Cryptocurrencies are famous for being extremely volatile and reactive to market movements. This is one of the significant issues that needed to be solved for crypto to accelerate its way to mainstream adoption and for it to be able to be considered a viable replacement for fiat cash. This is where Stablecoins come into play. Stablecoins are cryptocurrencies tied to the value of a fiat currency, such as the U.S. dollar or the Euro, and they allow for more price stability when using cryptocurrencies. USDC is one of many stablecoins out there.
USDC is a stablecoin cryptocurrency that is pegged 1:1 with USD. It was created and is managed by a consortium called Centre, co-founded by companies Coinbase and Circle.
USDC is an open-source project, meaning that anyone can contribute to its code and help with its improvement and bug fixes.
Its price is not volatile since it is pegged to the U.S. dollar. This makes it an excellent tool for hedging against inflation while always backed by actual U.S. dollars in reserve.
Finally, USDC has an outstanding level of transparency with monthly reports about the amount of USD in its reserves. A major accounting firm writes the reports.
When you want to buy one USDC, your USD is sent to a reserve, and in return, you get one USDC token. The same goes for when you want to redeem your USDC tokens for USD. Your USDC token gets burned, and you get USD back.
USDC use cases are:
The price of USDC at the time of writing (May 16th, 2022) is $1 with a market cap of $51.1B, making it the 5th largest cryptocurrency globally. It also has a 24h trading volume of $4.3B, showing that it is slowly growing.
There is 49.8B USDC in circulation right now. USDC is not limited by any computer program like Bitcoin, and new tokens can be created every time someone deposits an equal amount of USD to the treasury.
Stablecoins have become an essential part of any crypto portfolio in the last few years, so naturally, the demand for coins like USDC has skyrocketed.
USDC is available for purchase in many ways, with essentially infinite supply since new tokens are created only when users want to exchange their USD for USDC.
The primary way people buy their USDC is through centralized exchanges because they offer the ability to purchase them with credit\debit cards, which most people prefer.
Although significantly more complicated, the second way is through decentralized exchanges such as Uniswap. Decentralized exchanges usually require users to already have some cryptocurrencies in their wallets to buy other cryptos.
Finally, it can be purchased easily through a broker app such as our Veli App, where you can get your hands on some USDC in just a few taps on the screen.
As we mentioned, USDC was founded by a consortium called Centre. Centre was established by a cryptocurrency exchange Coinbase and a peer-to-peer payment services company, Circle.
The most notable people behind the project are Circle co-founders Jeremy Allaire and Sean Neville.
Circle and Coinbase collectively announced a significant upgrade to USDC’s protocol and smart contract. These enhancements aim to make it easier for USDC to be used for everyday payments, commerce, and peer-to-peer transactions. However, complete details about the update are still not published.
Besides being available on Ethereum, USDC is also available on the Algorand, Solana, Stellar, and TRON blockchains.
USDC’s latest investment round is paired with Black Rock and Fidelity Management and Research, where the USDC’s company founder, Circle, raised $400M to explore further possibilities with traditional finance.
USDC has not encountered any legal issues since its parent company Center, has consistently complied and positioned itself well regarding regulations, releasing regularly audited reports on its reserves.
USDC’s network activity shows us that the stablecoin is in constant growth with some impressive numbers:
USDC’s biggest competitors are USDT and BUSD.
USDT is the world’s largest and most popular stablecoin. The biggest difference between USDC and USDT is that USDT has had legal issues proving that every coin is backed by $1 while the reputation of USDC has remained intact.
DAI is the world’s first decentralized algorithmic stablecoin created by MakerDAO. It was the first stablecoin to be issued and controlled by Smart Contracts. It is also the first stablecoin backed by a crypto collateral deposit.
Tether | USD Coin | DAI | |
|---|---|---|---|
Market Cap | $112.3b | $32.3b | $5.34b |
24 Volume | $72.3b | $6.6b | $319m |
Total Number of Wallet Addresses | 38.5m | 13.9m | 2.3m |
Total Number of Daily Active Users | 80.5k | 26.1k | 2.1k |
Total Number of New Addresses Created Daily | 18.2k | 7.7k | 400 |
Launch Date | 2014 | 2018 | 2019 |
Issued by | Tether | Centre Consortium (Circle and Coinbase exchange) | Maker Protocol and the MakerDAO |
As with any other asset class, there are risks involved when it comes to investing. Since there are many kinds of cryptocurrencies, risks can be grouped into two categories – general risks that apply when investing in cryptocurrencies and risks that only apply to specific assets.
We have prepared a guide that addresses general cryptocurrency investing risks and offers tips on how to mitigate them, while risks that only apply to specific assets are addressed directly in the coin guides such as this one.
Centralization: One of the most significant risks is that most stablecoins are centralized, and USDC is one of them. Since the Centre controls it, this goes against the ethos of cryptocurrencies and the whole decentralization goal.
Website: https://www.centre.io/usdc
Medium: https://medium.com/centre-blog
USDC is the second-largest stablecoin and sixth-largest cryptocurrency on the crypto market. Co-founded by Coinbase and Circle, it is a highly regulated and transparent stablecoin offering monthly reports on its regulation-compliant reserves. Despite its heavy competition and risks, it is still gaining popularity quickly.
The future is looking bright for the USDC as use cases keep growing and network activity increases. Their latest investment round shows the initiative to keep exploring the possibilities of improving traditional finance.
