US Tether & USD Coin
Breaking down Tether (USDT)
Tether belongs to a new breed of cryptocurrencies called stablecoins that aims to keep cryptocurrency valuations stable, as opposed to the wide swings observed in the prices of other popular cryptocurrencies like Bitcoin and Ethereum. That would allow it to be used as a medium of exchange and a form of store of value, instead of being used as a medium of speculative investment as you can not trade the price fluctuations of a stablecoin, like you can normal crypto.
Tether specifically belongs to the category of fiat collateralized stablecoins, that is — a fiat currency like the US dollar, the euro, or the yen, backs each cryptocoin in circulation.
Tether was specifically designed to build the necessary bridge between fiat currencies and cryptocurrencies and offer stability, transparency, and minimal transaction charges to users. It is pegged against the U.S. dollar and maintains a 1-to-1 ratio with the U.S. dollar in terms of value.
Where to Store your USDT:
USDT is an ERC-20 token issued on the Ethereum blockchain and can be stored in an Ethereum wallet or on your USDT Vertex wallet. Do not forget that on Vertex you can take out insurance cover on your wallet. For more details on this: CLICK HERE.
Breaking down USD Coin (USDC)
USD Coins aren’t just being printed out of thin air. Circle guarantees that every USDC token is backed with a single US dollar, similar to USDT. USD Coin (USDC) is a 1:1 representation of one US dollar on the Ethereum blockchain. It is an ERC-20 token and can be used with most platforms which support the standard. Vertex being one of them.
In general, stablecoins like USDC are used to short cryptocurrencies without cashing out and make it easier to buy cryptocurrencies in the future. To move in and out of USDC is easy. For example, on Vertex you can buy and sell USDC easily in many countries using various payment methods. By using USDC as well as other stablecoins, you will avoid traditional financial instruments and institutions; as well as hyperinflation (for people living in countries like Venezuela). Hyperinflation is a huge problem for some countries and people are moving onto USDC or USDT instead.
USD Coin falls into the fiat-collateralized coins category, and is a centralized stablecoin. In general, all the projects within the same category work in a similar fashion and have only minor differences.
Where to Store your USD Coin:
USDC is an ERC-20 token issued on the Ethereum blockchain and can be stored in an Ethereum wallet or on your USDC Vertex wallet. Do not forget that on Vertex you can take out insurance cover on your wallet. For more details on this: CLICK HERE.
A quick add on:
- Borderless. Stablecoins retain the power of all cryptocurrencies to move without regard to physical borders.
- Transactional speed. Financial transactions on blockchains are objectively faster than traditional processes. Stablecoin transactions do not have to wait on a 3rd party to verify the transfer, which means no one pays fees to any 3rd party either.
- Transparency. Transactions using stablecoins are recorded on a public ledger that can be monitored by anyone, unlike fiat currency.
- Centralization. Unlike some cryptocurrencies, stablecoins are mostly created by centralized organizations that own the currency.
- Requires 3rd party audits. Stablecoins must be audited through 3rd parties that may create conflicts of interest to a decentralized, trustless, or pseudonymous experience.
- No growth. Stablecoins do not provide the potential for high ROIs to investors like unpegged cryptocurrencies.
The total stablecoin supply in the third quarter nearly doubled from the second quarter, and the total market capitalization of stablecoins has also breached $20 billion at press time, according to data from CoinGecko. That’s still relatively smaller than what’s found in traditional finance.
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