Day traders and beginners alike find the difference between TUSD and USDT a little confusing, especially if you’re only looking at the token symbols. There is a big difference between the two so trade with caution in order to assure yourself that you are trading TrueUSD or Tether.
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What is Tether?
Let’s talk about Tether (USDT). It is a USD backed stablecoin that is supposed to maintain a 1:1 ratio in value between 1 Tether to 1 USD. The USD is held in reserves to hedge the token against the wild volatility of the crypto markets.
While it has spurred controversy in the recent past, Tether is not open to regular audits to back its claim of holding sufficient USD reserves. Moreover, frequent Bitcoin pumps and dumps have coincided with an increase in supply of USDT reserves. Several crypto experts have shared their opinions on fiat-backed stablecoins and their limitations, which is fair given the fact that they seemingly have endless market manipulation tactics.
Tether is currently ranked 5th by coin market capitalization with a circulating supply of 4,108,044,456 USDT, according to CoinMarketCap.
What Is TrueUSD?
TrueUSD is a USD-backed ERC20 stablecoin that is fully collateralized, legally protected, and transparently verified by third-party attestations. TUSD uses multiple escrow accounts to reduce counterparty risk and it also provides token-holders legal protections against misappropriation. It is the first asset token built on the TrustToken platform.
How does TUSD work?
- For Purchasing TUSD – TrustToken works with multiple trust companies that manage million dollar funds. There is a mandatory AML/KYC process that all token purchasers must go through. Once they’ve passed the ID verification, users can send USD to a trust company to enter an escrow agreement. After the verification of the funds, their API instructs TrueUSD’s smart contract to issue the equivalent TrueUSD to the user’s public Ethereum address.
- For Redeeming TUSD – To redeem USD, one needs to pass a KYC/AML check and then send the smart contract, your TrueUSD tokens, from a registered Ethereum address after which the escrow bank will send you funds in USD. This way, the trust companies do all purchase and receipt of user’s money through escrow accounts.
The Team behind TUSD
TUSD’s founding team comprises of real people who have previously worked with Google, PwC, and UC Berkeley. Even though TrueUSD is currently ranked 37th by coin market capitalization, they are building trade confidence because the team is adamantly pursuing the legal framework to keep the regulators happy.
Benefits of TrueUSD over Tether
- USD funds are verified in regularly scheduled attestations by a trusted auditing firm
- USD holdings kept in escrow by trusted third-parties; TrustToken does not have direct access to dollar holdings unlike Tether, and could not abscond with them even if they wanted to
- Token minting/burning system ensures that every single TrueUSD token is backed up by 1 USD
- As an ERC20 token, TrueUSD can be stored in an Ethereum wallet, something you cannot do with USDT
- Mandatory KYC/AML compliance ensures that TrueUSD keeps shady characters from tainting the project
- The benefit of faster transaction speeds and lower fees without the extreme volatility
TUSD’s use cases and future scope
TUSD can cater to several use cases. Here’s a list of their future plans.
- Acting as a hedge against volatility on cryptocurrency exchanges
- Supporting mainstream commerce
- Boosting developing economies like Venezuela
- Facilitating institutional investments in cryptocurrencies
- Tokenizing other fiat currencies like the Euro, AUD, the British Pound and the Yen.
TUSD has acted as a safe haven for investors looking for a respite from the controversies surrounding Tether. It is currently one of the safest bets for investors looking to diversify their portfolio and hedge it against market volatility.
In closing, we can see that both USDT and TUSD aspire to be the stablecoin of choice for traders and investors, but there is a compelling argument to take a closer look at TrueUSD. We’ve marked the main differences between the two. Now the choice is up to you.
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