As the world of cryptocurrency continues to evolve, so do the types of available assets. One asset class that has seen much growth in recent years is stablecoins.
Digital assets called “stablecoins” are intended to keep their value steady throughout time. Stablecoins are typically pegged to another asset, such as the US dollar, and can be used to store value or make payments.
There are various types of stablecoins available, each with its advantages and disadvantages. This article will explain all the details regarding three of the most popular stablecoins: USDT, USDC, and BUSD.
Are Stablecoins That Stable?
When it comes to stablecoins, there are a few options out there for investors. Of course, USDT, USDC, and BUSD are all popular choices, but what are they? And more importantly, how stable are they?
USDT is a type of stablecoin that is pegged to the US dollar. 1 USDT is always worth $1. The advantage of USDT is that it is relatively easy to convert back into cash. However, the downside is that USDT is not backed by any asset or government, which means it could be subject to volatility
USDC is another type of stablecoin that is also pegged to the US dollar. However, USDC is fully backed by reserve assets, meaning each USDC can always be redeemed for $1. The advantage of USDC over USDT is that it is more secure and less volatile.
BUSD is a type of stablecoin that is backed by both the US dollar and the Ethereum blockchain. 1 BUSD is worth $1 and can be used to trade on the Ethereum blockchain. The advantage of BUSD over other stablecoins is that it combines the stability of the US dollar with the flexibility of Ethereum.
A Price War Between USDT, USDC, & BUSD: Who Will Win?
A price war is brewing between the three stablecoins. USDT is the market leader, but USDC and BUSD are gaining ground. The three companies are all vying for market share, and the competition is heating up.
USDT is the largest stablecoin by market capitalization, but USDC and BUSD are both snowballing. USDC is the second-largest stablecoin by market cap, and BUSD is the third-largest. The three companies are all fighting for market share and fierce competition.
USDT has a dominant market position, but USDC and BUSD are making inroads. As a result, all three ecosystems are vying for market share, heating the competition. However, currently, USDT is the market leader while the other two stablecoins continue gaining ground.
As of September 2020, the market capitalization of USDT, USDC, and BUSD were $15.4 billion, $5.5 billion, and $1.4 billion, respectively. USDT is the largest stablecoin by market capitalization and is pegged to the US dollar. Recently, the capital market prices of USDT, USDC, and BUSD have raised $68 billion, $45 billion, and $ 21.63B, respectively.
USDT Vs. USDC: What Will Prevail In The Long Run?
It is no secret that the cryptocurrency world is highly competitive, with various digital assets vying for the top spot. In recent years, USDT has been the dominant stablecoin, but a new challenger is on the scene: USDC. So, will USDC overtake USDT?
There are a few factors to consider when trying to answer this question. Firstly, USDC is backed by real USD, but USDT is backed by various assets, including USD and other cryptocurrencies. This gives USDC a more stable backing, making it more appealing to investors and users.
Secondly, USDC is developed by two major companies in the cryptocurrency space, Circle and Coinbase, which gives it a lot of credibility. USDT, on the other hand, is developed by a single company, Tether.
Lastly, USDC is available on several major exchanges, including Coinbase and Binance, whereas USDT is only available on a handful of exchanges. As it is available on many exchanges, it’s easier for users to access and trade USDC, which could lead to more adoption. So, considering all of these factors, it is possible that USDC could overtake USDT as the leading stablecoin. However, only time will tell for sure.
Will BUSD Be The Star Performer?
BUSD is the second-largest stablecoin by market capitalization and the fourth-most traded cryptocurrency on significant exchanges. BUSD was launched in September 2019 and is currently available on Binance, Huobi Global, OKEx, Upbit, and Digifinex.
According to CoinGecko, as of October 10, 2022, BUSD has a market capitalization of $19.5 billion and a 24-hour trading volume of $15.9 billion. In addition, BUSD is currently the fourth most traded cryptocurrency on significant exchanges after BTC, ETH, and USDT.
BUSD is pegged to the US dollar at a 1:1 ratio, and its reserves are audited monthly by Ernst & Young LLP. Unlike other stablecoins backed by fiat currency or crypto assets, Binance USD is backed by cash and cash equivalents, including short-term government bonds.
As of October 2022, the one-month US Treasury bills yield was 3.53%. Therefore, if BUSD’s reserves are invested in one-month US Treasury bills, then the expected return on investment for holders of BUSD would be 3.53% per month. However, it is essential to note that the actual return may differ due to changes in interest rates and liquidity risk.
What’s In It For The Investors?
When it comes to digital assets, there are a lot of options out there. But for those looking for stability, USDT, USDC, and BUSD are three of the best choices.
Each of these currencies is backed by a primary fiat currency, which gives them stability and makes them ideal for investors who want to avoid volatility. For instance, the US Dollar backs USDT and USDC, and the Chinese yuan backs BUSD.
Each of these currencies also has its benefits. For example, USDT offers low fees and fast transaction times, USDC offers high security and transparency, and BUSD is a good choice for investing in the Chinese market.
Conclusion
With all the different stablecoins on the market, it can take time to track them all. So first, you must know the various options available if you’re an investor. This article has briefly covered three of the most popular stablecoins: USDT, USDC, and BUSD.
Remember, each token has its advantages and disadvantages, so it’s essential to do your research before investing in any of them. Invest wisely!
