Updated: Dec 20, 2019
USD Coin (USDC) is a relatively new stablecoin fully backed by the US dollar. It is developed by the CENTRE consortium which is founded by Circle and Coinbase. USDC is an open source stable coin which is powered by Ethereum and based on smart contracts. The USDC token creates immense possibilities in lending, payments, investments, trade finance, and currency trading. USDC is CENTRE’s first stablecoin implementation and Coinbase and Circle are its first commercial users.
This guide will talk about why USD Coins were designed, their creators, how it works, and various real life applications and uses.
What Is USD Coin Designed For?
USD Coin was essentially developed to bring together the stability of US dollars with the flexibility of crypto. The founding members understood that smart contract platforms were the fundamental building blocks of value exchange as more and more goods and services were getting tokenized. However, there were still some inhibitions in the financial world towards using cryptocurrencies.
USDC was created as a solution to cryptocurrency volatility which is a major obstacle in mass adoption of the tech. Another hurdle in cryptocurrency transactions is speed and scalability. Further, there were not many cryptocoins that could be exchanged for fiat currency.
USDC works to solve all these problems and act as a bridge between the world of fiat currencies and crypto. The cryptocoin works essentially to solve the problem of other cryptocurrencies and interact with real world money and markets.
Who Is the Team Behind USD Coin?
USD Coins are the first offerings from the CENTRE consortium. The open source technology project was launched with significant contributions from founding members Coinbase and Circle. CENTRE consortium is expected to provide the support, governance, and R&D required by USDC to support the future of the initiative.
Circle was founded in 2013 to change the way money worked and make it open, secure, free, and everywhere. Its global OTC crypto trading desk, Circle Trade, experiences over $2 billion in monthly trading volume. Circle is also the group behind the world’s most active crypto exchange, Poloniex.
Coinbase is known for rapidly expanding its product offerings and has now gained the title of being many things crypto. It offers seven products over various different facets of the crypto space. Besides being a popular and successful exchange, it also offers a proprietary wallet. It is one of the leading crypto foragers into retail, business and institutional sectors.
How Does USD Coin Work?
Every USD Coin is backed by a US dollar, which is held in reserve by regulated financial institutions. The tokens are also issued by these audited financial institutions so that every USDC can be redeemed for $1. This allows the cryptocurrency to enjoy stability and become more attractive to businesses.
The US dollar reserves for USDC are attested every month by one of the top 5 accounting services firm, Grant Thornton LLC. This allows for true financial and operational transparency and ensures that the USDC is always 100% redeemable for dollars.
USDC is an ERC-20 token which is powered by Ethereum instead of traditional bank rails. This allows participants to move dollars via the USDC cryptocurrency anywhere in the world in a matter of minutes rather than days. Also, there is minimal transaction cost involved.
Users are required to sign up with a participating wallet, such as imToken, Trust Wallet, Ledger, or Coinbase wallet among others to store their tokens. You can trade USDC on all the popular crypto exchanges, namely Coinbase, Poloniex, CoinEx, FCoin, and Binance among others.
What are Current and Future Applications of USD Coin?
USDC can be purchased from Circle’s official website or a supportive cryptocurrency exchange by using fiat currency. The cryptocoin holds great opportunity for trading, payments, and applications.
USDC is used by a number of applications, such as Aave, BlockFi, Celsius Network, CoinLoan, Compound, and Constant. The cryptocoin also fuels various platforms, such as Dispatch labs, Fota, Abacus, Bitpay, and Loom among others.
USDC can be used by:
Traders can easily seize market opportunities. USDC gives them the advantage of using a cryptocoin that is essentially stable and acts as a convenient on-ramp between fiat and other cryptocurrencies. USDC also allows money to move across exchanges at the speed of crypto as opposed to bank wires.
USDC acts as the programmable bridge between crypto and fiat, allowing developers the stability they require while building, testing and launching a project.
USDC is a stable fiat token which is known to attract customers. Exchanges can capitalize on this and offer their participants a chance to realize profits or losses without losing the capability to trade at a moment’s notice.
USDC may prove to become very successful in the coming future since the entire system is regulated, transparent, and verifiable. USDC is already ranking in the top 25 crypto asset by market capitalization and has now surpassed $240 million in market cap.
The founding members have big plans for this coin aiming to use the token to create an open global financial system which is built on crypto rails and blockchain infrastructure. USDC is the first major step and is expected to stay on course with the many advantages offered, such as being easier to program, use in apps, send, and be stored locally than traditional US dollars.