Hi Publish0x community! Welcome back in this new article of my “Easy & Short Cryptocurrencies Made Accessible” area.
In this article we talk about more features of USDC!
In the last E&S article I introduced you USD Coin (USDC) and I said that is a stablecoin, which is a digital "currency" pegged to a stable reserve asset. Its value is tied to that of the U.S. dollar and therefore does not experience the fluctuations that other cryptocurrencies do. USDC is a currency pegged 1:1 to the dollar and, this fiat currency has no issue limit), the USDC smart contract is special in that the issuance of USDC is infinite.
What are the main features of the project?
USDC might seem like just another stable token. There are several today, especially when pegged directly to the value of the dollar. However, there are some specificities to consider. Specificities that could make it, in the medium and long term, one of the best alternatives we have available in the sphere of stables pegged to the U.S. national currency.
Anchored by Coinbase: The fact that it has one of the world's largest exchanges behind it is certainly a very good sign for USD Coin. Indeed, we are looking at the largest exchange in the world, which is also representative of several institutional investors within the cryptocurrency world. One can hardly be wary of Coinbase: a solid project, which now moves more money than many international banking groups and is constantly monitored by tax and financial authorities around the world.
The official website is hosted by Coinbase is another important source of information. Mainly because it constantly keeps updated the number of tokens in circulation and the trading volume for the past 24 hours.
Pros and Cons of USDC
The advantages of using a stablecoin appear obvious: since it is not tied to any algorithm (which makes it impossible to mine), USD Coin is released immediately as soon as it is requested, keeps its value tied to the dollar unchanged over time, and can be used to "crystallize" gains generated from investments.
USDC is based on the Ethereum network, to be precise it is identified as an ERC-20 token. This makes it possible to replicate the many advantages seen on the Ethereum network on this stablecoin as well: Ethereum manages smart contracts based on the Ether virtual currency and, in the case of the stablecoin we are analyzing, they allow for certifying the issuance of U.S. bonds to cover the required amount of crypto, with very rapid issuance times. Unfortunately, however, USDC also has shortcomings: since the exchange rate with the U.S. dollar is always 1:1, USD Coin does not lend itself to investment or trading, never generating a real profit or return from its price fluctuations (which are always very small and rare).
- Is pegged to the value of the dollar.
- Based on the Ethereum network.
- Not mineable through mining processes.
- Rapid issuance times.
- Useful for "freezing" investment gains.
- Managed by a consortium co-founded by Coinbase
- Due to its 1:1 ratio to the dollar, it is not suitable for trading activity.
- Does not generate real profit.
- As with all stablecoins, you risk having more crypto than dollar reserves.
- High competition: actually, the competition is very high. Tether is capitalized much more and although it is perhaps less transparent in its management than USD Coin, it is more popular. Binance also operates its token pegged to the dollar, and so will most likely begin to do all the major exchanges worldwide.
Image source: https://koinsquare.com/stablecoins-a-confronto/
If you want to research more, you can DYOR from the whitepaper: https://f.hubspotusercontent30.net/hubfs/9304636/PDF/centre-whitepaper.pdf
Have you already used USDC for trading or hedging?
Next Sunday I’ll introduce to you a new cryptocurrency.
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