The bank’s shutdown by California regulators in March due to a bank run raised concerns about the security of USDC’s reserves. This uncertainty led to a drop in USDC’s value, briefly touching 80 cents. USDC is commonly bought with Bitcoin — and if it’s your first time buying Bitcoin, be sure to check out our comprehensive guide here. A brief introduction of what DeFi flash loans are, how they impact the greater crypto ecosystem, and ways to prevent flash loan attacks. An overview of ERC20, the token standard that promotes interoperability across the Ethereum blockchain network and its many applications. MoonPay also makes it easy to sell USDC when you decide it’s time to cash out.
Is USDC the only stablecoin?
- It does this by keeping one dollar or cash equivalent in reserve for each USDC in circulation.
- If you want to make sure your USDC is as secure as possible, the best option is to secure it with a hardware wallet.
- Given its ability to transfer to individuals and businesses who have access to the internet, USDC makes it easier for governments to transfer relief funds.
- This comprehensive and transparent backing underlines USDC’s commitment to providing a stable and trustworthy digital currency option in the volatile world of cryptocurrencies.
The price stability of USDC contrasts sharply with the notorious price fluctuations of other cryptocurrencies like Bitcoin and Ethereum. Stablecoins are a specific subset of cryptocurrencies which aim to peg their value to the value of a real-world asset (usually fiat) https://cryptolisting.org/ to ensure price stability. Different types of stablecoins use different methods to attempt to maintain a stable value. USD Coin is managed by Centre, a consortium co-founded by the cryptocurrency exchange Coinbase (COIN), and Circle, a financial technology company.
USD Coin (USDC): Definition, How It Works in Currency, and Value
USD Coin is managed by Circle.[1] USDC is issued by a private entity and should not be confused with a central bank digital currency (CBDC). These fluctuations are usually minimal and temporary, as mechanisms are in place to manage its value. When demand for USDC increases, new tokens can be created, and when demand decreases, tokens can be taken out of circulation to help maintain its peg to the dollar. However, like any asset traded in open markets, its value can vary slightly at any given moment due to changes in supply and demand, market sentiment, and overall economic conditions.
How to buy USDC (USD Coin)
USDC was created by a non-profit consortium funded by crypto exchange Coinbase and financial technology company Circle. Its mission is to “raise global economic prosperity through the frictionless exchange of value”. To achieve this, it announced its digital dollar in May 2018, during the bear market, and launched in September of the same year.
Who Are the Founders of USDC?
You can purchase as little as 0.001—equal to one-tenth of a cent—of USD Coin. The accounting firm Deloitte oversees these segregated accounts and provides monthly attestation reports. Learn all about Bitcoin halving events that greatly what is other identify of financial institution reconciliation assertion affect the inflation rate and supply-to-demand ratio of BTC, and occur every four years until 2140. Learn about Lightning Network, one of the most promising scaling solutions for Bitcoin to make the blockchain cheaper and quicker.
USDC is an ERC-20 token, so when it comes to security, it relies on the underlying Ethereum network. If you’re worrying about the security of its peg, then that responsibility lies with Circle. To be transparent, USDC is audited by a third party that publishes information on its reserves periodically. These features mean USDC is reasonably secure both technically and financially. For example, among these assets, USDC reserves include USD-denominated Treasury Bonds.
And though most people choose to invest in BTC or ETHs, one concern with the largest cryptocurrencies is the often considerable price volatility. That said, there have been factors that have helped USDC 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.
Circle consistently publishes audited reports of its reserves and is seen as a trusted parent company of the stablecoin. For those trying to time the top of the market and buy back in later, USDC can be held until the time comes to swap back to a more volatile cryptocurrency of your choice. With USDC, you’re able to make cross-border payments, also known as remittances, to anyone with a cryptocurrency wallet for just a fraction of the cost of traditional remittances. Transferring your local fiat currency to other businesses or individuals around the world can be incredibly costly, not to mention inconvenient.
According to the report, the total USDC reserves held by the company consist of $42.3 billion worth of US Treasury Securities and total cash deposits of $12.2 billion. The monthly reserve report was issued by leading global accounting firm Grant Thornton. One of them is the peer-to-peer payment services company Circle, while the other is the Coinbase cryptocurrency exchange. Since USDC operates primarily as an ERC-20 token, it is supported by countless DeFi platforms and crypto apps and services. It’s also readily available on centralized and decentralized exchanges, meaning buying it is relatively simple too.
The value of USDC is designed to remain stable, making USDC a stablecoin. One of them concerns transparency — and giving users the assurance 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.
Much like cash, they are suitable for everyday purchases, such as buying in-game items or paying for crypto services. Before we take an in-depth look at the stablecoin USDC, currently the sixth-ranked cryptocurrency by market cap, it’s important to understand what stablecoins are. In this article, we’ll explore this type of digital currency and look at USDC, one of the most popular stablecoins on the market today. Price volatility is nothing new, however, and has been commonplace since the birth of crypto. For seasoned investors and crypto newbies alike, wild fluctuations in price can represent an opportunity for big returns. But for some they might make cryptocurrency assets seem too risky because of potential losses.
Since USDC operates on the blockchain, it benefits from the features of blockchain technology, such as the permissionless p2p transfer of assets. That means you can transfer USDC without a middleman tampering with the transaction or taking a cut of the fee. Even though Circle releases regular audits of its reserves, there is no guarantee that the coin will always maintain its $1 value.
USDC operates across multiple blockchains, including Ethereum and Algorand, ensuring wide accessibility. Its defining feature is full collateralization, with each USDC token backed by a corresponding US Dollar in reserve. This approach provides a dependable digital currency option for transactions and investments, countering the volatility typical in the cryptocurrency market.
USD Coin (USDC) is a stablecoin uniquely pegged to the US Dollar, aiming to offer a stable value of around $1. It’s a collaborative creation of the Centre consortium, involving Circle and Coinbase. Circle, a pioneering fintech firm established in 2013 in Boston, is known for its comprehensive financial services, including peer-to-peer payments and cryptocurrency trading. Notably, Circle gained regulatory approval with a BitLicense from the New York State Department of Financial Services in 2018. As a cryptocurrency, USD Coin (USDC) is generally considered risky as an investment.