First thing first. What is USDC and what does it stand for?
USDC stands for USD Coin.
USDC is a fully-reserved stablecoin, which is a type of cryptocurrency, or digital asset. Unlike other cryptocurrencies that fluctuate in price, USDC is designed to maintain price equivalence to the U.S. dollar. USDC is a stable store of value that benefits from the speed and security of blockchain technology.
USDC is the brainchild of Circle and Coinbase (The most influential players in crypto space), launched in 2018. USDC is an open source protocol, which means anyone can use it — not just Circle and their partners. USDC along with tether (USDT) equates to more than 80% of total market capitalization for all U.S. dollar-pegged stablecoins. Though USDT has the largest market capitalization among all stablecoins, USDC has its advantages and differences from its peers.
Why USDC? Or stablecoins?
Think of that, you have some BTC and you want to sell it to get some gain. Now you have the choice to sell it for fiat currencies. But you don’t know what fiat you want to sell it for. Your preferred fiat could go down by the time you sell it for. Now, stablecoins minimize typical cryptocurrency volatility by maintaining collateral in the form of reserves, often of U.S. dollars.
For instance, you sell it for Euro. Now you want to send it to your wallet. How you will do that? With the help of a stablecoin, you could send it to your wallet or to the supported wallet.
The purpose of USDC is to provide customers with a fast and cost-effective way to transfer value quickly anywhere in the world. Unlike some stablecoins linked to the price of a single asset or basket of assets, USDC’s value is tied directly to the U.S. dollar.
Who is backing USDC?
USDC was first announced on 15 May 2018 by Circle, and was launched in September 2018. On March 29, 2021, Visa announced that it would allow the use of USDC to settle transactions on its payment network.
USDC reserves are regularly attested (but not audited) by Grant Thornton, LLP and the monthly attestations can be found on the Centre Consortium’s website.
How transparent is USDC?
Unlike its competitor USDT, which has a severe transparency issue, USDC is fully backed by cash and U.S. Treasuries, one of USDC’s core value propositions is that a financial institution can hold it without fear of fluctuation.
For every $1 of USDC in circulation, Circle holds $1 of USD. USDC is fully-backed by cash and short-dated U.S. treasuries, and these reserves are held in the custody of leading financial institutions.
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Image: Coinbase
