What Is USDC (United States Dollar Coin)?

What Is USDC (United States Dollar Coin)? | mypatricia.co

Because digital money is for the digital age. Stable coins represent a breakthrough in how we use money. Digital dollars work like other digital content, they move at the speed of the internet, can be exchanged in the same way we share content and are cheaper and more secure than existing payment systems. Digital dollars can also be called stable coins.

What are stable coins?

A stablecoin is a new class of cryptocurrencies that mimics the price stability of fiat currencies and is backed by a reserve asset. Stablecoins have gained traction as they attempt to offer the best of both worlds — the instant processing and security or privacy of payments of cryptocurrencies, and the volatility-free stable valuations of fiat currencies.

Read more on stable coins here.

Now let’s take a look at the coin in question.

What is a US Dollar Coin?

The US Dollar Coin is a stablecoin that claims to have a 1:1 value with the actual US Dollar. Essentially, that means one US Dollar Coin (USDC) should equal one real US Dollar, giving some much-needed stability in the market. Originally an ERC-20 token, it has since expanded to the Algorand and Solana blockchains.

Who created the US Dollar Coin?

The US Dollar Coin was created in a joint move by Coinbase, the hugely popular cryptocurrency exchange, and Circle, a crypto finance company based in Boston. Circle is backed by several high-profile companies, including Goldman Sachs.

Circle started in 2013 as a way to send money easily and quickly. Since then, it has expanded into cryptocurrency — raising millions in venture capital and acquiring crypto exchange Poloniex.

Why is a digital Dollar beneficial?

Unlike regular US dollars, USD Coin doesn’t require a bank account. It doesn’t require that you live in a particular geography. And you can send USD Coins around the world at an extremely low cost in just a few minutes.

What does it mean to be a programmable dollar?

Being programmable unlocks a whole new world of applications and businesses: developers can create accounts to store money with one line of code; lending that is faster, cheaper, and more transparent; faster and cheaper payments, including payroll; global crowdfunding; transparent and stable donations to charity.

What’s so special about USDC?

The US Dollar Coin isn’t the first or even the most popular US Dollar-backed coin. That title belongs to Tether. But Tether is under intense scrutiny over the state of its finances. It once claimed to have a real dollar in the bank for every Tether in circulation, but an investigation by the New York Attorney General caused it to step back from that claim.

That has led to a rise in other US Dollar-backed stablecoins that have more transparent funding and auditing processes. These include Gemini dollar, True USD, Paxos, and US Dollar Coin (USDC).

While USDC may not be unique compared to those competitors, here’s why it stands out from other cryptocurrencies:

  • 🏛 Regulated: USDC’s parent company is a registered Money Service Business in the United States. That means it’s regulated by the government’s Financial Crimes Enforcement Network (FinCEN), which combats money laundering.
  • ⚖️ Audited: USDC is audited by Grant Thornton, one of the top 10 accounting firms in the world.
  • ⚡️ Fast: It can take a long time to send US Dollars to people and institutions when banks are involved. USDC offers the stability and desirability of the US Dollar with the speed of cryptocurrency transactions.

How is the US Dollar Coin produced?

The US Dollar Coin isn’t mined like a lot of other cryptocurrencies. It is available as Ethereum ERC-20, Algorand ASA, and Solana SPL tokens that can be purchased using US Dollars on several major exchanges.

Currently, there are about four billion USDC in circulation.

How it works.

After a customer meets the Know Your Customer (KYC) identity requirements, they can link their bank account and make a wire transfer in US Dollars. That money is then converted into USDC, and the customer can use an exchange to trade it for other cryptocurrencies.

The customer can also convert the USDC back into US Dollars, which will then be wired back into their bank account.

Closing Nuggets.

Traditional investors are wary of cryptocurrency for two key reasons: lack of regulation and volatility. This new wave of stablecoins seeks to change all of that, becoming a gateway for well-established institutions to dive in.

USDC’s parent company isn’t shy about saying the currency is for those who want to move medium to large amounts. By becoming a more attractive way for institutional investors to get involved, stablecoins like USDC could help make cryptocurrencies more mainstream.

Patricia Technologies Limited is a fintech company that trades bitcoin and other cryptocurrencies.