There are Bitcoin, Ethereum, Ripple and Litecoin, the prices of which are dependent on the volatile cryptocurrency market. And then there is tether (USDT), the price of which will never go too far from $ 1. While this stablecoin is the most popular in the world, it is not the only option.
So read on to learn more about the best stablecoin alternatives to USDT and why you might want to switch first.
What is a stablecoin?
A stablecoin is a cryptocurrency whose value is linked to a real asset or fiat currency such as the dollar or the euro. As a result, its value will always be the same regardless of the circumstances.
Tether is currently the most famous stablecoin in the cryptocurrency market, but since its inception in 2014, it has been embroiled in many financial scandals due to dubious claims about its dollar-backed reserves. For those who still want to buy stablecoins, here is a list of alternatives to Tether:
1. USD coin (USDC)
The US dollar coin, or USDC, is a mainstream alternative to USDT. The stablecoin was introduced in September 2018 and runs on the blockchain networks Ethereum, Stellar, Algorand, Solana and Hedera Hashgraph.
The USDC is managed by a company called Center, owned by Circle, a peer-to-peer payments company. Like USDT, USDC is pegged to the US dollar. Thanks to its relatively clean financial record, it is backed by Goldman Sachs, and with Tether surrounded by controversy, USDC is rapidly gaining popularity.
At the time of writing, there are over $ 24 billion in circulation and over $ 840 billion in transactions over the USDC network. In light of the USDC’s boom, Circle recently announced that it would expand it to ten more blockchain networks in order to meet increasing demand.
2. Binance USD (BUSD)
Binance is one of the world’s largest cryptocurrency exchanges, and Binance USD (BUSD) is the company’s stablecoin project, created in partnership with Paxos, a blockchain company that also has its own stablecoin.
BUSD runs on three blockchain networks: Ethereum, Binance Smart Chain and Binance Chain. The BUSD is also pegged to the US dollar and is regulated by the New York State Department of Financial Services.
According to Binance’s website, the BUSD offers three main advantages for its transactions: accessibility, flexibility and speed: BUSD holders can quickly send BUSD around the world with nominal transaction fees and they can also switch between the three blockchain networks as needed.
At the time of writing, there are over 11 billion BUSD in circulation.
3. Real USD (TUSD)
TUSD is the industry’s first regulated stablecoin to be backed by the US dollar. The stablecoin, created in 2018 by the San Francisco-based TrustToken, is based on Ethereum’s ERC-20 protocol and uses escrow accounts to ensure customer privacy.
Before you can hold TUSD, you must first pass Know-your-Customer (KYC) and Anti-Money Laundering (AML) tests. After this phase is completed, freshly minted TUSD is linked to the user’s Ethereum address.
TUSD can be staked and bred on DeFi platforms based on Ethereum, TRON and the Binance Smart Chain. Currently, TUSD has a market capitalization of $ 1.2 billion and there are $ 1.4 billion in circulation.
4. Standard Paxos (PAX)
The Paxos Trust Company, a partner of Binance’s BUSD, as mentioned above, also operates a stablecoin called the Paxos Standard (PAX). The PAX was launched in September 2018, around the same time as USDC, and was one of the first regulated stablecoins in the industry.
PAX runs on the Ethereum blockchain and follows the ERC-20 protocol. Like BUSD, PAX offers seamless global transactions to every corner of the world.
After PAX, the Paxos Trust Company launched PAX Gold, their gold-backed digital currency, in September 2019. At the time of writing, there are nearly 780 million PAX in circulation.
5. Twins Dollars (GUSD)
GUSD, created by the Gemini cryptocurrency exchange, joined the stablecoin market and was launched on September 9, 2018, one day before PAX. Like PAX, GUSD is based on Ethereum’s ERC-20 protocol and can be stored in any wallet that accepts Ethereum. In addition, like Binance, its circulation is regulated by the New York State Department of Financial Services.
Gemini claims that the GUSD is insured with “Passthrough Federal Deposit Insurance Corporation (FDIC) deposit insurance as a preventive measure against money laundering, theft and other illegal activities.” It is also checked monthly to ensure 1: 1 GUSD / USD parity.
DAI was created by Rune Christensen and introduced in December 2017.
DAI is based on Ethereum’s ERC-20 protocol, which enables transfers between any wallet that Ethereum accepts, and is shaped via its native Maker Protocol platform. Its price stability is regulated by its own decentralized community MakerDAO. DAI is also central to MakerDAO’s decentralized credit ecosystem.
For every loan that a lender takes out at MakerDAO, a certain amount of DAI is minted. Then when the lender repays their loan, DAIs are burned. At the time of writing, there are over 900 million DAI in circulation and the stablecoin has a market cap of over $ 5.5 billion.
Facebook also benefits from the stablecoin market. Diem, formerly known as Libra, is Facebook’s pilot stablecoin, slated to go live with its Novi digital wallet sometime in 2021.
Facebook’s foray into the stablecoin space has not been easy. The social media giant proposed the idea for Libra in 2019 and intended to peg Libra to a basket of currencies such as the US dollar and the euro. However, industry players such as eBay, PayPal, Visa, and Mastercard have pulled out of the project due to concerns about money laundering and Libra that may encroach on government monetary policies.
Facebook then renamed the project Diem, applied for regulatory approval and relocated operations from Switzerland back to the US. The latest blog post by Facebook executive David Marcus revealed that Facebook “has secured licenses or permits for Novi in almost every state.”
A launch date has yet to be confirmed, but at this point Diem is certainly a stablecoin waiting to disrupt the traditional financial system.
Stablecoins that are tied to real assets
Stablecoins are becoming an attractive alternative for investors to park their funds in the unfortunate event of a crypto market crash. As Tether continues to come under fire for suspicious operations, these stablecoin alternatives are also gaining traction
What is a cryptocurrency stablecoin?
Stablecoins are supposed to protect against the volatility of regular cryptocurrencies, but how do they work?
About the author
Jie Yee Ong
(58 published articles)
Jie Yee is currently based in Melbourne, Australia and has experience writing on the Australian real estate market and the Southeast Asian technology scene, as well as conducting business intelligence research in the wider Asia Pacific region.
More from Jie Yee Ong
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