Ethereum is a blockchain platform for decentralized applications and the second-largest cryptocurrency (ETH) by capitalization. Most of the popular DeFi and NFT projects operate on the Ethereum network. As for Tether (USDT), it is the first cryptocurrency to receive stablecoin status. This is a category of digital assets with a value pegged to the exchange rate of fiat money.
Ethereum is very popular today. Many people use it in their crypto transactions. For example, buy ETH for fiat, exchange 0.065 ETH to USD, etc. USDT is also attracting the attention of crypto investors. USDT has a capitalization of over $75 billion. It is chosen by those who do not want to invest in cryptocurrencies with unstable prices. Learn more about Ethereum and USDT below.
Ethereum and Its Main Features
Ethereum was originally created as an open-source platform that provides participants with advanced options for running DApps and smart contracts. According to the original idea of the creators, users get a tool that goes far beyond the usual exchange of coins.
The ETH coin is a token that was initially launched on the Ethereum blockchain. That is, it is native. In fact, this digital coin acts as an analog of classic fiat money in mutual settlements between blockchain participants. The coins are protected using modern cryptographic methods. They are owned by a specific owner and can be used to transfer to other network members.
Other tokens have been created and are successfully operating on the Ethereum platform. They have independent value. They can be bought and sold on exchanges. They can also be used for various tasks within decentralized applications. However, 82 Ethereum has several unique features that make it different from other coins:
- Only ETH is used as a crypto-fuel for the execution of smart contracts based on a distributed network;
- Ether acts as an incentive for users to keep the system running;
- Ether can act as collateral for issuing new ERC-20 cryptocurrencies, stablecoins, or NFTs.
General Characteristics of USDT
USDT is one of the most popular stablecoins on the crypto market. Its distinguishing feature is that it is backed by fiat currency reserves. That is, Tether does not have its own blockchain. Ready-made decentralized systems are used to implement tokens. You can buy USDT by making money transfers to Tether Limited accounts.
Various open protocols support the functioning of USDT stablecoin. Omni Layer is one of them. It provides interaction with the Bitcoin blockchain, as well as the issuance and redemption of USDT. Users can transfer issued tokens, use them to buy any other cryptocurrency, or simply store them in any Omni Layer-enabled wallet.
It is appropriate to pay attention to the principles of consensus of different currencies:
- Fiat money uses the Proof of Solvency principle;
- Cryptocurrency works on Proof of Work, Proof of Stake, or other algorithms;
- Tether uses the Proof of Reserves method. The amount of tokens is verified in the Bitcoin blockchain using publicly available tools. The appropriate amount of dollar reserves is confirmed by bank accounts and periodic audits.
The main essence of this format of work is reduced to two processes. Firstly, the amount of tokens is verified on the Bitcoin blockchain. Standard tools that are in the public domain are used for this. Secondly, the total value of the tokens is confirmed by dollar reserves in bank accounts. To monitor the situation, independent auditors periodically conduct inspections.
Ethereum vs. USDT: Final Remarks on What Is Better
Thus, it is impossible to say unequivocally what is better: Ethereum or USDT. Each has its own characteristics, advantages, and disadvantages. The main advantage of Ethereum is its versatility. USDT offers full settlement transparency and high transaction speed. Choose what you need and get benefits!