USDC Bringing Stability To Cryptocurrency
A stablecoin called USD Coin (USDC) was created by the Centre, a non-profit organization backed by prominent cryptocurrency exchange Coinbase and Fintech company Circle. Each coin in the USD Coin series has a fixed value of $1 and is backed by a single US dollar in a separate bank account.
Because of this, USD Coin is a well-liked option for cryptocurrency investors who wish to steer clear of the price risk and volatility linked to major coins like Bitcoin and Ethereum.
But what is USDC exactly, and does it really bring stability to cryptocurrency? Let’s find out below.
USD Coin (USDC) – what is it?
As mentioned above, a new stablecoin called USD Coin (USDC) is connected to the US dollar. Due to a collaboration between Circle and Coinbase, it was published on September 26, 2018. USDC is a cryptocurrency backed by the US dollar that competes with TrueUSD (TUSD) and Tether (USDT).
Shortly, USD Coin is a service that tokenizes US dollars and makes them usable on public blockchains and the internet. Additionally, USDC tokens are instantly convertible to US dollars. A smart contract called ERC-20 ensures that USDC coins are issued and redeemed.
By placing US dollars on the blockchain, they can be delivered instantly anywhere in the world and provide cryptocurrencies with much-needed stability. In addition, new trading, financing, risk-hedging, and other opportunities are also presented.
How does USDC work?
According to Circle, the process of transforming US currency into USDC tokens is known as tokenization. There are 3 steps to converting USD to USDC:
- A user transfers USD to the token issuer’s bank account.
- The issuer uses a USDC smart contract to generate an equivalent amount of USDC.
- The newly issued USDC is given to the user, while the replacement US dollars are kept in reserve.
The process is reversed, but the conversion of USDC to USD is equally straightforward:
- The user asks for an equal amount of USD to be converted into USDC tokens by contacting the USDC issuer.
- Using the USDC smart contract, the issuer asks that an equal number of tokens be taken out of circulation and exchanged for USD.
- The issuer uses its reserves to pay the user’s bank account the right amount of USD.
This is all it needs. But what makes USDC so stable?
What makes USDC so stable?
You may be curious about what sustains USDC’s stability. Because each USDC, as mentioned, is backed 1:1 by entirely reserved dollar assets held in supervised US financial institutions, the USD manages to maintain price stability. Additionally, the worldwide auditing company, Grant Thornton, certifies some management claims on the overall amount of USDC in circulation each month.
In addition to being one of the fastest-growing dollar digital currencies on the market, USDC’s stability, liquidity, speed, and transparency have propelled it into the top 10 of all digital assets by market value.
Is investing in USD Coins a Good Idea?
Given that the USD Coin is meant to be a stablecoin investing in it won’t result in any rewards for investors. Since this coin’s price isn’t expected to go up, the main benefit of this cryptocurrency comes from how it can be used.
By removing the need for banks or other intermediaries, USDC enables companies and people to send money in a matter of seconds, saving them time and money in the process.
Final thoughts
Stability, blockchain interoperability, security, and transparency – these are only a few words describing USDC. Although it does deal with certain hazards, the advantages of this coin are becoming ever more appealing to those in the cryptocurrency community. You can test it yourself by visiting FJ page and playing with USDC. Here, you’ll find one of the best bonus structures, a wide range of games, and many other great perks that will make your USDC gambling more profitable and fun.