USD Coin sounds pretty much like a reference to the dollar when interpreted literally. But USD Coin is not the same as the dollar; it is an entirely different thing altogether.
So what is it?
USD Coin (USDC) is a stablecoin pegged on the US dollar, one of the USD backed cryptocurrencies like Tether and TrueUSD. It was launched in September 2018 by fintech company Circle and crypto exchange Coinbase. USDC tokenizes the US dollar, enabling users to complete transactions on the internet anywhere in the world. Bringing the US dollars on the blockchain network also increases the dollar’s stability and brings new opportunities such as hedging, lending, and trading.
While it was initially an ERC 20 token, it has expanded to Solana and Algorand blockchains. In March 2020, DAI started accepting USDC as a stablecoin. Valued at $1 per coin the digital currency has a market capitalization of $39,000,000,000 it is the second-largest stable coin after Tether and the USDC exchange rate is forecasted to hover around the 1 USD mark pretty much most of the time. USD Coins are verifiable, transparent and regulated. One of the accredited partners holds a US dollar for every USD Coin. The accounts are audited monthly by Grant Thornton, which ranks among the top 10 accounting firms globally.
The technology and framework of the USD Coin were developed by the Centre consortium, formed by a partnership between Coinbase and Circle. The two companies are the first commercial issuers of the USDC.
Circle is a money transmitter or a money service business founded by Sean Neville and Jeremy Allaire in 2013. This means the fintech company adheres to all federal regulations and laws. It is regulated by the Financial Crime Enforcement Network (FinCEN) and backed by Goldsman Sachs.
How It Works
As mentioned, every USD Coin token is backed by a US dollar, making it an ideal store value without price risks associated with crypto, such as Volatility. Turning the US Dollar into a USD Coin is known as tokenization. This process occurs in three simple steps.
- The users send US dollars to the issuer’s bank account
- The bank creates equivalent USD Coin using smart contracts
- The issuer sends the new-minted USD Coins to the user and holds the US Dollar in a reserve
If you want to redeem the coins, you follow the same procedure in reverse.
- First, the user requests the issuer to exchange the USD coins into dollars.
- The issue requests USDC smart contracts to change the coins into dollars, and an equal amount of tokens are removed from circulation.
- The issues send US dollars equivalent to the USDC holdings to the users minus the transaction fees.
Besides redeeming and tokenizing the USD Coin, the platform allows you to send USD Coins to Ethereum addresses compatible with ERC 20 standard. You can also receive digital coins from Ethereum addresses. The creators of USD Coin are obligated to maintain full transparency by working with financial institutions regulators. For instance, all issuers are required to report their US dollars holding regularly.
How to Use USD coin
USD Coin is an ERC token that runs on the Ethereum blockchain. The circle platform allows you to redeem or tokenize the digital currency. However, you need to create an account, submit all KYC requirements to verify your identity and link a bank account.
Using USDC is a great way to trade volatile cryptocurrencies such as Bitcoin, remit funds, transferring wealth within crypto platforms. DeFi like BlockFi offers interest when you deposit USDC.
Other benefits include;
- Sends money globally securely, instantly and at a low cost
- Purchase products such as blockchain games on dApps
- Avoid financial institutions when transacting
- Prevent hyperinflation
Crypto EXchanges that List USD Coins
USD coin is available in myriad Crypto exchanges listed below.
- Binance– pairs USDC with BNB and Bitcoin
- CoinEx– paired with Tether (USDT)
- Kucoin – paired with USDT, ETH and BTC
- OkEx- paired with USDT and BTC
- Poloniex – paired with nine digital currencies, including DOGE, ETH, BTC and XRP
- CPDAX – paired with BTC
- Coinbase pro– paired with BTC and ETH
Other exchanges include Coinsuper, Hotbit, Korbit, FCoin, LATOKEN, South Exchange, Crex24 and COSS. Coinbase allows you to exchange USDC for US dollars and vice versa. It is the most accessible place to buy USDC.
Storing USD Coin
You can store ERC at any Ethreum wallet such as Mint, Jaxx wallets, MetaMask and MyEtherWallet.
Traditional investors are sceptical about cryptocurrencies because of two concerns, volatility and regulations. USDC addresses these two issues, a move that will help crypto get more mainstream adoption. It is one of the digital currencies with defined practical use. USD Coin will likely be around for a long time.
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