What is USDC(USD Coin)? What are its key features? How to acquire it? How You can use it?
Table of contents
- What is USDC?
- There are 3 main ways in which Stablecoins can be covered and which measure their quality and safety.
- What are the Key features of USDC?
- How much USDC in Circulation today?
- How to Acquire USDC?
- Using USDC
- Storing and Security
- About USDC
- Introduction to Stablecoins
- USDC Utility
- McHenry’s Endorsement: Boosting Stablecoin Regulation and Innovation
- PayPal’s Stablecoin Journey
- Coinbase Invests in Circle, expandas USDC Integration to 6 new Blockchains.
- Binance sold USDC for BTC and ETH after the Silvergate Bank Collapse
- Shopify to Include USDC-based Payments on its Platform
- Did You Know This?
What is USDC?
USD Coin(USDC) is a type of cryptocurrency known as a Stablecoin.
Stablecoins are designed to have a stable value and are pegged to a Fiat currency. Same as a US Dollar (USD) in the case of USDC.
A stablecoin is a digital cryptocurrency that represents the value of a fiat currency in terms of crypto.
And can be any other asset e.g. gold or fiat currencies. Stablecoins usually are covered by assets with low volatility to remain stable.
Most of them track fiat currencies, such as the euro or the U.S. dollar. This makes them relatively stable in value compared to other cryptocurrencies.
Investors can store their funds stable in the opposite of the high volatility of the crypto market.
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There are 3 main ways in which Stablecoins can be covered and which measure their quality and safety.
It should have less as possible differences from the original currency, for example, #UST shall have the equivalence of $1.
First, they are covered by physical assets like gold, Fiat, or other assets. The advantage is the reduced volatility of the stablecoin.
Second, they can be covered by other cryptos, which makes them more decentralized, but also more volatile on the other hand.
In this case, there must be more assets in cryptocurrency to stabilize the volatility.
Third, they can have an algorithm that can maintain the equivalence of the related fiat currency. The algorithm is automated and stabilizes the rate.
For example, if the value is above 1 USD the algorithm pushes more coins on the market so it turns back to 1 USD.
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What are the Key features of USDC?
USDC’s value is intended to remain close to the US dollar, making it a reliable store of value and medium of exchange.
Its issuers are required to hold an equivalent amount of USD in reserve for each USDC in circulation, ensuring transparency and backing.
Transactions can be completed quickly and across different platforms, allowing for efficient cross-border transfers.
It operates on various blockchain networks, including Ethereum, Algorand, and Solana, offering flexibility and interoperability.
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How much USDC in Circulation today?
Following the collapse of Terra USD, stable coin issuers have been under intense scrutiny over the quality of the reserves backing their tokens.
The current supply of USD Coin is 25.998.
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How to Acquire USDC?
1. Cryptocurrency Exchanges
Most major cryptocurrency exchanges list USDC, making it easy to Buy, Sell, and trade.
Peer-to-peer platforms allow you to buy USDC directly from other individuals using various payment methods.
Some platforms allow you to convert other cryptos into USDC.
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1. Digital Payments
Used for online purchases, bill payments, and various transactions, similar to traditional currencies.
2. Global Remittances
Fast and Low-cost transfers make it suitable for cross-border remittances, providing financial inclusion.
3. DeFi & Yield Farming
It is widely used in decentralized finance (DeFi) platforms for lending, borrowing, and yield farming.
Storing and Security
Storing in various types of wallets including hardware wallets, software wallets, and even some exchanges.
As with any cryptocurrency, it’s crucial to use strong passwords, enable two-factor authentication (2FA), and be cautious of phishing scams.
Reputation and Regulation
Regulatory compliance and a strong reputation in the industry contribute to its stability and acceptance.
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It is a second-largest stablecoin,a type of crypto token that maintains a peg to an underlying asset.
Such as a fiat currency or commodity. Despite its prominence ,it has been steadily losing market share to its primary competition, Tether,since March.
When Circle revealed that it had $3.3 billion in reserves stuck at the failing Silicon Valley Bank,causing USDC to briefly depeg.
Its market cap is currently just under $26 billion, compared with nearly $83 billion for Tether.
The push to other blockchains should spur much-needed adoption for USDC.
While Circle initially developed the stablecoin to kick-start a global payments revolution,it has largely found adoption for applications in decentralized finance, or DeFi, such as self-custodial wallets and lending protocols.
Because of its $1 peg, USDC serves as a substitute for the U.S,dollar in the crypto ecosystem,meaning you don’t have to transfer back and forth between digital currencies and fiat.
Introduction to Stablecoins
Five years ago USDC was launched with the idea that stablecoins could become a critical building block in creating a new financial system.
Since then, stablecoins have proven to be a critical element of the crypto economy,enabling users around the world to get easy access to U.S. dollars and other currencies with the benefits of crypto.
A fast, reliable,secure and programmable exchange of value.
It has an essential role vin serving the public interest when it comes to updating the financial system.
Having established itself as one of the most widely adopted and trusted digital dollars, USDC has enabled millions of users around the world with the ability to quickly access and move money at scale.
It has grown from an idea to the send largest stablecoin. The objective of the stablecoins is to be usable 24/7, widely available, stable,and backed 1:1 with transparent and safe reserves. It is designed with these principles.
Delivering humanitarian aid, especially in regions affected by natural disasters or conflict is not an easy task.
Traditional aid delivery methods face numerous challenges,including logistical issues, bureaucratic red tape, and intermediaries,which can slow down the distribution of resources to those in need.
Blockchain technology and stablecoins, such as USDC ,have the potential to address these challenges and improve the humanitarian aid distribution process.
Digital dollar assets can play a key role in improving the aid delivery process by reducing intermediaries,providing transparency,increasing speed,and cutting costs.
It facilitates the rapid and reliable transfer of funds to those in need, circumventing the pitfalls associated with traditional aid delivery mechanisms.
As we continue to explore the potential of blockchain and stablecoins ,we can work towards a future where humanitarian aid is delivered more efficiently and equitably.
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McHenry’s Endorsement: Boosting Stablecoin Regulation and Innovation
McHenry’s endorsement sparks momentum for Stablecoin regulation and innovation.
Paypal enters Stablecoin Space
Paypal has dived into the digital currency realm with PayPal USD.
In a notable development, PayPal has unveiled its latest endeavor :
The PAYPAL USD (PYUSD) Stablecoin.
This announcement closely follows the House Financial Services Committee’s recent passing of the Clarity for Payment Stablecoins Act.
A Bipartisan Bull designed to regulate stablecoins. This legislative move is aimed at creating a solid regulatory foundation to ensure secure and consumer-friendly stablecoin transactions.
Representative Patrick McHenry, Chair of the U.S. House Financial Services Committee, lends his support to PayPal’s novel Stable initiative.
His endorsement underscores the notion that stablecoins can flourish when nurtured within a well-structured regulatory framework.
His praise for PayPal emphasizes the significance of establishing clear regulations and strong consumer safeguards to fully unlock the potential of stablecoins.
McHenry seizes the moment to shine a spotlight on the clarity of the payment stablecoins act. Which was successfully ushered through his committee on July 27, 2023.
This bipartisan stride not only recognizes the importance of State-Level crypto oversight but also capitalizes on established regulatory frameworks.
Notably, McHenry envisions stablecoins as The Bedrock of Modern Payment Systems, amplifying the call for all-encompassing Digital Asset Regulations, with a spotlight on the stablecoin segment.
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PayPal’s Stablecoin Journey
The financial technology landscape is undergoing a significant transformation. And one of the latest developments is the integration of stablecoins into mainstream financial services.
A leading player in the digital payments industry, PayPal sees stablecoins as a potential revenue generator through payment flows.
This move not only highlights the growing acceptance of cryptos but also underscores the company’s commitment to innovation in the financial sector.
McHenry’s endorsement holds weight as PayPal faced regulatory challenges earlier for its stablecoins project.
The House Financial Services Committee’s Approval is crucial, even though it does not directly authorize stablecoins.
Its stablecoin PYUSD, launched through a partnership with PAXOS, was announced on August 1, 2023.
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Coinbase Invests in Circle, expandas USDC Integration to 6 new Blockchains.
Coinbase, a prominent cryptocurrency exchange, has acquired a minority stake in Circle Internet Financial and ended its partnership with the Center Consortium, which issued the USD Coin (USDC) stablecoin.
Circle will now independently handle the issuance and governance of USDC. And has expanded its support to 6 additional blockchains, making it compatible with a total of 15 blockchains.
While the exact size of Coinbase’s stake remains undisclosed, it was a non-cash transaction.
The move comes as PayPal introduces shifts in the stablecoin landscape. Despite competition, Coinbase downplays it, citing the nascent nature of crypto’s growth.
Amid evolving regulatory clarity, the decision to restructure aligns with industry changes.
With the move, Circle hopes to bolster its engagement with developers and cater to businesses and applications.
By adopting it as their on-chain dollar at a time when stablecoins are coming under scrutiny more than ever before.
The collaboration comes as both entities take the significant step of dissolving their Center Consortium partnership, which has been instrumental in the issuance of USD Coin (USDC).
Currently ranked as the world’s second-largest stablecoin.
According to Fortune, this updated agreement was made on 21st Aug. 2023, which comes as a response to regulatory uncertainty and potential competition from stablecoins, including Tether and now PayPal’s new stablecoin PYUSD.
USDC was originally launched in 2018 as a stablecoin pegged to the U.S. dollar, an action that would theoretically fix the asset price to $1.
The idea was first created by Circle, and the company went on to build a consortium called Center to govern the stablecoin.
Coinbase later joined this consortium as a distribution partner in preparation for the launch of USDC.
Following the launch, the stablecoin grew significantly, resulting in significant profits for Coinbase and Circle.
These two entities previously had a revenue-share agreement, which was disclosed in financial firms from firms.
Which would split earnings based on USDC minted by each company, and the amount held in each platform.
The new agreement will remain the same other than interest income being shared equally from any off-platform USDC such as DeFi wallets.
The adjustment will take away the previous focus on the company that originally minted USDC.
Binance sold USDC for BTC and ETH after the Silvergate Bank Collapse
Binance’s depleting USDC reserves have become a hot topic in the crypto ecosystem. Especially, after Coinbase CEO’s quip during the company’s Q2 earning call.
Cryptocurrency exchange Binance released its latest proof-of-reserves (PoRs) on Aug. 1, 2023, offering transparency into its crypto reserves.
However, the movement of its USD Coin reserves at the time of Silvergate collapse caught many people’s attention and became a topic of hot discussion on X(formerly Twitter).
Shopify to Include USDC-based Payments on its Platform
Shopify, an E-commerce platform,has added Solana Pay as a payment option. This allows merchants to use the platform to accept crypto transactions and will start with USD Coin stablecoin payments, stated Cointelegraph.
According to TechCrunch ,Solana plans to add other altcoins on its platform in the coming months.
It includes its native (SOL$22) token and the meme token Bonk.
Further, the company is integrating Web3.0 solutions into its operations.
They also include a suite of blockchain commerce tools for Web3.0 based stores and crypto wallets.
This integration will empower Shopify-based merchants to tap on blockchains capabilities by facilitating real-time fund access,enhanced management ,and improved protection against liabilities.
As a result, businesses can bypass traditional banking hassles, such as unwanted fees,chargeback issues, and delays in payment processing.
This alliance will also pave the way for direct and swift settlements using USDC from other networks compatible with Solana.
Following this collaboration, Solana Pay can now offer general commercial services,including token-specific promotions, international transactions.
As well as loyalty rewards tapping on other Web3 functionalities,including non-fungible tokens(NFTs).
USDC will be available on 15 Blockchains after adding 6 additional blockchains.
USD Coin according to the Stablecoin governing company, Circle,soon will be available on six additional blockchains:
Cosmos via Noble Network
The announcement comes just after Coinbase took an equity stake in Circle and the two firms shuttered the Center Consortium , the organization that had managed USDC since it launched in 2018.
Did You Know This?
While USDC is a prominent stablecoin, a staggering 70% of its adoption is happening outside the United States.
Emerging and developing markets, especially in regions like Asia, LatAm, and Africa, are showing a robust appetite for this transparent digital dollar.
It is a testament to the global reach and trust in blockchain technology.
As USDC is already available on Ethereum, Stellar, Avalanche,Arbitrum,Algorand,Tron,Flow,Solana and Hedera it will be rolled out on additional blockchains according to Circle,with Polygon PoS coming in October.
The company had announced that it planned to add Polkadot, NEAR,Optimism and Cosmos in 2023.
Because of Coinbase active role in the distribution of USDC as well as its equity stake in Circle and its newly launched layer-2 blockchain, Base served as a natural candidate for the stablecoin.
The expansion to other blockchains comes amid a flurry of developer-focused activity for Circle.
Earlier in August, the firm released a programmable Web3 wallet platform.
Which it said will facilitate applications to send, receive,and store cryptos, including USDC.
In April, Circle unveiled a protocol that allows you to move USDC between blockchains, with Ethereum and Avalanche serving as the pilot.
Basically, USDC market availability on other blockchains serves as a market differentiator from peers.
RivalPaxos only issues stablecoins on Ethereum,including the newly launched PayPal token.
Tether is currently available on 14 blockchains, although it operates outside U.S. regulation.
Yes, it is always redeemable 1:1 for US dollars. Its reserves are held in the management and custody of leading US financial institutions, including BlackRock and BNY Melon.
Mainly it is used for remittances. It can be used to send funds across borders. Recipients can store USDC without using a bank account or being concerned about price volatility. U.S. dollar exposure to Non U.S. Investors wishing to gain exposure to the U.S. dollar can add USDC to their crypto portfolio.
The price predictability of USDC has allowed it to serve as a safe haven for crypto traders during the periods of market volatility. It also enables a more efficient transaction of value in a stable digital currency across borders than has been the norm from traditional finance.
As a stablecoin,USD Coin is not designed as an investment. If it works the way its supposed to work, any USD Coin you buy will be worth the same amount in one year,five years,and so on.
Yes, it is one of the most trusted and reputable digital dollars,fully backed with high-quality reserves.