Stablecoins like USDC aren’t really seen as investments, instead offering liquidity for crypto traders looking to purchase other cryptocurrencies seamlessly on exchanges. As you probably already know, stablecoins need enough reserves in the bank account of the token issuer to keep the price stable. Therefore, if a stablecoin issuer does not have enough reserves, the stablecoin’s price will likely fluctuate, which is not supposed to happen.

On the contrary, the USD stablecoin can help safeguard recipients against the concerns of price volatility. Furthermore, users can leverage their USDC to obtain cryptocurrencies or assets of their choice. This issue has since been rectified due to the strong off-chain backing it enjoys. The platform has billions of dollars worth of US Treasury Securities and other liquid items.

Working of USD Coin

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 -1.11%) transactions. Stablecoins have had a rough streak lately, causing ripples across the cryptocurrency landscape. Despite headwinds in the crypto market amid the TerraUSD stablecoin crash in May, which wiped out $42 billion for UST and LUNA holders, USDC managed to maintain its $1 peg.

  • If you want to use your USDC to purchase other crypto coins like Litecoin or Dogecoin, you can make that happen on KuCoin.
  • USD Coin provides a stablе and convenient way to interact with cryptocurrеnciеs while maintaining a prеdictablе value due to its backing by U.
  • Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.
  • USD Coin, also known as USDC, is simply a stablecoin whose price is attached to the US dollar.
  • Any descriptions of products or features are merely for illustrative purposes and do not constitute an endorsement, invitation, or solicitation.

There is the possibility of losing funds if borrowers default on their loans or if the lending platform goes through financial difficulties. It halted withdrawals in 2022, and then filed bankruptcy, leaving users without access to the crypto they had deposited. USD Coin was issued by Circle, a peer-to-peer payments company, and Coinbase Global (COIN 0.43%), a cryptocurrency exchange.

What Are The Latest USDC News?

Most important of all, stablecoins allow users to transfer funds without leaving the crypto ecosystem as they don’t need conversions to fiat currency. Therefore, stablecoins can also provide a viable solution for unregulated exchanges which don’t facilitate conversion to fiat currency. In addition, stablecoins present a cost-efficient and faster alternative when compared to fiat money. The conversion process between USDC and USD is a foundational aspect of its functionality.

How to Use USDC

Additionally, it protects investors against local fiat currency devaluation, especially in areas where these currencies are considered unstable. While lending institutions require heavy collateral from borrowers to offset the risk of defaults, there is no transparency or guarantee to the loans they issue. Moreover, several lending platforms have gone bankrupt of late, making cryptocurrency lending highly risky. As mentioned previously, USD Coin is backed by two of the largest names in the payments and cryptocurrency exchange industries. Circle and Coinbase are both heavily invested in staying on the good side of global regulators. Somewhat luckily for both of them, most other stablecoin offerings simply cannot boast the same heritage.

What is USD Coin?

Another remarkable highlight regarding USD Coin points to the fact that it was the first stablecoin listed on the Coinbase crypto exchange. Subsequently, another notable exchange, Binance, added USDC to its listing. In addition, the outline of USD Coin explained in detail also showcases another important reason for coming up with USDC.

Introduction to USD Coin (USDC)

The main purpose of USDC is to facilitate value transfer across different borders and networks. It is also focused on maintaining price stability, unlike other cryptocurrencies. The vast majority of USDC tokens are minted on the Ethereum blockchain. 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.

How to Buy USDC

Each USDC is redeemable for one dollar, and is backed by one dollar or a dollar-denominated asset with equivalent value held in accounts at regulated U.S. financial institutions. Those accounts are audited by U.S. accounting firm Grant Thornton LLP, which issues monthly attestations on the reserves backing USDC. Stablecoins help in safeguarding your capital and profits in deflationary periods.

Uso de cookies

Este sitio web utiliza cookies para que usted tenga la mejor experiencia de usuario. Si continúa navegando está dando su consentimiento para la aceptación de las mencionadas cookies y la aceptación de nuestra política de cookies, pinche el enlace para mayor información.

Aviso de cookies