How Does USDC Work?

What is USD Coin

That’s better than many traditional savings accounts but falls short of the typical high-yield savings account. That’s a big difference from highly volatile coins including Bitcoin, Ethereum, and Dogecoin that may see big price swings in a single day. Meanwhile, USDC’s value has stayed relatively stable over its life, although there may be some short-term volatility during extreme market periods, Manoppo says.

And when you choose to sell 1 USDC for fiat currency, the coin is “burned” when you make the transaction. The year-to-date return on Bitcoin is -35% as of this writing, for example. Meanwhile, the value of USDC has remained almost completely flat year to date.

Wallets

To check USD Coin’s price live in the fiat currency of your choice, you can use Crypto.com’s converter feature in the top-right corner of this page. Many DeFi platforms offer users the opportunity to earn interest on their USDC holdings through lending and liquidity provision. USDC’s value is maintained through a reserve system, where each USDC token is backed by an equivalent amount of US Dollars held in reserve. USDC has been used as a substitute for U.S. dollars on major exchanges, such as Coinbase, Kraken, Binance, Poloniex and Gemini.

What is USD Coin

As mentioned earlier, crypto lending programs have failed in the past, leaving users high and dry. You can make passive income with USD Coin by lending it, and that’s one of the reasons investors buy it. There are several crypto lending programs available that will pay you interest for lending your crypto. Gemini and CoinLoan are among the platforms that support USD Coin lending and offer competitive interest rates.

How does a USD Coin work?

The most popular options are MyEtherWallet, MetaMask, Mint or Jaxx wallets. If you don’t know how to set up an Ethereum wallet, see this quick guide. Circle USDC doesn’t charge users any fees for tokenizing and redeeming services, except there is a $50 commission for incorrect and rejected bank transfers. Circle guarantees that every USDC token is backed with a single US dollar. The process of turning US dollars into USDC tokens is called tokenization. Circle is behind CENTRE, a consortium that creates frameworks and standards to improve mainstream adoption of stablecoins.

  • This makes it so that anybody can plainly see that all the USDC tokens are backed by actual US dollar cash deposits or something similar.
  • That has led to a rise in other US Dollar-backed stablecoins that have more transparent funding and auditing processes.
  • Tether Limited, on the other hand, didn’t provide information on its reserves for years.
  • As its name suggests, USDC’s value ties to the U.S. dollar, where each stablecoin attempts to maintain a value roughly equal to $1.
  • The most common use case is to purchase USDC, store it on an exchange or in a crypto wallet, and then use it to fund purchases of other cryptocurrencies.
  • In 2022, Tether’s USDT accounted for most of the exchanges out of Bitcoin by value.

That’s important because it shows there are actual funds in an account for every USDC. Although stablecoins aren’t investments, they have a variety of other uses, and you can often earn generous interest rates on them. Since its launch, USD Coin even became one of the largest stablecoins in the world and even became the first cryptocurrency selected for settling Visa (V 0.38%) transactions. It can be used as a medium to store value, just like keeping your money in a savings account at a bank. To that end, taking self-custody is simple — many cryptocurrency wallets support USDC as well. Our go-to recommendation for safe crypto storage, as always, is to invest in a robust hardware wallet.

What Is Crypto Tourism? Definition and Examples

USDC and USDT are fiat-collateralized stablecoins pegged to the U.S. dollar, which were introduced to combat the highly volatile price swings of the cryptocurrency market. USD Coin (USDC) is issued by the Centre consortium, which is made up of several major cryptocurrency companies, including Circle and Coinbase. USDC is considered to be a relatively safe and stable cryptocurrency, as it is fully backed by deposits of actual US dollars held in bank accounts. However, it’s important to note that no cryptocurrency is completely safe. It’s always a good idea to do your own research and carefully consider the risks before investing in any cryptocurrency, including USDC.

  • Failing that, consider using one of our top software wallet picks for smartphones and PCs.
  • A partnership of the two firms above resulted in the Centre Consortium, whose team of developers is responsible for the entire technology and governing structure of the USD coin.
  • As an ERC-20 token on the Ethereum blockchain, USDC boasts liquidity, accessibility, and adaptability.
  • USD Coin and Tether (USDT 0.03%) are the largest stablecoins by market cap.
  • Selling USDC in exchange for US dollars will trigger a reverse reaction.

On the other hand, USDC has a live market capitalization of around $31 billion and a circulating supply of 31 billion USDC coins. USDC coins can only be found on the Ethereum, Hedera Hashgraph, TRON, Avalanche, Solana, Algorand, and Stellar networks. Moreover, USD coins securely allow transactions across borders to take place and remove the hassle of currency conversions and even transaction times since they operate at internet speed.

This makes it so that anybody can plainly see that all the USDC tokens are backed by actual US dollar cash deposits or something similar. USD Coin, also known as USDC, is a de-pegged version of the US dollar that is referred to as Stablecoin in the Crypto industry. The coin is managed by Circle Inc, which is the parent company of Coinbase (a popular Crypto Exchange). Keep in mind that USDC is not issued with the assistance of official government authorities, so the price of this coin sometime might be slightly different than the actual US Dollar price. However, the company behind the platform claims that it is backed by massive reserves, so the price of USDC will always remain stable.

  • USD Coin’s main advantage is that it enables people to buy and sell other cryptocurrencies without having to move fiat currency in and out of exchanges.
  • The sole purpose of this crypto is to provide a stable store of value, rather than provide an asset that, theoretically, appreciates in value over time.
  • On top of it, the US Dollar Coin also offers the flexibility for investing your funds rather than locking them up in one account.
  • Circle and Coinbase are both heavily invested in staying on the good side of global regulators.
  • USD Coin is a stablecoin, and as such one USDC should always be equal in value to one dollar.
  • Stablecoins achieve their stability through the backing of a central reserve.

As of now, the circulating supply of USDC has crossed 9 billion, with a promising future revolving around evolution of infrastructures pertaining to permissionless decentralized protocols. USDC’s parent company isn’t shy about https://www.tokenexus.com/ saying the currency is for those who want to move medium to large amounts. By becoming a more attractive way for institutional investors to get involved, stablecoins like USDC could help make cryptocurrencies more mainstream.

USD Coin (USDC): Definition, How It Works in Currency, and Value

It’s worth mentioning that USD Coin follows current regulations and would likely have fewer issues with any new rules compared to other stablecoins. Circle has also partnered with two of the largest payment networks in the world and some popular payment processors. In December 2020, What is USD Coin Circle partnered with Visa, allowing businesses on the Visa network to accept USD Coin. In July 2021, Mastercard (MA -0.47%) announced plans to incorporate USD Coin as a payment method. Payment processors Stripe and Checkout.com both announced support for USD Coin in 2022.

Leave a Reply

Your email address will not be published. Required fields are marked *