The Beginner’s Guide
In this article, we will examine the differences between BUSD vs USDT vs USDC stablecoins. There are many stablecoins in the cryptocurrency market. The largest by market cap are USDT, USDC, DAI, and BUSD.
What these stablecoins have in common is that they all follow the US dollar. There are other types of stablecoins, such as WBTC, which are backed by Bitcoin and track the BTC price.
If you trade cryptocurrencies on Binance or other exchanges, you can often find that there are multiple stablecoins and more stablecoin pairs, such as BTC/USDT, BTC/USDC, and BTC/BUSD.
BUSD vs USDT
BUSD is a stablecoin developed by Paxos in partnership with Binance. Paxos are also issuers of other stablecoins Paxos Standard (PAX), HUSD, and PAX Gold (PAXG).
BUSD is approved and regulated by the New York State Department of Financial Services and backed by US dollars held at 100% FDIC insured US banks.
Also, an auditing firm (Withum) audits BUSD to audit if the source of BUSD matches, you can check the money held in banks monthly, here.
On the other hand, USDT is not regularly audited. The last audit posted on Tether’s site dates back to 2018, conducted by Sporkin & Sullivan LLP. But they publish daily the value of their reserves, which can be seen on this page.
Another difference between BUSD and USDT is that the reserve backing USDT is held in offshore banks, which are considered less reliable. To date, many allegations have been made about Tether, you can find a summary here.
So it can be said that BUSD is more secure than USDT. This is actually true. However, if you are an average trader, it doesn’t really matter whether you trade the BTC/BUSD pair or the BTC/USDT pair.
However, if you really want to hold a large amount of money in the form of stablecoins, it may be a better idea to hold only BUSD or split the money between BUSD and USDT.
Also, trading coin margin futures instead of USDT margin futures on Binance or other exchanges may be safer in the event of a Tether-related catastrophic event.
Other than that, there is really no difference between BUSD and USDT. If you’re an average trader, you’ll want to consider volume, arbitrage opportunities etc. You should choose to call.
USDC vs USDT
After USDT, USD Coin (USDC) is the largest stablecoin by market cap. USDC is managed by the Centre, a membership-based consortium of which Circle and Coinbase are founding members.
So USDC is basically a stablecoin launched and managed by Circle and Coinbase. USDC is also audited monthly by Grant Thornton LLP, an audit firm like BUSD.
The company behind USDC follows US regulations. And it works with established banks and auditors, which does not apply to Tether (USDT). So USDC is safer and more transparent than USDT, just like BUSD.
If we compare USDC with BUSD, both stablecoins are actually quite similar as they both comply with US regulations and work with US banks and supervisors.
Again, if you are a trader, you can trade both USDC and USDT pairs. It’s really not that important.
However, if you are going to open large positions in cryptocurrencies, you can choose products with coin margin instead of USDT margin products. You can also hold multiple stablecoins instead of being tied to one to mitigate risks.
We have reached the end of our BUSD vs USDT vs USDC article. Stay tuned to SinceCoin to learn more about Bitcoin and other cryptocurrencies.