What Is USD Coin (USDC)?
USD Coin (USDC) is a stablecoin pegged to the U.S. dollar on a 1:1 basis. Every unit of this cryptocurrency in circulation is backed up by $1 held in reserve, in a mix of cash and short-term U.S. Treasury bonds. The Centre consortium behind this asset says regulated financial institutions issue USDC.
The stablecoin was originally launched on a limited basis in September 2018. USD Coin’s mantra is “digital money for the digital age“, and stablecoin is designed for a world where cashless transactions are becoming more common.
Several use cases have been unveiled for the USD Coin. As well as providing a haven for crypto traders in times of volatility, those behind the stablecoin say it can also allow businesses to accept payments in digital assets and shake up an array of sectors, including decentralized finance and gaming.
Overall, the goal is to create an ecosystem where USDC is accepted by as many wallets, exchanges, service providers and dApps as possible.
Who Are the Founders of USD Coin?
The Centre Consortium has two founding members. One of them is the peer-to-peer payment services company Circle, while the other is the Coinbase cryptocurrency exchange. Other crypto ventures are open to joining this consortium.
Explaining the rationale behind USDC, Circle co-founders Jeremy Allaire and Sean Neville wrote: “We believe that an open internet of value exchange can transform and integrate the world more deeply, eventually eliminating artificial economic borders and enabling a more efficient and inclusive global marketplace that connects every person on the planet.”
In 2020, Circle and Coinbase collectively announced a major upgrade to USDC’s protocol and smart contract. These enhancements aim to make it easier for USD Coin to be used for everyday payments, commerce, and peer-to-peer transactions.
What Makes USD Coin (USDC) Unique?
The stablecoin market has become exceedingly crowded over recent years — but the USD Coin has aimed to stand head and shoulders over competitors in several ways.
One of them concerns transparency — and assuring users that they will be able to withdraw 1 USDC and receive $1 in return without any issues. To this end, it says a major accounting firm is tasked with verifying the levels of cash that are held in reserve and ensuring this matches up with the number of tokens in circulation.
Unlike some crypto ventures, Circle and Coinbase have also achieved regulatory compliance, which has helped pave the way for international expansion. Both projects are also well-funded, giving stablecoin certainty.
Coinbase briefly contemplated diversifying the funds backing USDC but retracted that proposal after heavy community backlash. The transparency over the provenance of its funds has been a big reason for USDC’s success. Unlike its rival USDT, which has found itself embroiled in repeated investigations, USDC has never been accused of wrongdoing. That has led to USDC gobbling up much of USDT’s dominance in the stablecoin market: although USDT commanded a 74%:16% lead in market share in February 2021, this has shrunk to a 45%:30% lead in February 2022.
How Many USD Coins (USDC) Are There in Circulation?
It’s difficult to give an exact number here — as, in theory, the number of USD that can exist is limitless. New coins are created in line with demand whenever someone wants to purchase one with their humble dollar.
That said, factors have helped USD Coin enjoy an explosion in popularity over the years — especially in 2020. One of them is the sudden, sharp rise in the popularity of decentralized finance. USDC is a common sight on many DeFi protocols, given how it serves as an onramp to the wider ecosystem.
How Is the USD Coin Network Secured?
The USD in circulation are ERC-20 tokens found on the Ethereum blockchain. One of the biggest advantages here is how it can then be integrated with Ethereum-based applications. As we mentioned earlier, security and confidence in this stablecoin are delivered by proving that U.S. dollars are being held safely in reserve.
Where Can You Buy USD Coin (USDC)?
As you might expect, one of the most enthusiastic exchanges that offer USDC is Coinbase, given how the exchange was involved in this stablecoin’s creation. USD Coin can also be purchased and traded on Poloniex, Binance, OKEx and Bitfinex, and decentralized exchanges such as Uniswap.