USDC stands for USD Coin. It is a digital equivalent of a US dollar. One USDC token is meant to be worth exactly one real US dollar. It is therefore common to say that USDC is a stablecoin because its price demonstrates little to no volatility around the intended value.
As of mid 2021, there are more than 26 billion USDC tokens in circulation, which makes it the second largest US stablecoin after Tether’s USDT.
One key aspect of stable cryptocurrencies like USDC is that they are issued and controlled by private companies instead of governments or unsupervised protocols. USD Coin is regulated by Centre consortium which was founded by Circle.
Circle is a rather famous company in the crypto realm which has received more than US$135 million in venture capital from four rounds of investments from 2013 to 2016. Its investors and members include Goldman Sachs, Coinbase and Bitmain.
The token was launched in September 2018. USD Coins can be issued on multiple blockchains including Ethereum, Stellar and Solana.
Every new token that Centre mints must be backed by a real US dollar deposited to a company’s bank account or its equivalent. The company can either use its own money to back new tokens or engage in a demand deposit-like agreement with external investors.
This means that an investor can deposit US dollars to the Centre’s account and get USDC in return while keeping his right to do the reverse exchange at any time. When the tokens are returned, Centre can decide to burn them (take them out of circulation). This is usually dictated by basic supply and demand rules in order to maintain stability.
“Every month, the US dollar reserves for USDC are attested to by top five accounting services firm, Grant Thornton LLP,” Centre says.
“We publish those reports so that you can be confident that USDC is always 100% redeemable for dollars.”
The reports can be found on the Centre website.
While several other leaders of the stablecoin space received a somewhat questionable reputation over the years (see Tether’s case), USDC has so far been on a relatively good account by being transparent from the beginning. You can nevertheless find news about the apparent lack of transparency within the company.
Visa has recently announced that it will allow the use of USDC to settle transactions. And, just this month, Circle said it will go public with a projected value of $4.5 billion. Such news is a big achievement for a crypto company which contributes towards confidence in using USDC as a fiat alternative. And all this comes with standard advantages of blockchain technology.
For more news, guides and cryptocurrency analysis, click here.
Las Vegas, US, 1st November 2024, Chainwire
From digital art to real-estate assets, NFTs have become a significant attraction for investors who…
Singapore, Singapore, 21st October 2024, Chainwire
HO CHI MINH, Vietnam, 17th October 2024, Chainwire
London, UK, 16th October 2024, Chainwire
Sinagpore, Singapore, 16th October 2024, Chainwire