Stablecoins are a cryptocurrency that has a constant value. This type differs in the fact that it reduces fluctuations of value. The price of a stablecoin depends on the dollar. Other types depend on the value of gold and other fiat currencies. Stablecoins are also widespread.
GUSD and USD are two stablecoins that are backed by dollars. They are popular among crypto traders. Stablecoins provide traders with a great method to preserve value when entering and exiting positions.
Features of USDC Coins
USDC was launched in 2018. Its value is directly related to the value of the dollar at the 1:1 level. Only regulated financial institutions can issue this coin.
The tokens of this coin are backed by reserves in the form of cash dollars and treasury bonds. It is important that the issuers report on the availability of reserves each month. This method can guarantee customers that they have the ability to withdraw 1 USDC and receive 1 dollar in return. On June 9 this year, more than 53 billion tokens were circulating. Among cryptocurrencies, USDC is in 4th place in the top of market capitalization.
Features of GUSD
GUSD is a stable coin. It was issued by a trust company called Gemini. It was launched in 2018. The smart contracts of this coin are verified by a special security company.
This coin is the first stablecoin to be approved by a regulator in the United States. On June 9, 2022, more than 253,000 tokens were in circulation. Among valuable cryptocurrencies, GUSD ranks 126th in terms of market capitalization.
The Main Similarities Between GUSD and USDC
Both coins are backed by fiat money reserves. They help effectively maintain a 1:1 correlation to the dollar. They are also distinguished by stable prices. Even if there are downs and ups, the value can quickly become like before. USDC and GUSD are centralized. This is a disadvantage because government authorities can control customer funds.
Also, these stablecoins have the same consensus mechanism. They use PoW, which is the same mechanism as in Bitcoin. Also, the similarities are that both coins were created in 2018.
The Main Differences Between GUSD and USDC
The main differences between these coins are the following:
- Reserves and liquidity. The main aspects of a stable coin are reserves. 60% of USDC reserves are in cash and the remaining 40% are in securities and bonds. This is a disadvantage because if there is a big crash in the cryptocurrency market, customers will not be able to cash out their assets. GUSD is always controlled by the company. An audit in 2021 showed that the balance of the reserve in dollars is the same as the volume of circulation. GUSD stands out as one of the most reliable reserves for stable coin. If there is a market crash, the customer can always repurchase his funds.
- Market capitalization. USDC ranks 4th among all types of cryptocurrencies by market capitalization. As of June 9, 2022, the market capitalization exceeded $53 billion. This proves that investors have confidence in this stablecoin. And the market capitalization of GUSD is $254 million as of June 9, 2022.
- Exchange availability. The majority of traders use stablecoins to convert volatile cryptocurrencies into stable digital assets. Therefore, it is important to be able to exchange cryptocurrency for stablecoin at any time. USDC is distinguished by the availability of multiple trading pairs on different exchanges. GUSD does not have this advantage. This coin is not quoted on many exchanges. If you want to exchange cryptocurrency for GUSD or USDC, you can do it quickly on this platform. Here the exchange is instant and there is no mandatory registration.
Therefore, it is necessary to determine your preferences in order to understand which stablecoin is the best. For those who like convenience, USDC is more suitable. Thanks to the availability of trading options, you can sell or buy cryptocurrency on different platforms in a convenient way. But USDC is not well backed with reserves, which is a risk in the case of a cryptocurrency market crash.
For those who prefer secure reserves, the best option is GUSD. This cryptocurrency has better regulation. Due to the monthly monitoring, the trust in the reserves of these coins is increased. For holding large sums in stablecoins, GUSD offers more peace of mind.
Frequently Asked Questions
What’s the best kind of stablecoin in US dollars?
It all depends on what features are being compared. If you look at market capitalization, the stable dollar coin with a high rating is USDT. The client can choose any coin, it all depends on the requirements and preferences.
Which one is better?
It all depends on what to compare. All stablecoins have pros and cons. It’s impossible to single out the best one by all criteria.
Are GUSD and USDC the same?
No, they are different stablecoins. Although they were launched in the same year and are backed by dollar reserves, they have many differences. USDC has a large market capitalization and it is traded on different platforms. The GUSD does not have these features. But it is backed by stable cash reserves, and that reduces the risk for investing in this stablecoin.
It is important to keep in mind that this information is introductory and is created based on observations. It is not financial advice or an official prediction. Cryptocurrency is a volatile asset and the client invests funds at his own risk.