- June 7, 2021
- Posted by: Admin
- Category: cryptocurrency, Stablecoin
Have you lost coins once due to incorrect network usage?
It was a very cool evening, as I was rounding up my work for the day; I received an enquiry from a Trenndify community member. The complaint was, I sent some USDT to a network and up till now am yet to receive the coins on my wallet despite confirmation on the Blockchain.
As I will always respond, I will get back to you on this because at Trenndify we are always ready to help our community to become more.
Reaching out to my team to provide a solution and an explanation, they responded that two things might have occurred. One, the coin was sent to a wrong address such as sending BTC to Eth address.
The second explanation was, the gas fee may be too low so there is delay in validating the transaction.
The essence of this experience is to show you that coins can be lost when the right network is not used. For instance, when sending USDT, there are two popular networks, they are TRC 20 and ERC 20, each having a different address. When a user sends a tether to a TRC 20 address instead of ERC 20 address or the other way round, such transaction will be lost.
But what is USDT or Tether?
What is USDT?
Tether is one of the Stablecoins that promises to make Cryptocurrency stable by solving the volatility concern of other cryptocurrencies. This is achieved by pegging 1 tether to 1 US dollar.
The USD pegged to tether is held in a reserve account by Tether Ltd. This means, if there is 1bn tether in circulation, there is an equivalent 1 billion USD backing the tokens.
In order to unlock the potential of this tether, there are Blockchains that support the token, they include; Ethereum, Tronx, EOS, Omni and Algorand.
This brings us to the concept of ERC 20 and TRC 20 as used in Tether transactions. What are they and how do they operate?
Blockchain Standard ERC 20 and TRC 20?
The ERC 20 USDT is the tether issued by the Ethereum blockchain. The withdrawal and deposit of this tether take place on the ethereum network and it is maintained by the etheruem network.
ERC 20 is a smart contract standard that enables a token on the Etherenum blockchain to function like Ether and Bitcoin. The ERC 20 defines the standard functions of tokens such as , totalsupply() transfer(), transferfrom(), Token name, token symbol etc.
What this means in a practical sense is this. When a user deposits or withdraws tether (USDT), such a user must use an address that supports the ERC 20 network.
On the other hand, TRC 20 USDT is a tether issued by the Tronx blockchain. The withdrawal and deposit of the coin takes place on the Tronx network and is maintained by the network.
What this means to a user is that a transaction in TRC 20 must use an address that conforms to the TRONX network. When another address is used, the coins being transferred might get lost.
What are the advantages of TRC 20 over ERC 20 when doing USDT transactions?
The Edges of TRC 20 over ERC 20 in USDT Withdrawal and Deposit
From the perspective of users, it has been noted that transactions with TRC 20 have some edges over transactions using the ERC 20 standard. The few edges which play very significant roles in the choice of which to use are;
According to a poll on bitcointalk.org the survey respondents reported that the transaction speed when using TRC 20 is higher than the speed when using ERC 20 for tether transactions. This is one of the reasons people prefer TRC 20 to ERC 20 in tether transactions.
Low Gas Factor
Gas fee is the transaction fee a blockchain network charges for the processing of the transaction. The gas fee rate differs from one blockchain to another blockchain.
When it comes to using ERC 20 for USDT withdrawal or deposit, the gas fee is usually very high and at times seems unbearable to the users. For instance, imagine a transaction of 100USDT costing a gas fee of 30USDT, that is very high for users.
On the other hand, the TRC 20 USDT transaction fee is ridiculously low , around 0.8% for deposit and withdrawal of tether. Due to this reason, a significant number of people prefer to use TRC 20 USDT than ERC 20 as the purpose of every cryptopreneur is to make marginal profit.
Between TRC 20 and ERC 20 which one do you prefer for your USDT transaction? According to a poll in Trust Wallet, the respondents prefer TRC 20 to ERC 20 for USDT transactions due to the above factors.
How do you make investment decisions in the different phases of the market? This article will guide you to do that.