The US dollar is the dominant global currency, and many people and businesses around the world use it for trade and commerce. Also, they are a secure investment option because they are based on blockchain technology which creates immutable records of transactions and protects user funds against theft or loss due to unforeseen circumstances. Due to their decentralized nature, these crypto assets can be transferred around the world quickly and with minimal fees since they do not go through traditional intermediaries like banks. On the other hand, stablecoins provide numerous advantages compared to fiat currencies. USDT and USDC stablecoins enable everyone to interact inexpensively and swiftly while also earning interest on decentralized finance protocols.
They can be used for international money transfers, micropayments, and remittances. Stablecoins can be used as a store of value, a medium of exchange, or a unit of account. The advantages of stablecoins include stable value, transparency, and efficiency. If the stablecoin is pegged to the US dollar, then it is referred to as a USD stablecoin.
The amount of fiat currency held in reserve should be equal to the number of stablecoins in circulation so that the stablecoin is fully collateralized. They are backed by a reserve of fiat currency held in a bank account. What is the difference between USD and USDT?įiat-backed stablecoins are the most common type of stablecoins.What is the difference between USDT and USDC?.USD Coin vs Tether: What are the Key Differences?.This meant that any USDC sent to Binance was effectively sucked away into BUSD’s market cap, which had a noticeable impact on each coin’s market dominance. Binance CEO Changpeng Zhao has confirmed that his exchange will have to pivot away from its use of BUSD when consolidating stablecoin liquidity, possibly making room for USDC to flourish again.īack in September, Binance began converting most major stablecoins including USDC (but not USDT) into BUSD when deposited to the exchange. USDC, however, may still gain from BUSD’s demise in the long run. Unlike Paxos and Circle – issuer of the second largest stablecoin, USDC – Tether is owned by the Hong Kong-based company, iFinex.ĭata from DeFiLlama shows that Tether’s latest gains bring its stablecoin market dominance to 50.77%, with the entire market worth $136.93 billion. Investors often trade against such tokens on CeFi and DeFi exchanges when buying other more volatile cryptos, making them a backbone of the crypto economy.īUSD’s losses may show that those seeking stablecoin liquidity are fleeing to the longtime king, Tether, to escape future regulatory crackdowns in the US. Each is backed by multi-billion dollar reserves mostly comprised of cash and US T-bills, but come with the programmability and transferability of a crypto asset. Stablecoins like BUSD and USDT are cryptocurrencies that are value pegged to the US dollar. Paxos, the company behind the token, confirmed that it would stop minting new units of the stablecoin beginning next week, following orders from the New York Department of Financial Services (NYDFS). Meanwhile, the Paxos-issued BUSD has experienced a nearly equivalent decline from $16.14 billion on Monday to $15.46 billion on Tuesday.
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