Categories: BitcoinCrypto

What Is USD Coin (USDC) Cryptocurrency / Stablecoin ? [All Information]

What is a USD Coin?

USD Coin is another top stablecoin to use. It initially only utilised the Ethereum blockchain and is supported by physical assets. But now it also includes the blockchains of Algorand and Solana. Because it has more transparent funding and auditing procedures than Tether, USD Coin is unique. High speed and dependability are offered.

A relatively new stablecoin linked to the US dollar is called USD Coin (USDC). In association with Coinbase, it was released on September 26, 2018. A substitute for other cryptocurrencies backed by US dollars like Tether (USDT) and TrueUSD is USDC (TUSD).

Simply put, USD Coin is a service that tokenizes US dollars and makes it easier for people to use them on the internet and public blockchains. Additionally, USDC tokens can always be converted back to USD. With the aid of an ERC-20 smart contract, the execution of issuing and redeeming USDC tokens is secured.

Putting US dollars on the blockchain enables instantaneous transfers to any location in the world and provides cryptocurrencies with much-needed stability. It also creates new possibilities for lending, trading, risk hedging, and other activities.

A digital stablecoin called USD Coin (USDC) operates on the Ethereum, Stellar, Algorand, and Solana blockchains as well as the Hedera Hashgraph network and is pegged to the US dollar.

A group named Centre,[5] formed by Circle and made up of representatives from the cryptocurrency exchange Coinbase and Circle investor Bitmain, manages USD Coin.

Fully reserved fiat-backed stablecoin known as USD Coin (USDC)

Stablecoin: What is it?

Due to its peg to a secure asset, such as fiat money, stablecoin has a value that is relatively stable. Let’s examine the top five stablecoins for investments in 2021.

Who is the USD Coin Development Team?

The Centre consortium, a collaboration between Circle and Coinbase, created USD Coin. While Circle and Coinbase are the first commercial issuers of USDC, Centre established the technology and regulatory framework.

The businessmen Sean Neville and Jeremy Allaire launched Circle in 2013.

Circle is a recognised money transmitter, making its financial records public. Money Transmitters are US enterprises that provide money transfer services and are subject to federal rules and regulations. The corresponding amount of USD is held by one of Circle’s certified partners prior to the issuing of USDC. As a result, all USDC coins are controlled, open, and verifiable. Additionally, Circle is recognised as the Goldman Sachs-backed cryptocurrency firm.

How Do USD Coins Operate?

USD Coins aren’t merely created by a magic printer. Every USDC coin will, according to Circle, be backed by a single US dollar. Tokenization is the process of converting US cash into USDC tokens.

Three steps are involved in tokenizing USD into USDC:

1) A user transfers USD to the bank account of the token issuer.

2) The issuer generates an equivalent quantity of USDC using a smart contract for USDC.

3) The freshly created USDC are given to the user, and the US dollars that were used in their place are kept in reserve.

Although the method is reversed, redeeming USDC for USD is just as simple:

  • A user asks the USDC issuer to exchange USD tokens for an equivalent quantity of USD.
  • The issuer requests that the USDC smart contract convert the tokens into dollars and remove an equivalent number of tokens from circulation.
  • From its reserves, the issuer returns the desired amount of USD to the user’s bank account. The user receives the net amount, which is equal to the amount in USDC tokens less any fees paid.

Unlike the most well-known stablecoin, Tether (USDT), the makers of the USD Coin are required to maintain full reserves of the comparable fiat currency while also cooperating with a number of financial institutions.

All USDC issuers are required to declare their USD holdings on a regular basis, and Grant Thornton LLP then publishes those reports. You may find here all of the monthly attestation reports.

Use of US Dollar Coin

On the Ethereum blockchain, USD Coin (USDC) is a 1:1 representation of one US dollar. It is an ERC-20 coin and is compatible with all apps that adhere to the standard.

You must register for an account, authenticate your identity (KYC), and link a valid bank account in order to tokenize or redeem USDC using Circle. Users can conduct the following four key operations on the Circle USD platform:

With the exception of a $50 cost for inaccurate and rejected bank transactions, Circle USDC doesn’t charge customers any fees for tokenizing and redeeming services. All usual costs are charged for Coinbase USDC activities.

100 USDC is the minimum redemption amount. Only on business days are the tokens processed, and it might take up to 24 hours.

There is no minimum threshold for tokenization, and it can take up to two business days to complete.

Stablecoins like USDC are often used to:

  • shorting cryptocurrencies without cashing them out will make it simpler to purchase them afterwards;
  • Stay away from conventional financial instruments and institutions;
  • Stay away from hyperinflation (if you live in Venezuela or Turkey);
  • Send money quickly, securely, and affordably worldwide;
  • Buy things for use in different blockchain-based games, exchanges, and dApps for cryptocurrencies.
  • What Sets US Dollar Coin Apart From Other Stablecoins?

Four groups may be made for cryptocurrency stablecoins:

Fiat-collateralized. These comprise all stablecoins linked to a fixed amount of fiat currency. By design, all fiat-collateralized currencies are all centralised. Examples include Gemini Dollar (GUSD), Paxos Standard Token (PAX), TrueUSD (TUSD), Tether (USDT), TrueUSD (TUSD), Digix Gold (DGX), and USD Coin (USDC).

Crypto-collateralized. These stablecoins have their value linked to predetermined digital assets. Havven; Makercoin (MKR and DAI); (nUSD & HAV).

algorithmic without collateral. models of economics based on software that aim to maintain price stability without using collateralized assets. Basis, Kowala, and Fragments are examples of projects.

Hybrid. Stablecoins that use a combination of the aforementioned methods. Typical projects Carbon.

A centralised stablecoin, USD Coin belongs to the first group of currencies with fiat collateral. In general, there aren’t many distinctions between the projects that fall under the same category and how they all operate. The two that stick out the most are Digix Gold (DGX), whose value is tied to gold, and Tether (USDT), which is infamous for refusing to perform a truly public audit.

The remaining stablecoins with fiat collateral emit attestations on a regular basis and are backed by US dollars. The primary distinctions between them centre on their price structures and various partner organisations, although the economic strategy mostly remains constant.

Where to Keep US Dollar Coin

Any Ethereum wallet may be used to hold USDC, an ERC-20 token that was created on the Ethereum network. The most popular choices are the wallets from MyEtherWallet, MetaMask, Mint, or Jaxx. If you are unable to create an Ethereum wallet.

State of the Project Currently

The USD Coin initiative is advancing quickly and is supported by reliable institutions. The ecosystem of the project has already grown to include more than 60 partners since it was first announced in May 2018.

The degree of influence project founders have over the stable cryptocurrency is one of the most recent topics of discussion surrounding the USDC project. It appears that if there is even the slightest suspicion that USD Coins are being used for unlawful purposes, the developers have the authority to blacklist addresses and freeze cash.

However, identical conditions may also be included in the majority of other stablecoins. DAI by Maker is the only stablecoin devoid of such conditions.

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