Stablecoins allow for faster, lower-cost, and secure transactions without the restrictions associated with traditional banking, such as location-based restrictions and lack of financial services during the holidays.
The global blockchain market is projected to grow to $23.3 billion by 2023, proving the popularity of cryptocurrencies around the world.
Stablecoins are considered to be a type of cryptocurrency that institutional investors consider more reliable and less volatile than Ethereum and Bitcoin. In the eyes of the wolves of Wall Street, this argument demonstrates greater potential for safe investment.
But which stablecoin is worth trading? How does a stablecoin compare to fiat currencies? Below you will learn all about the differences between stablecoins and how they are similar to each other.
What is a stablecoin?
A stablecoin is a cryptocurrency backed by fiat currency whose value is linked to another asset class, such as gold or fiat currency, to maintain a stable price.
According to Harvard Business Review, “true stablecoins are interest-free coins designed to have a stable value relative to a base currency, say $1.”
While major crypto assets like Bitcoin are useful because you don't have to trust an intermediary institution, they are very sensitive to price fluctuations.
Stablecoins address this disadvantage by tying the value of a currency to another stable asset, mainly fiat currencies such as dollars or euros.
Second, the coin issuer holds a “reserve” of assets that guarantee buyers that the issuer can repurchase the coins in circulation.
The first stablecoin was created in 2014 and was called Tether. Most other stablecoins are modeled after Tether, with users receiving one token for every dollar.
In theory, users can get back their original currency—dollars—at a one-to-one exchange rate. Initially, people used stablecoins to buy regular cryptocurrencies such as Bitcoin, since many exchanges did not have access to banking services.
Thus, stablecoins were a more reliable option since they are available 24/7 worldwide and do not require the use of traditional banking channels. In addition, money transfer is carried out in a matter of seconds.
FAQ
What is USDT on the exchange?
A cryptocurrency asset issued on the Bitcoin blockchain using the Omni Layer protocol. Each USDT block is backed by US dollars, the entire amount of which is held by Tether Limited. USDT is issued when the dollar equivalent is deposited into a company's account. When the money is withdrawn, the tokens are redeemed.
What kind of currency is USDT?
Stablecoin of Tether Limited. It can be transferred, stored and spent like any cryptocurrency. Users can store their savings in Omni Layer-enabled wallets: Ambisafe, Holy Transaction or Omni Wallet.
How to transfer USDT?
To transfer Tether (USDT), you need to open a wallet on a crypto exchange, copy its address and indicate it on the exchange from which the funds will be transferred. Then you need to confirm the operation via email and two-factor authentication.
What is driving the growth of stablecoins?
The use of smart contracts leads to the emergence of a stablecoin. Unlike many other currencies, smart contract code helps clarify contract agreements to facilitate transfers, lending, and disbursement of money with limited human intervention.
However, the main factor contributing to the popularity of stablecoins is their almost negligible volatility compared to regular cryptocurrencies. Additionally, industry partnerships are also driving the growth of stablecoins.
For example, in a recent corporate move, Visa partnered with Circle, the blockchain maestro behind USDC. Through this partnership, Circle Corporate Cardholders can spend their USDC stablecoins at merchants that accept Visa.
Moreover, the US Treasury Office of the Comptroller of the Currency has issued guidelines for banks on the use of stablecoins such as USDC payments and public blockchains for banking activities.
Thus, federal savings associations and banking channels can now use blockchain for coins such as USDC, just like SWIFT or ACH transfers.
The future looks bright for stablecoin holders as the currency could offer a widespread payment method that could cut down on data processing and international transfer costs. Moreover, banks can also use stablecoins to minimize the threat of digital challenges.
It's also likely that digital wallets like Cash App and Venmo, which have recently allowed cryptocurrency purchases, could use stablecoins in the future to make peer-to-peer payments easier.
USDC 2.0
USDC is in constant development and improvement. In August 2022, the Center Consortium announced the release of USDC version 2.0.
The second version of USD Coin contains important protocol and smart contract updates.
The update aims to improve USDC's capabilities for payments, trading and peer-to-peer transactions.
USDC 2.0 introduces “gasless” sendings, allowing wallet and app developers to find a workaround for gas fees and the need for customers to hold balances in ETH. Gas payments are transferred to another address.
This creates a whole new market, allowing wallet developers to provide gas payment options. Customers will be able to send and receive USDC payments peer-to-peer using only USDC, with fees denominated and paid in USDC instead of ETH.
Understanding USDT, USDC and BUSD
While there are dozens of different stablecoins, the three most common are USDT, USDC, and BUSD.
What is USDT?
USDT (Tether) is a stablecoin pegged to the US dollar at a 1:1 exchange rate. Thus, one US dollar is equal to one US dollar. Buyers can spend, transfer, or trade USDT as if they were using their regular fiat currency.
USDT was originally created to solve the following problems:
- Simplify transfers in national currency
- Offer a more stable version of the volatile Bitcoin
- Provide users with a verification method
Tether is in the spotlight as the third largest cryptocurrency in the world. While there is some controversy surrounding Tether's stability at $1, there are still many reasons to prefer the coin over regular currency, as discussed below.
What is USDC?
USDC is another stablecoin whose price is pegged to the US dollar. It was created to speed up funds transfer times and reduce the volatility associated with Bitcoin and other cryptocurrencies.
As an Ethereum token, USDC can be stored in a blockchain-compatible wallet. In addition to facilitating transfers, USDC also allows users to earn higher returns when lending their stablecoins through various decentralized finance applications.
The popularity of the USD coin has grown significantly over the past few years, with an average of $2 billion per day being sent through the Ethereum network as of March 2022.
What is BUSD?
Binance and Paxos founded BUSD to provide transactions with three important qualities: speed, flexibility and accessibility.
Simply put, Binance USD is a regulated fiat-backed stablecoin with the same value as the US dollar. For every dollar you buy, Binance has one dollar in reserve. As the price of the dollar fluctuates, the value of the stablecoin also rises or falls.
BUSD holders can exchange their stablecoins for US dollars and vice versa. Moreover, Binance USD exists on three blockchains: Binance Smart Chain, Ethereum and Binance Chain.
Hence, BUSD holders can exchange stablecoins between these blockchains according to their requirements.
Circle + Coinbase = Center Consortium
USD Coin was launched in September 2022 by the Center consortium, a collaboration between Circle and Coinbase.
USDC is one of the fastest growing stablecoins, pegged 1:1 to the US dollar.
Note that Circle, the company that developed the stablecoin, has the amount of money in circulation necessary to support USDC.
As mentioned earlier, the Center consortium is a collaboration between Circle and Coinbase. It is also a stablecoin governance consortium and open source framework with multiple issuers and a governance consortium. In other words, Center is a framework that allows USDC to be issued and communicated with other platforms.
Circle is a founding member and creator of Center's core technology and intellectual property.
The company is backed by leading venture capital and strategic investors, including IDG Capital, Breyer Capital, General Catalyst Partners, Goldman Sachs, CICC Alpha, Baidu, WanXiang, CreditEase and EverBright Bank. Thanks to its capabilities, Circle made significant contributions to the creation of USDC.
In creating the new stablecoin we know today as USDC, Coinbase contributed a lot of design and understanding, making it easier to launch and market to the crypto audience.
USDC vs USDT vs BUSD: Differences
This table compares the differences between the three stablecoins that account for the majority of the stablecoin market.
Blockchains
One of the significant differences between these stablecoins is their blockchains. Blockchain is a system that records transactions in a way that uses an immutable cryptographic signature to eliminate or minimize the risk of hacking or deception of the system.
Having different blockchains provides many benefits such as transaction speed and utility. While USDT only runs on one blockchain, USDC and BUSD have multiple blockchain options, allowing buyers to trade and transfer between them.
Stability
Although stablecoins achieve their price stability by enabling the buying and selling of a reference asset, they can deviate slightly from the price of their token and then gradually return to the original value. The stability of USDT is quite reliable as the stablecoin has managed to stay at $1.
Similarly, Binance USD and USDC are also stable at $1.
However, controversy has arisen over Tether's claim that it has enough dollar reserves, while economists and investors suspect it does not.
Eric Rosengren, president and CEO of the Federal Reserve Bank of Boston, worries that “a future crisis could easily be created as these [stablecoins] become a more important sector of the financial market unless we start regulating them and making sure that much more stable than what is sold to the general public as a stablecoin.”
But compared to USDT, USDC and BUSD are stable and free from controversy.
Stablecoin supply and volume
Stablecoin volume refers to the total number of trades taking place, while “liquidity” refers to the number of coins available for trading at a set price, which in this case is $1. As volume increases, liquidity usually increases.
A high volume stablecoin allows investors to trade their coins.
https://embed.theblockcrypto.com/data/decentralized-finance/stablecoins/total-stablecoin-supply-daily/embed As of August 30, 2022, USDT has $75 billion in trading volume, higher than the other two currencies The USDC market size is 2.7 billion, and the Binance USD stablecoin market size is 5.8 billion. The total supply of stablecoins is around 116 billion, among which USDT remains the largest stablecoin by market capitalization with total circulation. While USDC has USD 27.37 billion in circulation, BUSD has a supply of USD 12.25 billion.
How to use Tether.to
Official website: https://tether.to
- Registration on the resource is standard. You must confirm your email address and enable two-factor authentication.
- To withdraw or deposit dollars, you need to undergo authentication: identification documents must be in English.
However, few people use the main site. An easy way to withdraw USDT is to exchange it on the exchange for a currency whose withdrawal is quite simple, like Bitcoin and Ethereum.
Advantages of USDT, USDC and BUSD
Despite the differences, stablecoins have the following advantages:
- Fast transactions . Fiat currency deposits can take one to four business days to appear in your bank account. In today's fast-paced world, this is relatively slow. Meanwhile, stablecoin transactions happen instantly.
- Availability : Regular banking channels are not available on weekends and holidays. But the exchange of stablecoins is possible 24/7 - anywhere in the world.
- Transaction fees : Regular transactions incur high fees, especially for international money transfers. In contrast, stablecoins offer a low or no cost transaction method.
- Stability : Unlike other cryptocurrencies such as Bitcoin or Dogecoin. prices of stablecoins remain stable at the level of the assets to which they are pegged. For example, if a stablecoin is pegged to the euro, its price will remain the same as the fiat currency.
- Transparency : Most stablecoins are quite transparent, allowing users to see that issuers have enough assets in reserve to pay them off. For example, Binance Coin is audited monthly by Withum, a renowned accounting firm.
- Security : Blockchain technology makes transactions extremely secure, which is why many users consider stablecoins to be more secure than traditional banking channels, which are susceptible to hacking and malicious attacks.
USDT rate: how much will stablecoin cost in 2022
The USDT stablecoin rate at the time of writing was 1 USD, according to Coincost. Over the past seven days, the stablecoin rate has increased by 0.35%, and over the past 24 hours - by 0.44%. The trading volume of USDT on exchanges reached USD 114,165,000,000 per day (24 hours).
The price of Tether is not usually $1, as it is an arbitrary instrument. To exchange USDT for a dollar, ruble or other national currency, you must pay transaction costs. Above $1 per token, Tether typically trades when investors buy stablecoins to preserve their funds during the cryptocurrency's decline.
As demand for stablecoins increases, their price usually increases. According to Digitalcoin, the price of USDT in 2022 could reach a high of $1.69 in September before falling to $1.54 in December.
Tether (USDT) Price Predictions for 2022
The share of token trading on the crypto market increased from 5 to 70% within three years - from 2022 to 2022. Investors remain confident in USDT, which gives rise to favorable forecasts regarding the value of the asset in the future. The Block analyst Larry Chermak believes that the dominance of the stablecoin will continue in the future, and only regulatory intervention can influence the situation.
Using stablecoins
Stablecoins such as USDC can be used for multiple purposes, such as storing value, accessing market returns provided by the blockchain, and payments. Here are some profitable uses for stablecoins.
Crypto pair trading
Typically in cryptocurrency, “trending pairs” refer to assets that users can exchange with each other through an exchange.
These pairs allow buyers to compare the value of different digital assets. For example, the BTC/USDT crypto pair will tell you how much USDT is equal to one BTC.
If you have stablecoins such as USDC and others and want to trade them, you can check the availability of the pair on the exchange. For example, if you have USDC, you can trade the pair on an exchange such as BUSD.
DeFi Protocols for Lending
DeFi refers to an ecosystem consisting of blockchain-based financial applications that operate without a central administration or third party.
Since it uses a peer-to-peer model, anyone can connect regardless of their location.
With DeFi lending, you can lend your stablecoins to a borrower and earn interest. This benefits both borrowers and lenders as users can obtain loans at much lower rates than if they used decentralized exchanges. Meanwhile, long-term investors can earn interest rates on the coins they lend out.
USDT wallet: how to create?
The easiest way to create a Tether wallet is through the Tether.to platform. After registering and creating an account, the user is automatically provided with a crypto wallet address. With its help you can receive and spend stablecoins.
Binance USDT: how to trade on a crypto exchange
To start trading futures on Binance, you need to transfer USDT from the exchange wallet to the futures wallet:
- Login to the Binance Futures trading page and click “Transfer”.
- Enter the USDT amount to transfer and click “Confirm Transfer”.
- Check your available balance in the Available Balance section.
- To transfer funds to a futures account, select the “Exchange” option. Then enter the required amount and confirm the transfer.
USDT ERC20: what is it?
The Tether ERC20 cryptocurrency is a separate crypto asset created on the official Ethereum protocol. ERC stands for Ethereum Request for Comments, and the number 20 represents the identification number of the proposal to improve the blockchain. The Tether ERC20 token, in fact, is not a separate cryptocurrency, but is based on the Ethereum blockchain. You can buy and sell it on exchanges.
Which stablecoin should you choose?
Although USDT has a higher market capitalization and volume, most economists, interestingly, may not consider it the best stablecoin. The reason for the lack of trust lies in the lack of transparency and auditing of USDT.
USDC and BUSD have more transparency than USDT. Moreover, they are comparable to USDT in terms of exchange rate and blockchain. Thus, USDT is a better choice for people who prefer to invest in cryptocurrencies with higher volume and liquidity, while USDC and BUSD are preferable if you value transparency.
Binance USDT: how to buy stablecoin Tether on the exchange
Let's look at what the USDT cryptocurrency is on the Binance crypto exchange and how you can buy it there.
USDT (Tether) cryptocurrency on the Binance exchange
Binance offers the following ways to purchase USDT:
- from a Visa or MasterCard bank card;
- directly from the owner (P2P);
- through payment systems such as Simplex and Banxa.
Buy USDT: step-by-step instructions
To buy or sell USDT stablecoins on the Binance exchange, you need to follow these steps:
- Create an account on the exchange.
- Choose one of the purchase methods suggested above.
- Top up your account with fiat or digital money.
- Find USDT in your wallet and select the “Trade” option.
- To access the trading terminal, select the appropriate purchase option.
- Create an order to buy or sell cryptocurrency.
Stablecoin exchange is directly supported on the following p2p platforms: Binance P2P, Bitpapa, Paxful and others.
Fifty dollar bill and up
Fifty dollars in paper is one of the largest banknotes in existence. On one side of the bill, the next President Wilos Grant is depicted, and on the reverse - the Capitol, located in Washington. The $100 bill is the largest denomination issued in America today. It was first produced back in 1862, although images of Benjamin Franklin and Independence Hall were placed on the banknote only fifty years later.
In addition to the above bills, five hundred dollar, thousand dollar, five thousand and ten thousand dollar bills were previously issued. They were taken out of circulation in the late 60s of the last century and entered into the historical chronicle of the past life of the USD. This means that their value now far exceeds their face value. Many numismatists are chasing such banknotes and passionately want to add them to their collection. By the way, there was also a bill of one hundred thousand dollars, however, it was used exclusively for the internal affairs of the Treasury.
Currency movement in the US
In the United States, USD is the only legal and official currency accepted in all government agencies as a payment document. Among the foreign currencies in some border areas with Canada, the Canadian dollar can be accepted, but no more. Throughout the country, any payment in foreign currency is prohibited.
Plus, it’s worth knowing that, for example, parking boxes do not accept one-cent coins, and many machines do not even accept one-dollar coins. But all hundred-dollar and two-hundred-dollar bills are checked with special care. The latter is generally considered not very happy among the local population.
Five and ten dollar bills
The banknote featuring the famous Abraham Lincoln and his memorial is a USD dollar with the number five. By the way, it is very popular in circulation. No less interesting is the ten-dollar bill, which is decorated with a portrait of Alexander Hamilton, who was never President of the States, just like Benjamin Franklin, however. There was a time when the image of the twenty-fifth President McKinley was put on the $10 bill, but today Hamilton accompanies the reverse side of these bills
Why is USD Coin cryptocurrency better than the dollar?
Despite the fact that Center cooperates with banks, the main advantage of the USD Coin cryptocurrency over the dollar is its autonomy. By using this stablecoin, a person does not depend on the conditions imposed by financial institutions.
However, a fiat currency transaction through a bank can take several days. USDC does not have such a problem: transactions take place without delays. Online fees are also significantly lower than with a bank transfer.
The main difference between the USDC stablecoin and fiat coin is that when buying a dollar, a person is forced to sell it at a lower rate. In the case of this stablecoin, buying one coin, the user will give exactly one dollar.
Also watch a video review of the USD Coin cryptocurrency:
USD Coin Cryptocurrency Review
Rate and capitalization
USDC tokens are issued by issuers, and capitalization increases when US dollars are deposited into the Center system reserve. To do this, you must have licenses from financial organizations, pass the Anti-Money Laundering (AML) check and meet the standards of the Financial Action Task Force (FATF).
Next, to become an issuer of the USD Coin cryptocurrency, you need to create a one-to-one reserve with the issued coins (1 USDC = $1) and provide an audited report on its availability every month.
According to CoinMarketCap, USD Coin ranks 31st. The number of USDC tokens issued to the market is 362,185,161, with a capitalization of $361,107,926. The daily trading volume is $94,596,108.
USDC rate for all time
// Source: Coinmarketcap
During its existence, that is, from October 2022 to May 2022, the USD Coin cryptocurrency rate fluctuated on average from $0.97 to $1.05. The maximum figure a few days after the launch reached $1.11.
For example, Tether has high volatility. For all time, USDT had a maximum of $1.21 and at the same time a minimum of $0.84.
One and two dollar bills
Now let's look at the USD banknotes individually. What is the image on the one dollar bill? One dollar features a portrait of George Washington, after whom the capital of the United States is named, and on the other side there is a large-size US seal. For the first time, one dollar in paper was issued in 1862, only at that time it depicted the head of the American Treasury, Salmon Chase. They changed it to Washington seven years later.
The $2 bill is considered a very rare item and a great gift for a numismatist. For example, as recently as 2009, about two and a half billion two-dollar bills were printed, but today only forty-four million are issued. There was even a rumor among the population that two dollar bills had been completely taken out of circulation. In fact, there was such a moment in history: from 1966 to 1976, two dollars were not issued in the form of paper bills. Now, according to reviews, the USD two dollar denomination is a good catch among collectors. The bill features a portrait of Thomas Jefferson on one side and the Declaration of Independence on the other.
