What is USD Coin?
USD Coin (USDC) is a fairly fresh dollar-sticked stablecoin. It was released in partnership between Circle and Coinbase on 26 September, 2018. USDC is an alternative to other USD-backed cryptocurrencies such as Tether or TrueUSD.
In a nutshell, USD Coin is a software to tokenize US dollars and promote their use on the internet and via public blockchains. Additionally, USDC tokens can be converted to USD at any time. For ERC-20 smart contract, the execution of issuing and redeeming USDC tokens is assured.
Bringing US dollars on the blockchain enables them to travel in minutes anywhere in the world, and gives much-needed stability to cryptocurrencies. It also opens up new trading, investing, risk-hedging strategies and more.
Who is the Team Behind USD Coin?
Center consortium, a collaboration between Circle and Coinbase, is producing the USD Coin. Centre establishes the infrastructure and regulatory structure, while USDC’s first commercial issuers are Circle and Coinbase.
In 2013 the businessmen Jeremy Allaire and Sean Neville formed Circle.
Circle is an official Money Transmitter making it an open financial record for the company. Money Transmitters are money service companies in the United States that have to comply with federal laws and regulations. The corresponding amount of USD is with one of Circle’s approved partners before the issuance of USDC. All USDC tokens are therefore regulated, open, and verifiable. In addition, Circle is known as the Goldman Sachs-backed crypto-startup.
How Does USD Coin Work?
USD Coins are not actually printed out of thin air. Circle ensures every USDC token is backed by a single US dollar. The method of translating US dollars into tokens for the USDC is called tokenisation.
Tokenisation of USD into USDC is a process of three steps:
- A recipient sends out USD to the bank account of the token issuer.
- The issuer uses smart USDC contract to build an equivalent USDC number.
- The freshly minted USDC is shipped to the customer, while the substituted US dollars are kept in stock.
Redeeming USDC for USD is as simple as minting the token, except that it reverses the process:
- The consumer sends a request to the USDC issuer for the redeeming of the corresponding USDC tokens.
- The issuer shall submit a request to the USDC smart contract to swap the tokens for USD and withdraw an equal sum of tokens from circulation.
- The issuer shall send to the user’s bank account the required amount of USD from his reserves. The customer earns the net sum in USDC tokens, minus all fees incurred.
Unlike the most common stablecoin Tether (USDT), USD Coin creators are obliged to provide total transparency and work with a number of financial institutions to maintain maximum equivalent fiat currency reserves.
All USDC issuers are expected to report their USD holdings on a regular basis, which are then released by Grant Thornton LLP.
How to Use USD Coin
USD Coin (USDC) on the Ethereum blockchain is a 1:1 representation of one US dollar. It is an ERC-20 token, which can be used with any standard-supporting device.
You need to register an account, verify your identity (KYC), and connect to a valid bank account to tokenize or redeem USDC with Circle. Circle USD platform enables users to take four main actions:
- Tokenize USD;
- Redeem USDC;
- Transfer USDC out to ERC20 compatible Ethereum addresses;
- Deposit USDC from external Ethereum wallet addresses.
Circle USDC does not charge users fees for tokenizing and redeeming services, but there is a $50 discount for bank transfers that are wrong and rejected. All regular fees refer to coinbase USDC activities.
A minimum amount of a USDC redemption is USDC 100. The tokens are issued only on business days, which can take up to 24 hours to complete.
There is no minimum amount of tokenisation, and it can take up to 2 business days for the process.
Stablecoins, such as USDC are commonly used to:
- Short cryptocurrencies without cashing out which will make potential purchases of cryptocurrencies easier;
- Avoid conventional financial and institutional instruments;
- Avoid hyperinflation (for citizens in countries such as Venezuela or Turkey);
- Send money immediately, safely, internationally and at low cost;
- Buy products in various crypto dApps, markets, and games based on blockchains.
How is USD Coin Different From Other Stablecoins?
You may divide the crypto stablecoins into four categories:
- Fiat-collateralised. These include all stablecoins attached to the reserved fiat value. All fiat-collateralized coins are designed to centralise. Examples: Tether (USDT); TrueUSD (TUSD); Gemini Dollar (GUSD); Digix Gold (DGX); Paxos Standard Token (PAX); USD Coin (USDC).
- Crypto-collateralized. These are stablecoins the value of which is attached to reserved crypto properties. Examples: Havven (nUSD & HAV); Makercoin (MKR & DAI).
- Uncollateralized algorithmic. Software-based economic models that pursue market stability without collateralized properties. Project examples: Basis; Kowala; Fragments.
- Hybrid. Stablecoins that rely on a combination of the aforementioned approaches. Example projects: Carbon.
USD Coin falls into the first group of fiat-collateralized coins, and is a centralized stablecoin. All projects under the same group work in a similar manner in general, and have only slight variations. Tether (USDT), known for failing to perform a fully open audit, and Digix Gold (DGX), whose interest is tied to gold, are the most outstanding ones.
The rest of the stablecoins, fiat-collateralized, issue daily attestations and are backed by US dollars. The key variations between them revolve around their fee strategies and different partner organizations but for the most part the business model remains the same.
Where Can You Get USD Coin?
You can buy USD Coin (USDC) in the following exchanges:
- Binance (paired with BTC, BNB).
- Poloniex (paired with BTC, ETH, XRP, BHC, STR, LTC, ZEC, XMR, DOGE).
- Coinbase Pro (paired with BTC, ETH).
- Coinbase (paired with
- CoinEx (paired with USDT).
- Coinsuper (paired with BTC, USD).
- OKEx (paired with BTC, USDT).
- CPDAX (paired with BTC).
- Hotbit (paired with USDT).
- Kucoin (paired with BTC, ETH, USDT).
- Korbit (paired with KRW).
- FCoin (paired with USDT).
- LATOKEN (paired with BTC, ETH).
- SouthXchange (paired with BSV, DASH).
- COSS (paired with BTC, ETH).
- Crex24 (paired with USD).
In addition to these exchange pairs, at Coinbase, USDC can be converted to USD, and vice versa.
Where to Store USD Coin
USDC is an ERC-20 token distributed on the blockchain of the Ethereum and can be deposited in any Ethereum wallet. Wallets with MyEtherWallet, MetaMask, Mint, or Jaxx are the most common choices.
Current State of the Project
USD Coin is a project that is evolving rapidly, with reputable organizations behind it. The ecosystem has now grown to more than 60 partners since the launch of the project in May 2018.
Some of the latest news about the USDC project is about maintaining the level of power project creators have over the secure crypto-currency. The developers clearly have the right to blacklist addresses and freeze funds if there is some possibility that the USD Coins are being used for illicit activities.
Most other stablecoins, however, have similar clauses too. The only stablecoin without those terms is Maker’s DAI.
- USDT (Tether). The oldest and most successful stablecoin backed with USD.
- TrueUSD (TUSD). TrustToken Platform supports USD-backed ERC-20 token.
- Gemini Dollar (GUSD). USD-weighted token ERC-20 provided by Gemini Exchange.
- Paxos Standard token (PAX). A token of the ERC-20 attached to the US dollar.
- Dai (DAI). Stablecoin ERC-20 attached to the USD.
- bitCNY (BITCNY). A stablecoin backed by Chinese Yuans (CNY) and issued on BitShares blockchain.
- bitUSD (BITUSD). A stablecoin issued on blockchain BitShares and backed by USD.
- bitEUR (BITEUR). A stablecoin distributed on blockchain BitShares and backed by Euros (EUR).
- Stasis Eurs (EURS). A stablecoin ERC-20 collateralised linked to the EUR.
- nUSD (NUSD). An ERC-20 stablecoin released by the foundation Havven.
- White Standard (WSD). A USD-pinned stablecoin released on Stellar protocol for global payments.