First off, what is USDT? And what is DAI? And what is USDC? And how do they differ?
DAI is a stable coin, which means it is usually worth approximately $1. The same is the case for USDT. And USDC.
How do they differ? DAI differs from USDT in some ways, which we will look at in this article.
HOW DAI and USDC DIFFER FROM USDT
DAI is a stable coins backed by ETH collateral. This means that for every DAI created, a certain amount of ETH is placed into holding to collaterise the DAI. Every time the price of ETH rises, a smart contract reduces the amount of ETH that is being collaterised to ensure that the price of the DAI remains close to $1. The opposite is the case when the price of ETH falls.
USDC is also collaterized by REAL US Dollars. This means for every USDC created, there is an actual dollar stored away in a safe that is checked by the government. Coinbase, and by extension USDC are very government compliant.
USDT on the other hand is supposedly backed by real world dollars. This means that for every USDT created, an actual real world dollar is put into a vault. Of course this can't be proven, and Bitfinex, the company behind Tether has refused multiple audits as to their claims that they do have the backing of the USDT. USDT has had a lot of issues in the past because of these very reasons.
Which brings us to our next point: USDT is centralised, while DAI and USDC are decentralised.
DAI is created by the DAO, which is a kind of decentralised bank. They also create Maker, which is their tokenised asset. USDC was created by Centralized Coinbase, but the contract runs independently of coinbase, so it is decentralized.
USDT on the other hand is created by a centralised exchange called Bitfinex. They are a pretty old exchange starting out in 2013, and they have been the target of many hacks and cryptocurrency theft. They also have no proof that they really do collaterise their USDT Token with actual USD. This seems rather sketchy to me, because it means they can continuously print money without any consequences.
So let's put it all together. Which one is better?
Obviously DAI or USDC will be the better option. They're decentralised, have bigger backing which can be proven and are much more limited than USDT.
Those are just my opinions though. What do you think about this topic?
Let me know down below and I will answer every single comment.
Thanks for reading.
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There are many stable coins but I primarily use USDT and BUSD sometimes when it is on Binance. other coins like USDC and DAI I rarely used. I think tat USDT is highly popular and now BUSD is getting more attention because of Defi on BSC.
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Thanks for your input!
I equally also use BUSD because of the low fees on BSC, however I still prefer to hold my money in USDC because Coinbase is a very huge company nw, despite the high fees that come with Ethereum chain.
Hope you enjoyed the article!
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