What is USDC?
USD Coin (USDC) is a digital currency that is referred to as a Stablecoin (a coin with fixed value). You can always exchange one USD Coin for 1 US Dollar, which makes its price stable at $1. In Coinbase, eligible customers can receive rewards for each USD Coin they hold.
- Stable value: For customers with a US Dollar bank account, 1 USDC can always be exchanged for 1 US Dollar, giving it some price stability.
- Backed by US dollars: Each USDC has a certified US dollar behind it, which is kept in the bank.
- Powered by Ethereum: USD Coin is a token on the Ethereum platform, so you can store it in a suitable wallet like the Coinbase wallet.
- Global transactions: USC Coin is designed to help Dollars circulate globally from your crypto wallet to exchanges, businesses or other users.
- Above is an introduction to what USDC is – A stable coin created by Coinbase.
USDC runs on the Ethereum blockchain as an ERC-20 token. Each USDC token is 100% legally backed by a single USD held in accounts exposed to regular public reserve reporting. The underlying technology behind the USDC was developed in collaboration between Coinbase and the Circle platform.
USD Coin is the first implementation of CENTRE's fiat-back stablecoin network, launched as an ERC-20 compliant token on Ethereum. USDC relies on a proof-of-reserves system to ensure that reserve assets match circulating tokens.
CENTRE contracts manage the minting and the redemption/burning of stablecoins, which can be used for both the exchange and wallet interoperability use cases. Customers who on-board through a stablecoin on-ramp, such as a web application created and maintained by a licensed CENTRE token-issuing member, can transfer fiat funds into that CENTRE issuer’s account. The issuer then executes a series of commands with the CENTRE network to verify, mint, and validate fiat tokens pegged to the value of those deposited funds. The customer can then transfer those tokens elsewhere in order to use them. Redemption follows the reverse sequence: fiat tokens are burned when a customer visits an off-ramp such as a web application maintained by a licensed CENTRE issuing member. Upon successful verification and validation, funds from underlying fiat reserves would be transferred to the customer’s external bank.
What does USDC do?
Circle Company issues USDC with the following objectives:
- Bring transparency: Transparency brings trust, and trust is a necessary factor in giving users a reason to trust stablecoins to be stable over the long term. The source code of the USDC token is open, so all issuance and amount of USD coins are publicly disclosed and audited by leading auditing firms.
- Bring high liquidity: USDC is backed 1:1 with the US Dollar. Circle is one of the major technology companies in the US, it is valued at 3 billion USD, and is licensed to operate by the New York Stock Exchange (NYSE). Having a large company like Circle behind it as a launch pad will make it possible for this token to withstand periods of market volatility and reach the sustainable crypto space. In addition, investors can convert USD to USDC and vice versa at any time at a ratio of 1:1, only needing approval through Circle’s KYC/AML process. Circle also ensures that the USD Coin rate is always stable around 1 USD to provide the best store of value for investors.
- Build credibility: A brand everyone knows and loves will make USDC easier to accept.
USD Coin functions exactly like the US dollars, so you can spend it in pretty much any way you would with cash. The only thing you can’t do with a token is to fold it up and stuff it in your pocket.
Here are some of the most typical usage of USD Coin:
- Buy cryptocurrencies: You can trade USDC for any other type of crypto across many platforms. Note that since its value is fixed to the dollar, you’ll be subjected to exchange rate fluctuations when trading for other stablecoins.
- Make online purchases: One of the most significant advantages of using USDC is privacy. Transactions made on DEX are verified by smart contracts. They serve as a receipt of your payment so you can always keep track of your expenses. Commercial purchases are also possible. Companies that accept crypto payments usually take USD Coins as well. They include major corporations like Amazon, Microsoft, Visa, Tesla, and more.
- Earn Interests: Like the regular dollars, you can put USD Coins in an earning program, an exchange may offer, and make passive gains. Since it has a fixed value, you won’t have to worry about depreciation.