Is It Better To Buy USDT or BUSD? Ultimate Guide For Beginners

Cryptocurrency is a kind of digital currency, an electronic form of payment that operates without a physical analog in the real world. It is a programmatically generated code that is not as secure as fiat money but has significant differences compared to them.

Stablecoins are a type of digital asset that solves the problem of the stability of electronic money. Like other cryptocurrencies, they are based on the same technology as Bitcoin, Ethereum, and others. These types of coins provide protection against any form of volatility, so you can be sure that the crypto dollar you purchased will still be worth one dollar in a year.

What makes them attractive is their low transaction fees, which can often save you from paying huge amounts for certain transactions on networks like Ethereum when they experience high traffic levels. The most popular stablecoins are USDT and BUSD. The most popular queries are: buy and exchange BUSD to USDT.

Stablecoin USDT

USDT is the first and most popular stablecoin that appeared on the crypto market in 2015 and was released by Tether Limited.

Consider the key characteristics of this coin.

• USDT is a blockchain—based cryptocurrency whose tokens in circulation are backed by an equivalent amount in US dollars, which makes it a stablecoin with a price pegged to $1.

• Tether was originally released as RealCoin in the summer of 2014, and its name was changed to Tether in the fall of the same year by Tether Ltd., which is responsible for the availability of reserve amounts of fiat currency. The coin began trading in February 2015.

• Tether is a representative of fiat—backed stable coins – the real currency supports every coin in circulation.

• Tether tokens, developed by the BitFinex crypto exchange, are proprietary tokens of the Tether network and are implemented under USDT.

• The goal of the project is to create a bridge between real money and virtual funds, ensuring sustainability, transparency, and low transaction fees.

• Tether has no issue limit — new coins will be issued as long as the project is functioning.

• The Proof of Reserves method is used — proof of reservation.

• Tether is chosen by those investors who want to avoid the volatility inherent in other digital assets while saving value on the crypto market.

• Tether is primarily used as a medium of exchange and a method of storing value, and not as an asset for speculative investments.

• USDT (compared to the US dollar) eliminates transaction costs and delays that hinder transactions in the digital asset market.

• Tether Ltd. does not offer any guarantees regarding any right of redemption or exchange of Tether for real money, that is, Tether is not subject to direct conversion into US dollars.

• Tether does not have its own blockchain — ready-made decentralized systems are used to implement tokens. The functioning of the coin is provided by open protocols — the coin is mainly based on the Ethereum blockchain and also supports TRON, Omni, EOS, Liquid, OmiseGO, Algorand, Solana, and others.

BUSD Stablecoin

BUSD is a cryptocurrency that belongs to the stablecoins; it appeared on the crypto market in 2019 and was released by Binance together with Paxos.

Let’s consider the main features of this coin.

• The goal of the project is to create a cryptocurrency that will be supported by the US dollar.

• The key characteristic is the equivalence of one BUSD unit to one US dollar.

• Paxos stores an amount in dollars on the accounts, which is equal to the total volume of the BUSD asset offer, and the price of a stablecoin directly depends on the price of the US currency.

• Due to its stability against the US dollar, BUSD gives traders and users of cryptocurrencies the opportunity to make transactions with other digital coins and blockchain-based assets, minimizing the risk of volatility.

• Thanks to its interoperability and accessibility, BUSD gives traders the opportunity to trade with much greater ease and speed. 

• Binance offers a “Multi-Asset Mode” feature that allows you to trade stablecoins, thereby providing traders with even greater flexibility and protection when trading.

• BUSD acts as a bridge between traditional finance and DeFi, introducing a new level of monetary freedom that is not offered by traditional currencies or institutions.

• BUSD adheres to strict regulatory standards: officials of the New York State Financial Services Authority take responsibility for compliance with certain Paxos and Binance rules regarding the principles by which the coin works and how it is ultimately secured.

• Paxos has the ability to create and burn BUSD tokens at will, as well as freeze and withdraw funds from people who carry out illegal activities or conduct suspicious transactions.

• BUSD has a high level of security: the stablecoin is subject to regular third-party audit and is strictly regulated to maintain a 1:1 ratio with the dollar

Advantages and disadvantages of USDT and BUSD stablecoins

Advantages of USDT:

• no volatility and minimal fluctuations in value;

• stability of the exchange rate, always striving for a 1:1 ratio with the US dollar;

• absolute transparency of calculations;

• high speed of transactions;

• minimum transaction fees;

• high level of stability in the crypto market: the stablecoin is secured by the world’s main fiat currency;

• high level of security and protection from hacker attacks;

• using different blockchains: the coin is transferred to any crypto wallets that support this asset;

• widespread: the coin is very popular among users and is traded on all major exchanges and other platforms.

Disadvantages of USDT:

• lack of regular audit;

• risks associated with redundancy issues;

• Tether Limited’s accusations that the company does not have collateral for all issued tokens;

• no guarantees of USDT exchange on other platforms;

• lack of absolute anonymity;

• lack of coin mining capability;

• lack of USDT emission control;

• the risk of depreciation in the event of a devaluation of the US dollar;

• lack of communication.

So, despite the fact that Tether solves two main problems of digital assets — the volatility of the exchange rate and the lack of fiat funds — the cryptocurrency still has its weaknesses and risks.

Advantages of BUSD:

• fixed and stable value due to the peg to the US dollar;
• cryptocurrency opportunities: widespread in the market, high popularity among users, community trust, a large number of available trading pairs;
• high level of security: user rights are protected, and the stablecoin itself is approved by the New York State Department of Financial Services;
• regulation, compliance with strict regulatory standards, conducting regular audits confirming 100% security of the cryptocurrency with real dollars;
• publication of reports confirming the availability of necessary reserves to ensure all issued tokens;
• no possibility of manipulating the exchange rate and the number of tokens issued;
• trading in pairs with BUSD on Binance without commissions.

Disadvantages of BUSD:

• centralization: Paxos is responsible for issuing and burning coins, which does not quite correspond to the principles of digital currencies;
• strict regulation: all operations on the issue and burning of tokens are monitored, and in case of suspicious activity, the user’s balance may be frozen;
• Limitation: BUSD is mainly traded on Binance and is available on a small number of crypto platforms;
• narrow focus: the coin will give good dividends only when working on Binance;
• the presence of large competitors that do not allow the asset to become the most popular stablecoin.

Despite the fact that BUSD is a young stablecoin, it offers advantages over similar cryptocurrencies, which primarily relate to the absolute confirmation of 100% of the asset security in US dollars.