Brian Armstrong, the CEO of cryptocurrency exchange Coinbase, is urging cryptocurrency users to use more trustworthy stablecoins such as Coinbase’s own USD Coin (USDC), instead of the Tether (USDT) stablecoin.
With the confirmation that Tether is not fully collateralized, my hope is that the industry graduates to more trusthworthy stablecoins, including https://t.co/lZQKCUDjAH
One more piece of reliable infrastructure to help build the open financial system.
— Brian Armstrong (@brian_armstrong) May 1, 2019
As previously reported by IIB, lawyers have confirmed that the Tether (USDT) stablecoin only has enough cash and short-term securities to back up 74% of the total supply. As a result, there has been something of a run on the banks, as Tether holders have been exiting the debunked stablecoin in a frenzy, selling their USDT to buy Bitcoin (BTC) and propping up the price of the later.
Is USDC Better than USDT?
Coinbase’s USD Coin is considered to be a far better stablecoin solution than Tether, because it is actually audited and backed 1:1 by US dollars, unlike Tether which is not actually backed 1:1.
The only downside to USDC, when compared to Tether, is that it’s not traded on as many cryptocurrency exchanges. However, it is still traded on the world’s largest crypto exchange, Binance, as well as Poloniex and Coinbase.
As the Tether/Bitfinex situation unravels over the coming weeks and even months, the cryptocurrency industry expects to see a major shift in which stablecoins are preferred. While Coinbase’s USDC is reputable and backed 1:1 with the US dollar, it still depends on banks and fiat currency.
Therefore, the ultimate stablecoin solution may actually be something like the Dai stablecoin by Maker (MKR). The Dai stablecoin is unlike any other, as it is collateralized by crypto rather than algorithmically backed by math and the US dollar.
All in all, if there’s one thing for sure, it’s that almost every other stablecoin is a better bet than Tether.
Which stablecoin do you prefer to use? Or do you not use stablecoins at all? Let us know in the comment section below.