Stablecoins 101: USDT vs USDC, and Could They Depeg?

I already wrote a guide on using stablecoins for cross-border payments, but I noticed a lot of people are still fuzzy on the basics — they know it's "roughly worth a dollar," but not why it holds that price, whether USDT or USDC is more trustworthy, or whether anything has actually gone wrong historically. This one steps back and covers those fundamentals.

A depeg is when a stablecoin's price noticeably deviates from $1 — it could spike to $1.02 or drop to $0.90 or lower. Several well-known depeg events have happened historically, usually triggered by doubts about reserve assets, a confidence crisis around the issuer, or extreme market panic causing mass redemptions. In most cases the price re-pegs within a short window, but if you needed to cash out during that window, the loss was real.

This is exactly why stablecoins shouldn't be treated as equivalent to a bank deposit — bank deposits are insured in many countries, stablecoins have no such backstop. Their "stability" rests entirely on the issuer's reserves being real and well-managed.