Stablecoins make up more than 50% of the global crypto trading volume. It’s no surprise, as they give you a way to transact without the fear of volatility. In the crypto world, they’ve become the go-to method for fast cross-border payments, DeFi operations, and stable trading pairs. 

USDT and USDC are the two most popular stablecoins on the market. Both are used as ‘digital dollars’ as 1 coin is worth $1. 

So that begs the question - which is better? USDT or USDC?

What are stablecoins?

Stablecoins are cryptocurrencies designed to maintain a stable price and bridge the gap between traditional fiat currency and cryptocurrency. A stablecoin's value is tied or ‘pegged’ to another currency, which is often the U.S. dollar. USDC and USDT are both stablecoins pegged 1:1 to the U.S. dollar. This means that 1 USDT or 1 USDC should always be worth $1.

Cryptocurrency is volatile. For some coins, including Bitcoin, it’s not uncommon for prices to spike or fall more than 10% in a matter of days. This volatility creates problems, particularly for everyday financial transactions and investors who pursue price stability. Stablecoins fix this problem as a stable store of value and medium of exchange. They’re heavily relied upon for efficient cross-border payments, DeFi lending, and risk-off environments for trading.  

The benefits of no volatility, low transaction costs, safe storage, and real-time payments give stablecoins a competitive use case compared to normal cryptocurrencies. 

That’s the long and short of stablecoins. Next, let’s answer the question, ‘What are USDC and USDT?’

USDT vs USDC

USDT and USDC are the two most dominant stablecoins in the crypto industry. On first inspection, it’s hard to see much of a difference between them - it’s easy to get them mixed up if you’re just starting to investigate the best stablecoins. 

Both are top 10 cryptocurrencies by market cap. USDC regularly boasts a total market cap exceeding $30 billion. While USDT’s popularity gives it a market cap well over $100 billion, a figure only superseded by Bitcoin and Ethereum. 

USDT’s first-mover advantage gave it complete dominance from 2014 to 2019 when it held a 100% share of the world’s stablecoin supply. In recent years, USDC has taken a substantial chunk of this market, dipping USDT’s share to less than 50% before recovering to hold 70% market share in 2024. 

Over its first decade, USDT has proven itself as the market leader, continually riding out industry storms and delivering liquidity across most top exchanges. But it now faces stiff competition from USDC, which embraces U.S. securities regulation and provably audits to give users transparency and peace of mind. 

In a nutshell:

• USDT is battle-tested and widely adopted

• USDC is transparent and more compliant

If you’re not sure which to choose, let’s put USDC vs Tether further under the microscope.

USDC overview

USDC was launched in 2018 by the Circle consortium, a collaborative organization from Circle and Coinbase that continues to manage the stablecoin. At the time, “USDC” was an abbreviation for “USD Coin” but that name has since been phased out and “USDC” is now the official name.

Circle is the company managing and maintaining USDC’s 1:1 peg to the US Dollar. It ensures this by backing every USDC coin with fiat U.S. Dollars in a reserve fund.

This means if you buy 1 USDC using $1, a real dollar is deposited and stored, and you keep 1 USDC. If you then sell 1 USDC for $1, the USDC is burned.

Transparency is a unique characteristic of USDT. The Circle Reserve Fund is registered with the SEC where it issues reports of reserved assets. Adding to this, holdings are fully disclosed every week. Adding to this, Circle uses a Big Four accounting firm, Deloitte, as its auditor to further confirm proof of reserves. It always aims to be the most regulated and transparent stablecoin. 

This consumer confidence, coupled with support across most major exchanges and 15 blockchains, is making USDC a hugely successful project. USDC is supported across:

• Ethereum

• Solana

• Polygon

• Polkadot

• Algorand

• Arbitrum

• Avalanche

• Base

• Celo

• Hedera

• Near

• Noble

• OP Mainnet

• Stellar

• ZKsync

USDT overview

Launched on October 6th, 2014, USDT was originally called Realcoin by the founders Reeve Collins, Craig Sellers, and Brock Pierce before changing the name to Tether (USDT) a month later.  

Bitfinex was the first major exchange to add USDT to its platform in 2015, signaling the start of the stablecoin’s rapidly swelling support. Between January 2017 and September 2018, the total supply of USDT grew from $10 million to nearly $2.8 billion.

Just like USDC, USDT is pegged to 1:1 to the U.S. Dollar and works across multiple blockchains including:

• Omni Protocol

• Ethereum

• Avalanche 

• Cosmos

• Celo

• Tron Blockchain

• EOS Blockchain

• Liquid

• Algorand

• Solana

• Polkadot

• Kusama

• Tezos

• Ton 

USDT’s growth has not gone unnoticed by authorities, particularly the New York Attorney General, who issued a lawsuit against managing company Tether in 2019. They were accused of covering up a reserve fund deficit of $850 million and paid a $18.5 million penalty. 

USDT has the first-mover advantage in the stablecoin world and has built up its legitimacy for stable performance during its first decade of operation. Huge liquidity across most exchanges makes it a hugely popular trading pair to enter and exit trading positions. Plus DeFi protocols and trading providers heavily rely on USDT for financial transactions. 

However, USDT faces questions and allegations about being fully backed and holding enough reserve assets. Tether has delayed independent audits in recent years, leading to a lack of transparency in its operations. Despite this, the leading stablecoin continues to maintain its dollar peg in an impressive display of stability.

How to choose between USDT and USDC

USDT and USDC seem pretty similar - both fast, cheap, stablecoins pegged 1:1 to the U.S. Dollar… So, how do you choose which one to use?

The USDC/USDT difference often comes down to the platform you’re using to transact. This could be where you trade, cash out, lend, buy NFTs, or store funds. 

For example, if you’re in the US the dominant crypto exchange is Coinbase. As a fully regulated and compliant crypto business, Coinbase heavily favors USDC in its UX. That means it offers more trading pairs and ways to cash out your crypto through USDC.

Alternatively, Binance has a wider international user base and favors USDT within the platform. This makes it easier to deposit, trade, and cash out with USDT on Binance. 

Both have wide blockchain support, although you should check which is supported on the chain you’re using as they differ in support. Plus some blockchains have a greater weighting and functionality towards one coin or the other. For example, they both have Solana functionality, but the Solana ecosystem is more USDC-orientated.

Before you start sending and receiving either stablecoin, be sure to double-check that you’re using the correct network and coin. Mistakes could result in the loss of your funds!

In your choice of USDC vs Tether, you should balance your level of risk. Quite often USDC users prefer the comfort of regulation and transparency, while USDT users like the flexibility and liquidity across the crypto landscape. 

How to use USDT or USDC

Using USDT and USDC is the same as using any other cryptocurrency - you can either use a custodial exchange account or have your own wallet.

Using an exchange

With an exchange like Coinbase or Binance, you can deposit funds. Deposit methods offer fiat transactions like credit cards and bank transfers. Or, if you already own cryptocurrency, you can deposit directly into your account.

Once your account is funded, you can buy, sell, and trade crypto. For example, you could deposit U.S. Dollars to buy USDC on Coinbase. Then, store your USDC in your exchange account.

Crypto wallets

Crypto wallets give you more control over your funds and investments. You store your crypto on a software wallet on your computer or phone. Or you can use a hardware wallet, similar to an external hard drive, to store funds offline when not in use. Using a crypto wallet means no third parties, businesses, or governments can freeze or access your funds without your permission. 

Most people buy their USDT or USDC on an exchange and send them to a crypto wallet for use and storage. 

If you already own other cryptos like Bitcoin or other altcoins, you can use a decentralized exchange (DEX) to acquire USDT or USDC. A DEX enables you to trade directly from your wallet without the need to transfer funds to a centralized exchange. 

For example, Uniswap allows you to connect your wallet and swap coins in seconds. No signup, account validation, or hoops to jump through. 

This is the beauty of decentralized finance DeFi platforms. You could even start lending and borrowing using USDT and USDC on DeFi protocols!

How to cash out USDC or USDT

Stablecoins are a valuable segment of the crypto universe. It’s handy to have assets that mimic the value of the U.S. Dollar. But there’s one small problem, you can’t walk around spending USDT or USDC in everyday life. 

So if you want to spend your funds, you’ll need to ‘cash out’ using what’s known as an on/off ramp. A place where you can switch your crypto for fiat money.

It’s easiest to do this via a crypto exchange. There are many options supporting both major stablecoins. Start by researching the best ones for your geographical location and currency requirements. Fintech/crypto hybrid banks, like Revolut and Crypto.com, are also popular for switching currencies between accounts in seconds but it can be an expensive exchange rate.

Acctual is quickly growing in popularity to cash out USDT and USDC. You just need to create an account and use the ‘automatic cash out’ feature. Freelancers and businesses that invoice in stablecoins are using this option today to simplify their accounts receivable processes. Acctual generates a wallet address that’s tied to the stablecoin invoicer’s bank account of choice, and when that invoice is paid, the funds flow directly into the connect bank account without the need for any additional transactions.

USDT and USDC also have official ways to cash out your stablecoin for U.S. Dollars - they require significant holdings and are not suitable for everyday consumers with small funds. Here are the requirements for USDC redemption and USDT redemption.

Stablecoin risks

Before you start using either USDT or USDC, you should be aware of the risks associated with stablecoins.

To start with, both of these are centralized stablecoins. While you can still send and receive them in a decentralized peer-to-peer fashion, the coins and networks are still managed by centralized organizations. This opens up the risk of funds being frozen or governmental interference with managing institutions like Circle or Tether. Although the risk is low, it usually happens only in extreme scenarios like exchange hacks. 

Right now both coins are stable and maintain their peg against the U.S. Dollar but rely on trusting companies managing the stablecoin. It has to be said that these are two long-standing and trusted stablecoins in the industry. But it’s still worth researching depegging risks if you’re investing large amounts.

Get paid in USDC or USDT with Acctual

Taking payment in crypto can feel risky, especially when you factor in the volatility between the invoice generation and final payment. How much will you actually receive? 

USDT and USDC solve this problem, especially when combined with Acctual invoicing. 

You can create an invoice in seconds, send it via a PDF or link and get paid straight into your crypto wallet.

Here’s the cool part:

Your client can choose to pay however they like… in fiat currency, stablecoins, or other crypto. And you get paid instantly into your USDT or USDC wallet. 

For example, your client can pay in U.S. Dollars, and you can receive USDT. All automatically. 

Plus, Acctual is a Circle Alliance partner. This collaborative global network is working to increase access to digital dollars and improve cross-border payments. We’re committed to making it easier for people around the world to pay and get paid with USDC or USDT.

Try out the free crypto invoice generator from Acctual to see how you can automatically invoice, track, and get paid in stablecoins. As of October 2024, we’ve processed $17M in USDC invoices with users across 100+ countries. Get started today and simplify your crypto accounting with Acctual!