Quick Facts

Approximate Market Cap$51,917,607,397
Year Established2018
FounderCENTRE Consortium
Symbol/AbbreviationUSDC
UtilityAsset

A stablecoin is a blockchain-based virtual currency. It uses a combination of open, borderless cryptocurrency with traditional fiat currency price stability. Stablecoins grew in popularity since they seek to combine the best of the two worlds. First, for the quick execution and security or anonymity of cryptocurrency payments. Second, for the fluctuation and predictable values of fiat currencies.

USD Coin is the world’s fastest-growing dollar digital stablecoin that is completely controlled.

What is USD Coin – Definition

USD Coin (USDC) is a digital stablecoin. It represents a form of cryptocurrency backed by real-world assets.

USDC runs on the Ethereum blockchain. It’s an ERC-20 coin that works with any app that supports the protocol. Users can store USDC in any Ethereum Wallet.

USDC is a system that allows users to tokenize US dollars and utilize them on public blockchains. Additionally, USDC tokens can be exchanged for USD at any time. The ERC-20 smart contract guarantees that USDC currencies are issued and refunded.

The USD Coin can be easily traded on many crypto exchanges. Crypto traders also hold it as a solid asset.

Stablecoins like USDC are commonly used to:

  • Avoid traditional financial tools and  involvement of institutions third-party 
  • Avoid hyperinflation in some countries
  • Send money quickly, securely, and at a reasonable cost globally
  • To purchase products via a multitude of crypto dApps, exchanges, and blockchain-based games

Pros and Cons

Pros

  • Stable price
  • Regulated
  • Fast transactions

Cons

  • Potentially high transaction fees
  • High withdrawal fees
  • Strong competition

The History

The Centre consortium, a collaboration between Circle and Coinbase, developed the USD Coin in September 2018. The Centre established the USDC’s technology and governance structure. Circle and Coinbase were the initial commercial issuers of USDC.

The Circle company represents an authorized money sender. As a company that provides money services in the US is subject to federal rules and regulations. As a result, all USDC tokens are controlled, traceable, and transparent.

USDC aims to address the concerns of cryptocurrency high volatility and fiat currency-to-cryptocurrency conversion. The idea was born out of the necessity for a fiat-collateralized stablecoin with a strong governance structure and transparency.

USDC tries to address these concerns by releasing a monthly public assurance of 100 percent fiat token reserves on CENTRE.io. It provides its members with regulations and procedures for USDC creation and exchange.

How USD Coin Works

The USD Coin is a stablecoin that promises to be worth exactly the same as a US dollar. This implies that one USDC should equal one actual US Dollar. That is how the USDC provides much-needed market stability.

The USD coins aren’t designed to be mined like other cryptocurrencies. USD coins are issued.

Every USDC coin is backed by a single US dollar, according to its creator. 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 newly issued USDC. the replaced US dollars are retained in reserve

Advantages & Disadvantages

Advantages

Secure

Users of USDC may exchange their currency on a bank account. this provides a sense of security.

Regulated

The company behind USDC is a licensed Money Service Business. That means it’s governed by the Financial Crimes Enforcement Network. 

Fast

USDC combines the US Dollar’s stability with the speed of cryptocurrency transactions.

Disadvantages

Market competitiveness

USDC isn’t the first coin to aim to replace actual dollars with digital ones. It’s not a novel concept.

Dependability

The fact that USDC is equal to the US dollar can be its major downside. While this may be beneficial to some, it will not be a lucrative investment for others.

USD Coin in the Global Crypto Market

While Tether (USDT) is the most popular stablecoin today, USDC is quickly becoming the new preferred stablecoin. Centre has already issued approximately $6.5 billion USDC on Ethereum alone.

USDC has risen to become the second-largest stablecoin as a result of its widespread acceptance. DeFi has accelerated the acceptance of stablecoins. That contributed to the immediate market adoption of USDC.

FAQ

Is USDC safe?

USDC is relatively secure in comparison to other cryptocurrencies. Yet, all cryptocurrencies come with their own set of threats.

Is USDC decentralized?

USD Coin is a centralized stablecoin. It falls under the category of fiat-collateralized currencies.

Why is USDC using the Ethereum blockchain?

The developers decided to use the Ethereum blockchain because of its reputation as the market-leading smart contract platform and excellent developer support.