Stablecoins explained: USDT vs USDC
Stablecoins are crypto tokens designed to keep a steady value, usually one US dollar. The two biggest are USDT (Tether) and USDC (USD Coin). Today 1 USDT = $1.00 and 1 USDC = $1.00.
How a dollar stablecoin keeps its value
The issuer creates new tokens when someone deposits dollars and destroys tokens when someone redeems them for dollars. The issuer holds reserves, such as cash and short-term US government bonds, meant to cover every token in circulation. As long as people trust that one token can be redeemed for one dollar, traders keep the market price close to $1.
USDT and USDC compared
| USDT | USDC | |
|---|---|---|
| Issuer | Tether | Circle |
| Launched | 2014 | 2018 |
| Where it is most used | Trading pairs on exchanges; P2P markets in Asia, Africa and Latin America | Regulated platforms and payments, especially in the US and Europe |
| Reserve reporting | Periodic attestations published by the issuer | Monthly attestations published by the issuer |
| Price in PKR now | Rs 278.08 | Rs 278.08 |
The same token on many networks
Both coins exist on several blockchains, including Ethereum (ERC-20) and TRON (TRC-20) for USDT, and Ethereum and Solana among others for USDC. A token on one network cannot be received on another. Always check that sender and receiver use the same network, and compare network fees, which can differ a lot.
Risks to understand
- Issuer risk. The value depends on the issuer really holding the reserves and honouring redemptions.
- Depeg risk. Stablecoins can briefly trade below $1 in a crisis. In March 2023, USDC fell well below $1 for a short time when a US bank holding part of its reserves failed, before recovering.
- Freezing. Issuers can freeze tokens at specific addresses, for example on law-enforcement request.
- Platform risk. Coins held on an exchange depend on that exchange staying solvent and honest.
- Not a bank deposit. There is no deposit insurance.
Why this matters for rupee users
In Pakistan and India, USDT is the main way people hold a digital dollar and move value across borders. Its rupee price follows the dollar rate plus any local premium. See USDT to PKR, USDT to INR and USDT to AED for current values.
Frequently asked questions
Is USDT safer than USDC, or the other way round?
They carry similar kinds of risk: issuer, depeg, freezing and platform risk. They differ in how their issuers report reserves and where they are regulated. CoinRate does not recommend one over the other.
Can I send USDT on TRC-20 to an ERC-20 address?
No. Both sides must use the same network. Sending on the wrong network can lose the funds.
Do stablecoins pay interest?
The tokens themselves do not. Some platforms offer yield on deposits, which adds platform risk.