All about USDC

What Is USDC (USDC)?
USDC is a stablecoin that is pegged to the U.S. dollar on a 1:1 basis. Every unit of this cryptocurrency in circulation is backed up by $1 that is held in reserve, in a mix of cash and short-term U.S. Treasury bonds. The Centre consortium, which is behind this asset, says USDC is issued by regulated financial institutions.

The stablecoin originally launched on a limited basis in September 2018. Put simply, USDC’s mantra is “digital money for the digital age” — and the stablecoin is designed for a world where cashless transactions are becoming more common.

Several use cases have been unveiled for the USDC. As well as providing a safe 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.

USD Coin (USDC) is a cryptocurrency stablecoin that is pegged to the United States dollar on a 1:1 basis. It is managed by Circle and issued by a private organization. Each unit of USDC in circulation is backed by $1 held in cash or cash-equivalent assets, making it 100% redeemable for US dollars.

USD Coin (USDC) is a digital currency that is entirely backed by U. S. dollar assets, making it a stablecoin. It aims to maintain a stable value, closely pegged to one U. S. dollar. This stability is in contrast to other cryptocurrencies, which often experience significant price swings. The coin is backed by reserve assets like U. S. dollars and U. S. Treasury instruments, and its cash reserves are held in separated accounts with regulated financial institutions. The management of these reserves is overseen by the accounting firm Deloitte, which provides regular attestation reports.

The company that created USDC, Circle, ensures the 1:1 peg by holding an amount of cash equal to the USDC in circulation. For example, purchasing one USDC with one dollar results in that dollar being stored to maintain the equivalent value. If someone exchanges one USDC for a dollar, that USDC is effectively removed from circulation (burned) as the dollar is returned.

USDC operates on various blockchains, including Ethereum and Solana, and was initially co-managed by a consortium of companies, including Coinbase and Circle, before Circle took full responsibility. The goal of Circle is to reshape the global financial system by connecting diverse participants, including individuals and businesses.

USDC has both advantages and disadvantages. On the positive side, it has low price volatility, is fully backed by regulated U. S. assets, and can serve as a hedge against inflation. However, it does not appreciate in value and is still susceptible to U. S. dollar inflation.

There are several use cases for USDC. It can provide stability for investors who hold more volatile cryptocurrencies, allowing them to stabilize their portfolios. It can also facilitate pricing for digital assets in fiat currencies, represent various financial obligations, and simplify cross-border money transfers, as recipients can hold USDC without needing a bank account. Non-U. S. investors may utilize USDC to gain exposure to the U. S. dollar or to protect against local currency inflation. Additionally, USDC can support global crowdfunding efforts by helping startups and nonprofits raise funds while ensuring the value remains stable.

USDC is not intended as an investment; its purpose is to maintain a stable value relative to the U. S. dollar. While it generally stays close to one dollar, minor fluctuations may occur, typically not exceeding $0. 0006. Events such as the collapse of Silicon Valley Bank have shown that external factors can affect the stability of USDC, demonstrating it is not perfectly pegged to one dollar at all times.

In conclusion, USDC is designed to be a stablecoin with a backing of U. S. dollar reserves. While it typically maintains its peg, it is affected by various factors that can cause slight price fluctuations.

Who Are the Founders of USDC?
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 join 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. The goal of these enhancements is to make it easier for USDC to be used for everyday payments, commerce and peer-to-peer transactions.

What Makes USDC (USDC) Unique?
The stablecoin market has become exceedingly crowded over recent years — but USDC has aimed to stand head and shoulders over competitors in several ways.

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.

Unlike some crypto ventures, Circle and Coinbase have also achieved regulatory compliance — and this has helped pave the way for international expansion. Both projects are also well-funded, giving the 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 any 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 Much Is Held in USDC Asset Reserves?
Following the collapse of TerraUSD, stablecoin issuers have been under intense scrutiny over the quality of the reserves backing their tokens. In a transparency move, Circle Internet Financial LLC (Circle), the issuer of the USDC stablecoin released its reserves report as of July 31, 2022.

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.

The accounting firm later released an independent attestation dated August 24, 2022. It reads:

“In our opinion, the Reserve Information in the accompanying USDC Reserve Report as of July 31, 2022 is fairly stated, based on the criteria set forth in the USDC Reserve Report, in all material respects.”

How Many USDC (USDC) Are There in Circulation?
It’s a bit difficult to give an exact number here — as in theory, the number of USDC 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, 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. USDC is a common sight on many DeFi protocols given how it serves as an onramp to the wider ecosystem.

How Is the USDC Network Secured?
All of the USDCs in circulation are actually ERC-20 tokens, which can be 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 is delivered by proving that U.S. dollars are being held safely in reserve.

Where Can You Buy USDC (USDC)?
As you might expect, one of the most enthusiastic exchanges that offers USDC is Coinbase, given how the exchange was involved in this stablecoin’s creation. USDC can also be purchased and traded on Poloniex, Binance, OKEx and Bitfinex, as well as decentralized exchanges such as Uniswap.

USDC is commonly bought with Bitcoin — and if it’s your first time buying Bitcoin, be sure to check out our comprehensive guide here.

World’s Largest Asset Manager Shows Interest in USDC
In a seemingly loosely regulated space, USDC has continued to distinguish itself from other stablecoin projects by forging ties with traditional financial institutions.

Following a $400 million funding round, which saw participation from BlackRock, Fidelity, Fin Capital, and Marshall Wace LLP, BlackRock revealed that it had “entered into a broader strategic partnership with Circle, which includes exploring capital market applications for USDC.”

In addition to partnering with the world’s largest asset manager, the stablecoin provider has inked other deals with big names from the world of traditional finance. In March, news broke that America’s oldest bank BNY Mellon would serve as the primary custodian of the assets backing USDC stablecoins. Meanwhile, a press release revealed that BlackRock will serve as a primary asset manager of USDC cash reserves.

Title: Overview of USD Coin (USDC)

Introduction:
USD Coin (USDC) is a digital currency that is pegged to the U. S. dollar, providing a stable alternative in the cryptocurrency market. It is designed to maintain its value close to one U. S. dollar, unlike more volatile cryptocurrencies.

Key Points:

• Definition and Stability: USDC is a stablecoin fully backed by U. S. dollar assets, making it less volatile than other cryptocurrencies like Bitcoin and Ethereum. Its value is intended to remain consistent, typically around one dollar.
• Backing and Management: The reserves backing USDC are held in segregated accounts managed by regulated U. S. financial institutions. The USDC Circle Reserve Fund is under the management of BlackRock and custodianship of The Bank of New York Mellon. An accounting firm, Deloitte, also oversees these accounts and provides monthly reports.
• Functionality: When a user purchases USDC, the equivalent U. S. dollar is stored, creating a 1:1 relationship. When USDC is sold, it is essentially “burnt” to maintain this balance. USDC operates on multiple blockchains, improving its usability across different platforms.
• Advantages of USDC:
• Low price volatility.
• Fully backed by U. S. -regulated assets.
• Useful as a hedge against inflation.
• Disadvantages of USDC:
• No potential for price appreciation.
• It is still subject to inflation of the U. S. dollar.
• Use Cases for USDC:
• Provides stability for investors during cryptocurrency market volatility.
• Offers a means for remittances without needing a bank account.
• Acts as a stable currency for global crowdfunding initiatives.
• Investment Perspective: USDC is not designed to be an investment but rather a digital version of the U. S. dollar. While it usually maintains a price around one dollar, it can fluctuate slightly.
• Price Stability: While USDC is pegged to the U. S. dollar, the price can experience minor fluctuations throughout the day as it is affected by various factors, including banking developments.

Conclusion:
USD Coin serves as a stable digital asset with various practical applications in the cryptocurrency landscape. Both individuals and businesses can benefit from its price stability while being mindful of its limitations and potential external influences.