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What is the difference between USDT TRC20 and ERC20: comparison of standards and format differences

What is the difference between USDT TRC20 and ERC20: comparison of standards and format differences

The possibilities of cryptocurrency, as well as the instruments associated with it, are increasingly attracting the attention of investors. Some use digital assets directly for investments, while others are engaged in trading. In any of these cases, it is convenient to use coins that belong to the category of stablecoins. They are characterized by stability and reliability, since they are tied to the rate of fiat money.

In addition, they are used for transactions in almost all available projects and on exchanges. If we consider the most popular tokens of this type, it is worth highlighting Tether TRC20 (in the Tron network) and ERC20 (in the Ethereum network). Both assets are virtual means of payment, but have a number of differences. In this article, we will talk about them in more detail, and also analyze the features of cryptocurrencies.

Tether: what is it?

To understand what Tether is, you should first understand the concept of cryptocurrencies. It unites all digital assets that operate on the basis of the blockchain. This is the name of a special distributed database created from blocks of information. They contain details of transactions made with cryptocurrency, which are encrypted using a secure cryptographic key.

It is important that coins created in a separate blockchain network (for example, Ethereum) are singled out separately. In most cases, they are the project’s own asset. And tokens are similar to them, since they are also digital assets, but they are created based on an existing standard in the network.

Tether belongs to the second category. At the moment, it is one of the most popular assets used by cryptocurrency market participants around the world. The purpose of creating this type of tokens was to eliminate the problems that are present in other digital assets – lack of security and high volatility.

Tether completely copes with this task. The cryptocurrency is backed by reserves of ordinary money and is tied to their rate. 1 Tether is approximately equal to 1 dollar, which is very convenient for many users. Due to the pegging to fiat currencies, the token is relatively stable. Owners cannot suddenly lose part of their investments, as sometimes happens during transactions with highly volatile assets.


How did the Tether stablecoin appear?

The history of one of the most popular tokens began in November 2015. This month, the coin was first launched on the cryptocurrency market. The creation process, both then and now, is handled by Tether Limited. At the initial stage, many rumors appeared that the company was associated with the Bitfinex exchange platform. One of the reasons was the introduction of the Tether token by this organization. It was the first to become interested in the asset, after which it introduced it into circulation and launched transactions with it.

Later, some journalists confirmed the connection, after which legal proceedings followed. Claims concerned the provision of tokens with real US dollars. But, later the company presented evidence. In 2022, a report was published stating that all obligations were secured by various assets. In particular, real money and securities.

Initially, the token was created on the basis of Omni Layer. This is a special platform that is an add-on to the blockchain used for the functioning of the first digital currency – Bitcoin. But, over time, the developers improved the technical component and released two new standards – ERC20 (Ethereum network) and TRC20 (Tron network). These types of tokens are now actively used by both investors and traders.


What is Tether USDT ERC20?

This name refers to a type of stablecoin that operates on the Ethereum blockchain. Among the features of this network, it is worth highlighting the use of smart contracts and wide support for applications in the DeFi field. The wide capabilities of the ecosystem attract the attention of a huge number of investors. This determines one of the properties of the token itself – high liquidity.

It is easy to sell, buy and transfer, since most Ethereum network users choose Tether ERC20. In addition, this type of cryptocurrency is characterized by simple integration with exchanges, credit platforms and various DeFi protocols. Additionally, it is worth mentioning several other important features of the Ethereum-based token:

  • high level of security of the Ethereum network;
  • lower payment fees (due to the transition of the Ethereum network to an environmentally friendly and less energy-consuming PoS algorithm);
  • fast transaction processing in the Ethereum network.

The ERC20 (Ethereum) token is also compatible with other types of cryptocurrencies created in the Ethereum network.


More about Tether USDT TRC20

A separate type of cryptocurrency Tether can also function in the TRON network. For this, the developers created an update – a token that functions on the TRC20 standard. The main goal was to optimize settlements in digital currency. The TRON network became an ideal solution, since it has low fees and higher transaction speeds.

Thus, the launch of the TRC20 token opened up new opportunities for users. In particular, due to the network functionality, many were able to conduct transactions for minimal amounts, starting from $ 1. This factor became another prerequisite for the mass implementation of the cryptocurrency operating in the TRON network. The speed of processing settlement transactions on nodes (computer equipment) deserves special attention. It is approximately 2000 transactions per second.

Differences between the TRC20 and ERC20 standards

The first thing you need to understand when choosing between Tether TRC20 (Tron) and ERC20 (Ethereum) is that both types are tokens. But, they operate on two different standards, that is, in different networks. The release of tokens is due to the need for improvements.

For example, ERC20 (Ethereum) became a solution to the problem of slower transactions in the Bitcoin network. And, the TRC20 (Tron) token helped reduce the cost of transaction fees. If we compare ERC20 (Ethereum) and TRC20, they are similar in many ways. However, there are also quite a few key differences between tokens on Ethereum and Tron. Let’s consider the main ones:

  1. Transaction processing time. In the TRC20 network, transactions are processed quickly, often up to 1 minute. In ERC20 (Ethereum), this period increases. The average transaction processing time is from 5 to 15 minutes.
  2. Basic blockchain. Tether TRC20 tokens operate in the Tron network, and ERC20 tokens in the Ethereum network.
  3. Cost of commissions. A cryptocurrency transfer operating in the Tron network costs less than 1 cent. Transactions in the Ethereum network are more expensive.

Another important factor is the level of security. The Tether cryptocurrency, adapted for the Ethereum network, has a slightly higher security. Otherwise, the tokens are similar to each other.


Key differences between ERC20 and TRC20

After reviewing the main characteristics and features of the Tether tokens, you can understand which asset is suitable for your purpose. If you still have questions, then it is worth highlighting the key differences. These are the amount of the commission, the speed of transaction processing, and the token issuance standard.

If you plan to explore the DeFi sphere and wide integration opportunities, then you should pay attention to the token operating on the Ethereum network. Owners of such a cryptocurrency get access to various digital tools and products.

For transactions with small amounts that are carried out quite often, the best solution would be a token in the Tron blockchain. It has low fees, a low entry threshold, and high speed of processing financial transactions.

How to get started with Tether USDT TRC20 and ERC20?

To take advantage of the tokens, you need to buy them. This can be done in different ways. In particular, you can create a Tether wallet or purchase tokens through an exchange (including a built-in p2p platform). But each of these options is associated with some difficulties. To get a Tether token (TRC20 or ERC20) or to your account, you need to create an account and in most cases go through verification.

But there is another more profitable solution – an exchanger. Here, the procedure for obtaining cryptocurrency is simpler and more accessible. First, you need to decide on a currency pair. It is important that tokens (both on Ethereum and Tron) can be purchased for almost any fiat currency. Next, you need to specify an email address and the amount. After processing the request, the user is sent an account number to pay for the application.

Immediately after the successful transfer of funds, managers send Tether cryptocurrency (based on Ethereum or Tron) to the account. Before making a transaction, make sure that the wallet supports the selected Tether token standard. Otherwise, the token transfer transaction will not be completed. If you have cash, then you can buy cryptocurrency through the exchanger’s cash desk.

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