USD Coin (USDC) is a relatively freshstablecoinpegged to the US dollar. It was launched on September 26, 2018, in collaboration between Circle andCoinbase. USDC is an alternative to other USD backed cryptocurrencies likeTether(USDT) orTrueUSD(TUSD).
In a nutshell, USD Coin is a service to tokenize US dollars and facilitate their use over the internet and public blockchains. Besides, USDC tokens can be changed back to USD at any time. The execution of issuing and redeeming USDC tokens is ensured with ERC-20 smart contract.
Bringing US dollars on the blockchain allows moving them anywhere in the world within minutes, and brings much-needed stability to cryptocurrencies. Also, it opens up new opportunities for trading, lending, risk-hedging and more.
USD Coin is developed by the Centre consortium, a partnership between Circle and Coinbase. The technology and governing framework are developed by Centre, while Circle and Coinbase are the first commercial issuers of USDC.
Circle was founded in 2013 by the entrepreneurs Jeremy Allaire and Sean Neville.
Circle is an official Money Transmitter, which makes the company an open financial book. Money Transmitters are US money service businesses that must comply with federal laws and regulations. Before the issuance of USDC, the equivalent amount of USD is with one of Circles accredited partners. Consequently, all USDC tokens are regulated, transparent and verifiable. Besides, Circle is known as the crypto startup backed byGoldman Sachs.
USD Coins arent just being printed out of thin air. 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.
Tokenizing USD into USDC is a three-step process:
1) A user sends USD to the token issuers bank account.2) The issuer uses USDC smart contract to create an equivalent amount of USDC.3) The newly minted USDC are delivered to the user, while the substituted US dollars are held in reserve.
Redeeming USDC for USD is as easy as minting the token, except the process is reversed:
1) A user sends a request to the USDC issuer to redeem an equivalent amount of USD for USDC tokens.2) The issuer sends a request to the USDC smart contract to exchange the tokens for USD and take an equivalent amount of tokens out of the circulation.3) The issuer sends the requested amount of USD from its reserves back to the users bank account. The user receives the net amount equivalent to the one in USDC tokens, minus all incurred fees).
Unlike the most popular stablecoin Tether (USDT), creators of the USD Coin are obligated to provide full transparency and work with a range of financial institutions to maintain full reserves of the equivalent fiat currency.
All USDC issuers are required to regularly report their USD holdings, which are then published by Grant Thornton LLP. All the monthly attestation reports can be foundhere.
USD Coin (USDC) is a 1:1 representation of one US dollar on the Ethereum blockchain. Its an ERC-20 token and can be used with every app which supports the standard.
To tokenize or redeem USDC with Circle, you need to register an account, verify your identity (KYC), and link a legitimate bank account. Circle USD platform allows users to perform four core actions:
Circle USDC doesnt charge users any fees for tokenizing and redeeming services, except there is a $50 commission for incorrect and rejected bank transfers. For Coinbase USDC operations, all the standard fees apply.
A minimum USDC redemption amount is 100 USDC. The tokens are processed on business days only, and the process can take up to 24 hours.
Theres no minimum tokenization amount, and the process can take up to 2 business days.
In general, stablecoins like USDC are used to:
Short cryptocurrencies without cashing out and make it easier to buy cryptocurrencies in the future;
Avoid traditional financial instruments and institutions;
Avoid hyperinflation (for people living in countries like Venezuela or Turkey);
Send money instantly, globally, securely and at low cost;
Purchase items in various crypto dApps, exchanges, and blockchain-based games.
How is USD Coin Different From Other Stablecoins?
Crypto stablecoins can be put into four categories:
These include all stablecoins pegged to reserved fiat value. All fiat-collateralized coins are centralized by design.
Examples: Tether (USDT); TrueUSD (TUSD); Gemini Dollar (GUSD); Paxos Standard Token (PAX); Digix Gold (DGX); USD Coin (USDC).
These are stablecoins whose value is pegged to reserved crypto assets.
Examples: Makercoin (MKR Havven (nUSD & HAV).
Software-based economic models that seek to provide price stability without any collateralized assets.
Stablecoins which rely on a blend of the approaches listed above.
USD Coin falls into the first, fiat-collateralized coins category, and is a centralized stablecoin. In general, all the projects within the same category work in a similar fashion and have only minor differences. The more outstanding ones are Tether (USDT), known for refusing to conduct a genuinely transparent audit, and Digix Gold (DGX), whose value is pegged to gold.
The rest fiat-collateralized stablecoins release regular attestations and are backed by US dollars. The main differences between them revolve around their fee policies and different partner organizations, but the business model, for the most part, stays the same.
USD Coin (USDC) can be purchased in the following exchanges:
Besides these exchange pairs, USDC can be turned to USD and vice versa at Coinbase.
USDC is an ERC-20 token issued on theEthereumblockchain and can be stored in any Ethereum wallet. The most popular options are MyEtherWallet, MetaMask, Mint or Jaxx wallets. If you dont know how to set up an Ethereum wallet, seethis quick guide.
USD Coin is a rapidly developing project with credible institutions behind it. Since the project announcement in May 2018, its ecosystem has already expanded to more than 60 partners.
Some of the latest news surrounding the USDC project is about thelevel of control project creators retainover the stable cryptocurrency. Apparently, the developers hold the right to blacklist addresses and freeze funds if theres any suspicion that the USD Coins are used for illegal activities.
However, most of the other stablecoins also have similar clauses. The only stablecoin without such terms isDAIby Maker.
The oldest and most popular USD-backed stablecoin.
USD-backed ERC-20 token by TrustToken Platform.
USD-pegged ERC-20 token issued by Gemini exchange.
A stablecoin issued onBitSharesblockchain and backed by Chinese Yuans (CNY).
A stablecoin issued on BitShares blockchain and backed by USD.
A stablecoin issued on BitShares blockchain and backed by Euros (EUR).
A collateralized ERC-20 stablecoin pegged to the EUR.
An ERC-20 stablecoin issued by the Havven foundation.
A USD-pegged stablecoin for global payments issued onStellarprotocol.
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