Stablecoins & crypto
What are stablecoins? USDT and USDC explained
Stablecoins come up more and more when people talk about digital money, payments and saving in dollars. This guide explains what they are, how USDT and USDC try to stay at one dollar, how they differ, and what to check before you hold any.
What is a stablecoin?
A stablecoin is a type of cryptoasset that aims to keep a stable price by tracking another asset, most often a traditional currency such as the US dollar. Most cryptoassets move up and down in price all the time. A dollar stablecoin tries to stay close to one dollar per coin, so it can be used to hold or move a dollar amount on a blockchain.
The most common kind is the reserve-backed (or "fiat-backed") stablecoin. The issuing company creates new coins when someone hands it dollars and destroys coins when they are redeemed. In return, it says it keeps reserves, such as cash and short-term government debt, worth at least as much as the coins in circulation.
How do USDT and USDC hold their value?
USDT is issued by Tether. It is one of the most widely used stablecoins and is accepted across many apps and networks.
USDC is issued by Circle. It is described as backed by cash and short-term US government debt, with regular reserve reports.
Both are designed to be worth one US dollar each. Their price can still move slightly above or below one dollar on the market, especially when markets are stressed. Both can also exist on several blockchain networks, which matters when you move them between wallets or apps. Tether and Circle are named here for information only; they are not Odix Pay partners.
USDT vs USDC: what's the difference?
USDT | USDC | |
|---|---|---|
Issuer | Tether | Circle |
Designed to track | US dollar | US dollar |
Backing (as described by the issuer) | Reserves held by the issuer | Cash and short-term US government debt |
Reserve information | Published by the issuer | Regular reserve reports |
For everyday use the two work in a similar way. Some people prefer one because of how its reserves are reported, others because a service or a counterparty uses it. Neither is guaranteed by a government or a deposit protection scheme.
What are the risks?
Losing the peg. If confidence in the issuer or its reserves falls, the price can drop below one dollar.
Issuer and reserve risk. You rely on a private company to hold and manage the reserves.
No deposit protection. Stablecoins are cryptoassets, not bank deposits. They are not covered by any deposit protection or compensation scheme.
Network mistakes. Sending coins on the wrong network or to the wrong address may mean they can't be recovered.
Rules differ by country. What you can buy and how it is regulated depends on where you live.
Step by step
How to get started with stablecoins, step by step
Learn the basics first
Read how the stablecoin you are looking at is backed and who issues it.
Choose a regulated route
Use an app or service that verifies your identity and shows the rate and fees before you pay.
Verify your identity
Most services ask for identity checks the first time you buy, depending on your country.
Start small
Buy a small amount first so you understand how it works, and only use money you can afford to lose.
Check every detail
Before you confirm, check the coin, the amount you will receive and, if you move it to another wallet, the network and the address.
Keep records
Save your purchase history; it helps with support questions and, where relevant, tax.
Stablecoins in Odix Pay
You can buy USDT or USDC in the Odix Pay app through our licensed partner and hold them in your Odix Pay account; the partner carries out the purchase. You can also top up your balance with a debit or credit card from your bank; card top-ups are held in fiat currency. If you choose, you can also use them with Odix Earn; returns are not guaranteed. The rate, all fees and the exact amount you will receive are shown before you pay. Availability, limits and verification steps depend on your country.
Your balance stays in the currency you added: USDT, USDC, EUR or USD. There is no currency conversion inside the app. USDT you deposit stays in USDT until you choose to pay it out in local currency to a bank account, yours or someone else's, in 44 countries: see how to turn USDT into money in a bank account.
You can top up your Odix Pay balance with USDT or USDC in the app. See how a stablecoin card works. Odix Pay is not a crypto wallet, does not provide any crypto custody service, and does not operate as a crypto buy/sell, Bitcoin/BTC or crypto investment platform.
New to buying? See how to buy USDT or USDC, and how stablecoin yield works before you use Earn.
Good to know
Stablecoins are cryptoassets. Their value is designed to track the US dollar, but this is not guaranteed and you could lose money. They are not covered by any deposit protection or compensation scheme. Odix Pay is a payment app, not a bank. Any Odix fees are shown in the app before you confirm; for an overview, see the help centre.
Disclaimer: This guide is provided for general information only. It is not legal, financial, investment or other professional advice. Features, steps and availability depend on your country and eligibility, and they may change when the app is updated. Where fees or limits apply, the Odix Pay app shows them before you confirm.
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