Cryptocurrencies are an appealing investment instrument that can bring incredible profits to savvy traders. However, they are also very volatile, and their price can drop as quickly as it rises. Moreover, entering and exiting the market through fiat currencies can be aggravating as it’s often subject to additional fees and wait times.
Stablecoins like USDP or USDC are a great off-and-on ramp to the cryptocurrency market. They can help you shield your portfolio from the volatility of the market, while at the same time allowing you to remain in its ecosystem.
In this article, we compare USDP vs USDC, two popular stablecoins, and will give a complete overview of how they function. This should give you a good idea of PAX Dollar vs USD Coin similarities and differences so that you can choose the right stablecoin for you.
The Pax Dollar or USDP is a regulated stablecoin that falls under the New York State Department of Financial Services. This ensures that the USDP cryptocurrency is completely backed by reserves held in cash or cash equivalents. Consequently, Pax Dollar users will always be able to redeem 1 USDP for 1 US dollar.
Created in 2018, Pax Dollars are cryptocurrencies collateralized by US dollars and serve as a means to invest in the crypto market without being subject to its volatility. Worth noting is that USDP is an ERC-20 token that runs on the Ethereum network. Additionally, a portion of the coins in circulation is recorded on the Binance Smart Chain as BEP-20 tokens. Currently, there are over 945,000,000 Pax Dollars in circulation, and as more USD is added to the reserves, more USDP is issued (without a maximum limit).
USD Coin, or USDC, is the second-most popular stablecoin right after USDT. It has recently reached the top 5 cryptocurrencies by market cap by surpassing 43 billion USDC in circulation.
USDC was launched in 2018 by the Centre Consortium, comprised of two founders: Circle and Coinbase. Coinbase is the top crypto exchange in the US and is the first crypto-related business to be listed on NASDAQ.
Every USDC in circulation is backed by an equivalent of US dollars on the consortium’s bank accounts. Moreover, USDC has reached regulatory compliance, ensuring these reserves are real and that users will always be able to redeem their USDC for US dollars.
Finally, we should note that USDC is considered by many as the ultimate stablecoin. It has liquidity across many major blockchains, including Ethereum, Algorand, Avalanche, Hedera Hashgraph, Solana, and Tron, among others.
So how do you choose between Pax Dollar versus USD Coin? Well, the main factor impacting your decision will be the ecosystem where you are planning to use them. In this regard, USDC comes out as the clear winner as it’s available on Ethereum and the Binance Smart Chain, just like Pax. This means that you can easily do a seamless 1:1 PAX to USDC exchange on these networks.
However, you will also be able to use USDC in other up-and-coming decentralized financial markets such as Avalanche and Solana, in addition to a small dozen of other networks.
Comparing the Pax Dollar vs USD Coin price is a moot point, considering they are stablecoins. Their value is very close to being equal to the USD at all times, with slight variations — between $0.001 and $0.04.
Both stablecoins experienced their highest price fluctuation during the COVID-19 crash in March 2020. At that time, their value diverged as much as 4 cents on the dollar from the USD. That said, this “volatility” was quickly put under control.
Comparing USDP vs UDSC can be quite challenging, as they offer more or less the same advantages to traders. Both are regulated in the US, which ensures the safety and veracity of their backing reserves. Consequently, regardless of whether you choose Pax Dollar vs USD Coin, you will always be certain that their value in your portfolio is secure.
Yet, USDC remains a community favorite, because of the sheer amount of blockchains where you can use it.
While the Pax Dollar vs USD Coin are pretty similar in function, they can still be differentiated through a number of different factors:
Both USDP and USDC remain pegged to the USD because they are backed by cash reserves on bank accounts owned by the companies that issue them.
Although both stablecoins have similar functions and identical values, they are two different cryptos, residing on different networks and issued by different companies.
