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Payments and transfers with stablecoins: Tether and USD Coin

Tether USD Coin Pagos transferencias stablecoins ccoins pilar tanda 10

Cryptocurrencies have revolutionized the world of finance, offering a decentralized, transparent and secure alternative to fiat money. However, they also present some challenges, such as volatility, regulations and mass adoption.

That is why stablecoins emerge; Cryptocurrencies that maintain a stable value linked to another asset, such as the US Dollar, the Euro, gold or a basket of currencies. These digital currencies offer the best of both worlds: The stability of fiat money and The advantages of blockchain technology.

Among the most popular and used stablecoins, Tether (USDT) and USD Coin (USDC) stand out, both with a value equivalent to the US dollar. What are these currencies and how do they work? What benefits and risks do they have for users? What are the differences between them? In this article, we will try to answer these questions and analyze the prospects of these stablecoins for the future.

What is Tether (USDT)?

Tether (USDT) is a stablecoin issued by a Hong Kong-based company called Tether Limited, which backs its issuance through cash, bank deposits, treasury bills, collateralized loans, commercial papers, certificates of deposit, reverse repurchase, corporate bonds, funds and precious metals, among others.

The advantage of Tether is that it is the most liquid currency on the market. Therefore, large volume operations can be carried out without significantly affecting the price. Additionally, Tether is available on several blockchain networks, such as Bitcoin, Ethereum, Tron, EOS and Algorand, making it easy to inter operate and access.

However, as a main disadvantage, Tether Limited is a private company that does not have a regulatory framework or independent audit. This raises doubts about the veracity of its reserves and the transparency of its operations. In fact, Tether has been the subject of several lawsuits and legal controversies, such as the investigation by the New York attorney general for alleged market manipulation and concealment of losses.

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What is USD Coin (USDC)?

USD Coin (USDC) is a stablecoin issued by the companies Circle and Coinbase, registered with the endorsement of the Financial Crimes Enforcement Network (FinCEN) of the United States Department of the Treasury. Additionally, they have a New York Bit License and an endorsement by the Financial Conduct Authority of the United Kingdom.

All units in circulation of this Cryptocurrency are backed by a Dollar that is held in reserve, in a combination of cash and short-term US Treasury bonds, with periodic audits carried out by the firm Grant Thornton. For this reason, the main advantages of USDC are the certainty regarding the reserves that support its issuance and compliance with the regulations of the different organizations.

On the downside, USDC has lower liquidity and availability than Tether, although it is growing rapidly.Additionally, being subject to United States laws, USDC could be affected by potential regulatory changes or sanctions on certain countries or individuals.

What benefits and risks do stablecoins have for users?

Stablecoins, in general, offer a series of benefits for users who want to take the advantages of Cryptocurrencies without giving up the stability of fiat money. 

Some of these benefits are:

  • They allow payments and international transfers to be made quickly, safely and economically, without intermediaries or abusive commissions.
  • They facilitate access to financial services for unbanked people or people with geographic or political limitations.
  • They protect the purchasing power of users against inflation, devaluation or confiscation of their local currencies.
  • They encourage innovation and the development of new products and services based on blockchain technology, such as decentralized finance (DeFi).

However, stablecoins also involve some risks that users should be aware of. 

Some of these are:

  • They depend on the trust and credibility of the entities that issue and support them, which can be compromised by lack of transparency, auditing or regulation.
  • They are exposed to possible computer attacks, fraud or theft that affect the platforms, exchanges or wallets where they are stored or traded.
  • They may suffer fluctuations or deviations from their nominal value due to supply and demand factors, arbitrage or speculation.
  • They may generate legal, tax or regulatory problems for users, depending on the laws and regulations of each country or jurisdiction.

What are the differences between Tether and USD Coin?

Tether and USD Coin are two of the most popular and used stablecoins on the market, but they also have some important differences that users should be aware of. 

Some of these are:

  • Tether has a higher market capitalization, trading volume and liquidity than USD Coin, making it the stablecoin of choice for traders and investors.
  • USD Coin has greater transparency, security and regulation than Tether, giving it greater trust and credibility among users and authorities.
  • Tether is available on more blockchain networks than USD Coin, giving it greater versatility and compatibility with different protocols and applications.
  • USD Coin has greater integration with Coinbase, the largest Cryptocurrency exchange in the United States, which facilitates its use and adoption by users in that country.

Conclusion

Stablecoins are one of the most important and promising innovations in the Crypto ecosystem, as they offer a solution to one of the main problems of Cryptocurrencies: volatility. Among them, Tether and USD Coin stand out for their popularity, usefulness and potential.

However, it is also important that users are informed and aware of the benefits and risks involved in these currencies, as well as the differences and characteristics of each of them. In this way, they will be able to choose the one that best suits their needs and expectations, and make the most of the opportunities offered by blockchain technology.

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They are Cryptocurrencies that maintain a stable value linked to another asset, such as the Dollar, Euro or gold.

They allow payments and international transfers to be made quickly, safely and economically, without intermediaries or abusive commissions.

They depend on the trust and credibility of the entities that issue and support them, and may suffer fluctuations or deviations in their value.

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