What Is USD Coin?
USDC stands for United States Dollar Coin. It’s a stablecoin that’s fully collateralized. This means that every USDC is backed by the equivalent in fiat currency, in short, 1 USDC = 1 USD. It’s a creation of CENTRE, an organization that came to life in a collaboration between Circle and Coinbase. The developers chose to host USDC on the Ethereum blockchain to remain completely transparent. Those who issue new USDC have to report their USD reserve holdings frequently, and an external party audits these reserves every month.
The USDC stablecoin is relatively new in comparison to other currencies. After the rumors about Tether not having the financial reserves they claimed to have, Coinbase and Circle decided it was time for complete transparency. They believe that there’s no strong demand for new currencies, but instead, people will prefer to use a trusted and established currency on top of a public chain. Thus, the creation of a completely transparent stable coin is necessary. In just two years, the coin snowballed in popularity and rose to the top 20 in terms of market capitalization. Any major exchange and wallet provides support for the USDC stablecoin.
Pros and Cons of USD Coin
Let’s have a look at some advantages and disadvantages of USDC.
Advantages of USDC
- Open-source project open for contribution by anyone
- 100% backed by real fiat currencies
- Audits by an external party every month
- Support of trusted companies Circle and Coinbase
Disadvantages of USDC
- USDC is centralized. Circle holds power to freeze or revoke coins when they find the reason to do so.
- KYC required to redeem USD for USDC. Anyone who’s privacy-focused will not prefer this manner.