Each Tether token (USDT) is backed by a corresponding US dollar held in Tether's reserves. This gives the cryptocurrency inherent stability, allowing users to store, send, and receive digital tokens pegged to dollars, euros, and yen.
USD Coin, introduced in 2018, is a project by the Centre Consortium, a collaboration between Circle and Coinbase. Like Tether, USDC is a stablecoin backed one-to-one by US dollars.
USDC works similarly to Tether, with each token backed by an equivalent amount of USD in a reserved bank account. The reserve's holdings are published regularly to maintain transparency and trust.
With its longer tenure, Tether has a larger market cap and greater liquidity than USDC. However, USD Coin has been rapidly gaining ground.
While both stablecoins claim a 1:1 reserve ratio, USDC arguably offers greater transparency, with more frequent audits and reserve attestations.
Tether is more widely adopted due to its age, but USDC has seen significant adoption, especially in DeFi applications.
USDC's developers are US-based and adhere to American financial regulations, while Tether's operations are based in Hong Kong, which may influence their regulatory obligations.