When crypto investors buy USD Coin, they expect one USDC to always be equal in value to one dollar. The most common use case is to purchase USDC, store it on an exchange or in a crypto wallet, and then use it to fund purchases of other cryptocurrencies. To maintain USDC’s stable value equal to $1, USDC is backed by cash and short-term U.S. government bonds as collateral.
How Is Bitcoin’s Technology Upgraded?
It’s also linked with China to help establish mBridge, a cross-border payments system that uses central bank digital currencies. It has managed to create a global community and give birth to an entirely new industry of millions of enthusiasts who create, invest in, trade and use Bitcoin and other cryptocurrencies in their everyday lives. The emergence of the first cryptocurrency has created a conceptual and technological basis that subsequently inspired the development of thousands of competing projects. Businesses can apply for a Circle Mint account to exchange US dollars for USDC. When a business deposits USD into their Circle Account, Circle issues the equivalent amount of USDC to the business. The process of issuing new USDC is known as “minting.” This process creates new USDC in circulation.
Who Created USDC?
The US Dollar Coin isn’t mined like a lot of other cryptocurrencies. It is available as Ethereum ERC-20, Algorand ASA, and Solana SPL tokens that can be purchased using US Dollars on several major exchanges. Circle says there is a total supply of four billion tokens in circulation right now.
- Since then, it has expanded into cryptocurrency—raising millions in venture capital and acquiring crypto exchange Poloniex.
- The customer can also convert the USDC back into US Dollars, which will then be wired back into their bank account.
- The top crypto is considered a store of value, like gold, for many — rather than a currency.
- Governments have sought to regulate stablecoins, particularly as central banks work on their own digital currencies.
- Our currency rankings show that the most popular Canadian Dollar exchange rate is the CAD to USD rate.
Is USD Coin a Good Investment?
Tether Limited, on the other hand, didn’t provide information on its reserves for years. It has also faced legal troubles related to its lack of transparency, with a lawsuit alleging that unbacked Tether issuances caused $1.4 trillion in damage to the crypto market. The stablecoins have the same uses and normally keep a value of $1. However, each has advantages over the other, so they’re not entirely interchangeable. USDC’s stability is built upon its reserve system, where every issued USDC token corresponds to a reserved US dollar. This strategic reserve approach effectively cements the connection between USDC and US dollar values.
This negative sentiment appears to have been broken, with a number of corporate behemoths buying up Bitcoin since 2020. In particular, business intelligence firm MicroStrategy https://www.tokenexus.com/ set the pace after it bought $425 million worth of Bitcoin in August and September 2020. Since then, many others have followed suit, including EV manufacturer Tesla.
How Is the USDC Network Secured?
Is USDC a Stablecoin?
- In May 2021, the Chinese government declared that all crypto-related transactions are illegal.
- On the flip side, countries like China have moved to heavily clamp down on Bitcoin mining and trading activities.
- That work also showed that the demand for gold by central banks responded positively to global economic policy uncertainty and global geopolitical risk.
- Because it uses the Ethereum blockchain, USDC transactions require Ethereum gas fees.
- Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.
- This ability to mitigate risk significantly contributes to USDC’s value within the cryptocurrency market.
