One of the most well-known stablecoins is the U.S. Dollar Coin (USDC), a kind of cryptocurrency that keeps its value fixed at the same level as another asset, in this case, the U.S. dollar.
Numerous use cases exist for stablecoins, which are expanding in terms of trading volume and market capitalization. The stablecoin market was estimated to be worth $130 billion in 2021, making USDC the second largest stablecoin in use.
Coinbase, the biggest cryptocurrency exchange in the United States, and Circle, a financial services company sponsored by some major financial institutions including Goldman Sachs, collaborated to create USDC.
Circle, a Boston-based company, was established in 2013 to make it simple and quick to send money. The business swiftly entered the cryptocurrency space and said in April 2020 that it had bought the cryptocurrency exchange Poloniex.
How it works
Ethereum is a programmable blockchain that powers the Coin. The goal of developing the coin was to build a digital currency that wouldn’t experience extreme price fluctuations.
As an ERC-20 token, it complies with the set of programmatic requirements that developers must adhere to have their tokens produced on Ethereum. For utility tokens, which have a specific purpose, ERC-20 is the industry standard. A stablecoin like USDC can be compared to a specific kind of utility token in that it serves as a substitute for dollars in the world of digital assets.
At a 1:1 ratio, assets denominated in dollars support the creation of its tokens. There are assets equal to the number of coins in circulation.
Advantages of USDC
Its many advantages include:
Stability
Its primary benefit is that it is a stablecoin, which means that the value is always fixed to the US dollar. Because of this, it is less volatile than other cryptocurrencies. It is appropriate for use in applications where constant prices are crucial, such as payment processing or invoicing, because of this property.
Blockchain Interoperability
Due to its Ethereum blockchain foundation and compatibility with all Ethereum-based protocols and apps, it may be easily integrated into current platforms and systems.
Security
Since it is a digital asset, you can keep it in a cryptocurrency wallet. This benefit adds an extra degree of security because the coin is not owned by a single entity and is secured by the Ethereum blockchain’s encryption as well as any additional security measures the platform may have put in place.
Transparency
The Ethereum blockchain maintains a record of every USDC transaction. This public ledger offers a high level of transparency by making it simple to follow and confirm all transactions.
Licensed & Verified
Since USDC is a regulated and audited currency, it satisfies all monetary and legal regulations while yet enjoying the advantages of blockchain technology.
Disadvantages of USDC
Everything in life has drawbacks, and purchasing digital assets is no different. Therefore, even while utilizing USDC has numerous benefits, it’s important to be aware of the hazards as well.
Limited Price Appreciation
The value of USDC is fixed to the dollar, thus it doesn’t have the same potential for price growth as other cryptocurrencies. Therefore, while investors can benefit from a consistent return on their investments as the value of USDC often stays constant, they won’t be able to profit from any unexpected price spikes as they can with other assets.
Stablecoin competition
There are other stablecoins available besides USDC. Now are other additional stablecoins out there, including Tether (USDT) and DAI. These coins have slightly different features than USDC yet provide advantages like USDC. This rivalry can result in less interest in USDC and a consequent drop in pricing.
