USD Coin is a stable coin based on Ethereum. Its price is pegged to the US dollar in a 1:1 ratio. USDC is a backed stablecoin, meaning that in return for one unit of it, there is one dollar reserved in financial institutions in the United States. In this article, we will go through USDC, its features and its functions. Stay with us.
What is USD Coin (USDC)?
When we are talking about different types of USDT, The USD Coin cryptocurrency that is known as USDC in the crypto community is a stablecoin whose price is always stable at 1 dollar. It was developed by the “Centre” foundation in 2018. Centre is a non-profit organization backed by the Coinbase exchange. Each unit of USDC is backed by 1 US dollar reserved in bank accounts in the United States. These reserves are controlled and supervised by the US authorities. USD Coin is an alternative to other dollar-backed stablecoins like Tether (USDT).
How does USDC work?
USDC was developed to tokenize the US dollar on the blockchain. The main benefit of USDC and other stablecoins is that when volatility increases, investors and traders can change their cryptocurrencies for these coins and maintain the value of their investments. Before stablecoins were developed, investors had to change their cryptocurrencies into fiat currencies. Stablecoins facilitated this process and removed the need for changing cryptocurrencies into fiat currencies.
We mentioned that USDC was developed on the Ethereum network, but we have to mention that this token can be received on open blockchains like Solana, Algorand, Tron, and Stellar.
Since USDC is an Ethereum-based token, transferring it can take 15 seconds to 5 minutes. As you know, making an international transaction can take a much longer time (even several days). Therefore, if you want to send money to someone living abroad, you can consider sending the same amount to USDC. Your transaction will take at most 5 minutes. Another important point about USDC transactions is the fee you have to pay. For making a USDC transaction, you must pay the Gas belonging to Ethereum. It is calculated based on the traffic of Ethereum at the time of making the transaction, and it is a constant amount independent from the amount of the transaction.
Who created USD Coin?
USD Coin was developed by the Centre Consortium. The Centre Consortium is a cooperation between the Centre company and the Coinbase exchange. The Centre was founded by David Poot in 2017. He was the CEO of the Centre till 2021. According to a report by Crunchbase, the Centre gathered 20 million dollars in its first round of funding in December 2017. It also gained another 20 million dollars in the second round in November 2018.
Why did Coinbase participate in developing USDC?
According to the Coinbase team, they participated in developing USDC because they believe their mission is to create an open global financial system. They wanted to make use of the stability of a currency like the US dollar in the volatile world of cryptocurrencies.
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USDC is among the world’s most famous stablecoins. It is backed by the US dollar, and its price is pegged to this fiat currency in a 1:1 ratio. USD Coin benefits from all advantages that other stablecoins have. It is stable, digital, and to some extent decentralized (though not as decentralized as cryptocurrencies like Bitcoin and Ethereum). If you think you need a stablecoin in your investment portfolio, USDC is one of the options you can consider.