People regularly complain about the highly volatile nature of cryptocurrency; even going as far as to say that it is a scam since the monetary value can be manipulated. Stable coins like USD Tether (Crypto: USDT) are not as affected by the volatile nature of the market and speculation since it has approximately equal value with fiat USD. Hence, traders could easily use it as an alternative storage. USDT is controlled by wallets within the Omni Layer which includes Omni wallet, Ambisafe and Holy transaction within the bitcoin blockchain. That is why USDT, irrespective of its position in market capitalization, is always a top 3 most traded cryptocurrency.
However, after Circle bought over Poloniex, one of the oldest exchanges for cryptocurrency, they have tried as much as they could to ensure that users are attracted back to the exchange and that they penetrate more parts of the market. This led to its replacement option USD Coin (Crypto: USDC), which is also tied to USD and has equal value with USD, hence it could not be as affected by the volatile nature of the market.
Some of the reasons why USD Coin by Circle could lead to partial destruction of using USDT and USD in the cryptocurrency market are:
1) It is an ERC 20 coin and not just a stable coin. Presently, it could be seen that the Ethereum (Crypto: ETH) blockchain offers the latest largest of tokens that are in the market. And, due to this number, many of the token holders would prefer to instantly exchange their tokens to USD Coin (USDC) within the Ethereum network and not to use other means to preserve the value of the token at a given point.
2) Strong licensing. USD Coin is presently satisfied by all US laws which has helped to grow its trust and legitimacy online than the USDT that has no such license.
3) Strong partnership. Recently, Bitmain invested about $110 million in Centre which is in partnership with Circle. The Centre platform has many known businesses that are investing in it like DG Capital, Pantera, Breyer Capital, General Catalyst, Accel. This has grown legitimacy for USDC.
From these three reasons, it could be seen that USDC could possibly make the use of USDT and USD irrelevant in the crypto market.
Contributed by: Nwaru Chukwuemeka
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