USD Coin, also known by its cryptocurrency ticker code USDC, is a stablecoin developed by Centre, a non-profit supported by major cryptocurrency exchange Coinbase and Fintech firm Circle. USD Coin has a set value of US$1 per coin, and each USD Coin is backed by a US dollar in a separate bank account. This makes USD Coin a popular choice for cryptocurrency investors who want to avoid the volatility and price risk associated with big currencies like Bitcoin and Ethereum. Its current market cap is US$ 29,279,268,065 (up by 0.27%) and fully diluted market cap is US$ 29,264,720,129 (down by 0.00%). The current USD Coin price is US$1.00, with a 24-hour trading volume of US$2,73,48,02,617.
What is USD Coin (USDC)?
USD Coin (USDC) is a new stablecoin that is linked to the US dollar. It was released on September 26, 2018, as a result of a partnership between Circle and Coinbase. USDC is a USD-backed cryptocurrency that competes with Tether (USDT) and TrueUSD (TUSD). USD Coin, in a nutshell, is a service that tokenizes US dollars and allows them to be used on the internet and public blockchains. Furthermore, USDC tokens can be converted to USD at any moment. The ERC-20 smart contract ensures the issuing and redemption of USDC coins. Putting US dollars on the blockchain allows them to be sent anywhere in the globe in minutes and gives cryptocurrencies much-needed stability. It also offers up new trading, lending, risk-hedging, and other possibilities.
History of USD Coin:
USD Coin (USDC) is a fiat-collateralized stablecoin established by the CENTRE consortium, a collaboration between Circle and Coinbase to develop price-stable crypto assets and network protocols. It was launched in October 2018. Jeremy Allaire and Sean Neville, two entrepreneurs, established Circle in 2013.
USDC, like its predecessors, aims to address two key concerns with existing cryptocurrencies: excessive volatility and fiat currency-to-cryptocurrency conversion. In contrast to Tether, the project was born out of the realization that the industry required a fiat-collateralized stablecoin with robust governance and transparency. USDC tries to address these concerns by releasing a monthly public attestation of 100 percent fiat token reserves on CENTRE.io, as well as providing CENTRE members with explicit regulations and procedures for USDC creation and redemption. Members of the CENTRE consortium must also meet the important membership and operating standards, such as licensing, compliance, technology and operations, accounting, and custody of fiat reserves, to become issuers.
USDC tries to address these concerns by releasing a monthly public attestation of 100 percent fiat token reserves on CENTRE.io, as well as providing CENTRE members with explicit regulations and procedures for USDC creation and redemption.
Circle and Coinbase announced a substantial improvement to the USDC protocol and smart contract in 2020. These improvements are intended to make it simpler to use USD Coin for everyday payments, commerce, and peer-to-peer transactions.
How Does USD Coin Work?
USD Coins aren’t created out of thin air. Every USDC coin is backed by a single US dollar, according to Circle. Tokenization is the process of converting US cash into USDC tokens.
The conversion of USD to USDC is a three-step procedure:
- A user sends USD to the bank account of the token issuer.
- The issuer creates an identical quantity of USDC using a USDC smart contract.
- The user receives the freshly issued USDC, but the replaced US dollars are retained in reserve.
It’s just as simple to exchange USDC for USD as it is to create the token, only the procedure is backward:
- A user contacts the USDC issuer and requests that an equivalent amount of USD be exchanged for USDC tokens.
- The issuer requests that the USDC smart contract swap the tokens for USD and remove an equal number of tokens from circulation.
- The issuer returns the required amount of USD to the user’s bank account from its reserves. The user receives the net amount, which is the same as the amount in USDC tokens minus all costs.
Unlike the most popular stablecoin, Tether (USDT), the USD Coin’s developers are required to maintain full reserves of the corresponding fiat currency and to operate with a variety of financial institutions.
How to Use USD Coin?
On the Ethereum blockchain, USD Coin (USDC) is a 1:1 representation of one US dollar. It’s an ERC-20 coin that works with any app that supports the protocol.
To use Circle to tokenize or redeem USDC, you must first create an account, authenticate your identity (KYC), and link a valid bank account. Users may execute four basic actions on the Circle USD platform:
- Tokenize USD
- Redeem USDC
- Send USDC to ERC20 Ethereum addresses
- Deposit USDC from external Ethereum wallet addresses.
Except for a US$50 penalty for erroneous and rejected bank transactions, Circle USDC does not charge customers any fees for tokenizing and redeeming services. All normal costs apply to Coinbase USDC transactions. The minimum amount of USDC that may be redeemed is 100 USDC. Only business days are used to process tokens, and the procedure might take up to 24 hours. The procedure can take up to two business days and there is no minimum tokenization value.
For What Purposes are USD Coins Used?
Stablecoins like USDC are commonly used:
- To short cryptocurrencies without having to pay them out, making it simpler to acquire them in the future.
- To stay away from conventional financial tools and institutions.
- To prevent hyperinflation (for residents of countries such as Venezuela or Turkey).
- To transmit money quickly, safely, and at a cheap cost throughout the world.
- To buy things in different crypto dApps, exchanges, and blockchain-based games.
How to Mine a USD Coin?
USD Coin cannot be mined. Every time someone buys or converts cash and obtains a USD Coin, more coins are produced. If this occurs, a fresh dollar is deposited into the USD Coin bank account.
How to Invest in USD Coin?
Coinbase is the simplest way to acquire USD Coin since it was a driving force behind its creation. USD Coin may also be traded on Binance, Bitfinex, Coinbase, Crypto.com, Kraken, and Uniswap, among other major cryptocurrency exchanges.
USD Coin is extensively supported by major cryptocurrency wallets since it operates on the Ethereum network. Software wallets like Coinbase Wallet and Exodus, as well as hardware wallets like Ledger, are examples.
USD Coin transactions take around five minutes to complete and require 20 confirmations, according to Kraken. This is comparable to the way other Ethereum-based currencies work.
Expenses and Fees
USDC transactions require Ethereum gas costs since it uses the Ethereum blockchain. Due to network congestion, the price of Ethereum gas might fluctuate.
How Is the USD Coin Network Secured?
The USDC coins in circulation are all ERC-20 tokens, which are located on the Ethereum network. One of the most significant advantages is the ability to connect it with Ethereum-based applications. As previously stated, the security and confidence in this stablecoin are provided by demonstrating that US dollars are safely maintained in reserve.
What Makes USD Coin (USDC) Unique?
USD Coin’s major distinguishing feature is that it is always worth $1. This is in stark contrast to extremely volatile currencies like Bitcoin, Ethereum, and Dogecoin, which may see large price fluctuations in a single day.
How Many USD Coins (USDC) are in Circulation?
It’s impossible to offer a precise amount because the number of USDC that can exist is theoretically unlimited. When someone wants to buy a coin with their hard-earned dollar, new ones are made in response to demand. However, several variables have contributed to USD Coin’s meteoric rise in popularity throughout the years, particularly in 2020. The rapid, dramatic surge in popularity of decentralized finance is one of them. Given its role as an onramp to the larger ecosystem, USDC is a regular sight on many DeFi protocols.
What Makes USD Coin Unique Among Other Stablecoins?
Fiat-collateralized, crypto-collateralized, algorithmic non-collateralized, and hybrid are the four types of crypto stablecoins. USD Coin is a controlled stablecoin that belongs to the first type of fiat-collateralized currencies. This includes all stablecoins that are linked to a fixed amount of fiat currency. By design, all fiat-collateralized currencies are centralized. In general, all projects in the same category operate in the same way, with just small variations. Tether (USDT), which is renowned for refusing to perform a truly public audit, and Digix Gold (DGX), which is linked to gold, are two of the most notable. The rest of the fiat-collateralized stablecoins are backed by US dollars and provide regular attestations. The primary variations between them are their pricing policies and the organizations with whom they collaborate, but the economic strategy remains much the same.
USD Coin (USDC), Circle’s dollar-pegged stablecoin, appears to have lost one of its key competitive advantages against Tether (USDT) in August 2021. Following an audit that found that not all of USDC’s reserves were stored in cash, major crypto exchange Coinbase made a significant modification to the USD Coin page on its website. The prior assertion that “each USDC is backed by one US dollar held in a bank account” was contradicted by this. When visiting the USD Coin homepage on Coinbase, users are now presented with a message stating that USDC is “backed by fully reserved assets”.
With a market value of approximately US$28 billion, USD Coin is the eighth-largest cryptocurrency. According to its most recent Consolidated Reserves Report, USDC is the second-largest stablecoin behind Tether, which has over US$63 billion in total assets. USDC has grown in popularity as a stablecoin completely backed by US dollars since its introduction.
Future of USDC: