This means their price is supported by other assets with universal value. While the first stablecoins maintained pure cash reserves, many have adopted low-risk assets such as treasury bonds as well. Either way, an equivalent amount of money needs to exist before units of the stablecoin can be minted. Another popular option is USD Coin staking on decentralized crypto exchanges. Most of these platforms allow you to deposit an equal amount of USD Coin and another cryptocurrency into liquidity pools that are used to facilitate crypto trading. This passive income method carries much greater risk, but you could earn a larger return.
Many exchanges have trading pairs that include USDC against Bitcoin and other cryptocurrencies. Dollar Coin created, there is supposed to be an equal amount of dollar assets held at Circle. USDC tokens can be transferred between wallets on the Ethereum, Algorand, Solana, and other blockchain networks. Each transfer is recorded on the blockchain, ensuring transparency and immutability. USDC was initially built on the Ethereum blockchain as an ERC-20 token.
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USDC is backed by a reserve of US dollars held by Circle, and for every USDC token in circulation, Circle claims to hold an equivalent amount of US dollars in reserve bank accounts. This reserve is meant to ensure there is a direct and auditable link between the USDC tokens in circulation and the actual US dollars held in reserve. If you often find yourself converting your digital assets to fiat and vice versa, you no longer have to do so. You can now exchange your Bitcoin for USDC since it holds the same value as the U.S. dollar.
These include software wallets such as Coinbase Wallet and Exodus or hardware wallets such as Ledger. The accounting firm Deloitte oversees these segregated accounts and provides monthly attestation reports. USDT has a live market capitalization of approximately over $80 https://www.tokenexus.com/ billion and an estimated 80 billion USDT coins in circulation. On the other hand, USDC has a live market capitalization of around $31 billion and a circulating supply of 31 billion USDC coins. Selling USDC in exchange for US dollars will trigger a reverse reaction.
Transaction Times
A USDC-based contract, on the other hand, would naturally not fluctuate in value since the token always trades at $1. This would leave no ambiguity as to how much value you receive on the day of the contract’s execution. In our deep-dive into Ethereum’s fundamentals, we discussed how the blockchain What is USD Coin was built to support smart contracts. In a nutshell, anyone can create programmable contracts that run and execute on the Ethereum network. Such contracts are usually perfect for applications involving payments, since the contract terms can be enforced without human intervention.
- Both USD Coin and Tether serve the purpose of providing stability in the volatile cryptocurrency market, but they differ in a few key aspects.
- Cryptocurrencies have revolutionized the world of finance, but their volatile nature has often deterred investors and traders from fully embracing them.
- 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.
- It could also be useful as a store of value in your crypto portfolio.
- USD Coin offers the advantages of a digital asset while maintaining stability through its peg to the US dollar.
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. Currently, USD Coin has a market cap of 25,385,659,039 USD, which is ranking 7 among cryptocurrencies worldwide.
How does the US Dollar Coin work?
Currently, 25,387,396,170 USDC coins are circulating through 16,026 market pairs. As a result, in the last 24 hours, 3,278,741,548 USD of USDC coins were traded in the market. 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. USDC can be transferred 24/7 and is faster to send than traditional currencies, with settlements occurring in seconds. Transaction costs are low cost, making it cost- and time-efficient to use. The designs featured on the coins follow the three periods of Tubman’s life and her work as an abolitionist and social activist.
It is not intended to offer access to any of such products and services. You may obtain access to such products and services on the Crypto.com App. USDC’s stability is built upon its reserve system, where every issued USDC token corresponds to a reserved US dollar.
The US Dollar Coin isn’t the first or even the most popular US Dollar-backed coin. But Tether is under intense scrutiny over the state of its finances. It once claimed to have a real dollar in the bank for every Tether in circulation, but an investigation by the New York Attorney General caused it to step back from that claim. Circle has also partnered with two of the largest payment networks in the world and some popular payment processors. In December 2020, Circle partnered with Visa, allowing businesses on the Visa network to accept USD Coin.
- When users purchase or redeem USDC, the corresponding amount of US dollars is moved between the reserve accounts and the user’s digital wallet.
- If you want to buy USDC, you’ll have to convert your fiat currency into crypto.
- If you want to learn more about stablecoins, check out this article explaining how stablecoins work.
- For instance, the price of the USD Coin will never appreciate as it is pegged to the U.S. dollar.
- Many people used stablecoin as a viable hedge against fiat currencies.
- “Centre works with auditors and government regulation with a transparent and clear description of the reserves available to back the peg to the U.S. dollar,” Bumbera says.
As for the technical aspects of the token, USD Coin is similar to most other cryptocurrencies in that it uses blockchain technology. More specifically, it is built on top of existing blockchains such as Ethereum and Algorand. USDC’s biggest competitor, Tether, uses a similar approach and is available on even more cryptocurrency networks. Stablecoins such as USDC excel at transferring wealth between different platforms. They are incredibly convenient for traders too, since withdrawing a fiat currency from an exchange takes several hours or even days. After a customer meets the Know Your Customer (KYC) identity requirements, they can link their bank account and make a wire transfer in US Dollars.