You might have searched for ‘What is USDC?’; so your search ends here

If you look closely, you will find out that the stablecoins are more with the practical use cases which a currency is expected to be that too with the advantage of being a blockchain-based cryptocurrency like USDC.

Since they came into existence, cryptocurrencies have had different aspects which every other individual takes care of. Some see it as another investment asset, some take this extreme and think of it as a ‘get rich quick scheme,’ some criticize them for their volatile nature, and that’s why some of them don’t consider it to be as valuable as traditional currencies. But the stablecoins are meant to bridge the technology of cryptocurrency and users by minimizing the flaws of digital assets. 

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In a nutshell, stablecoin came into existence after removing the drawbacks of cryptocurrencies, making them unable to replace traditional currencies. They are far better than crypto assets like Bitcoin and Ethereum, etc., in terms of stability, security, speed and transaction fees, etc. 

Beginning of the Stablecoins

With the launch of the first stablecoin Tether in 2014, the concept of stablecoin took a push, and people took it hand in hand. Tether stablecoin is backed with the US dollar as stablecoins are pegged with any fiat assets. 

Although the stablecoin is considered to be centralized as its development, control, and the firm behind the cryptocurrency controlled working. A little to know about Tether is important to get an idea about USDC and why it’s better than USDT. 

USDC 

First thing first, USDC or USD Coin is a stablecoin collateralized or pegged with fiat assets. Its offerings consist of the advantages of blockchain technology while minimizing the risk of price volatility. 

USDC is an ERC-20 token on the Ethereum blockchain, and it is completely backed with US dollars. As it follows that the company has an equal number of US dollars in their holdings equivalent to the number of USD Coins in circulation. 

Origin of the stablecoin

USDC was launched in October 2018 by a consortium going by the name of CENTRE. It’s a partnership with US biggest crypto exchange, Coinbase, and a fintech service firm, Circle. Their goal was to develop crypto that would be price-stable and related network protocols. 

The stablecoin came and tapped on the significant problems as the coins before it had planned to do. The main aim was to deal with high volatility and solve the convertibility issue between cryptocurrencies and fiat currencies. 

As the stablecoin Tether emerged, the related issues came along with it. First, the USDT was not clear about its working, the USD reserves it holds. In short, there was a lack of transparency with USDT, which was considered to be a primary feature of a cryptocurrency. 

Sensing the discomfort in the industry because of USDT and considering this as an opportunity, Circle and Coinbase move forward with their stablecoin plan to fill the void. Ticking all the necessary boxes to be a worthy stablecoin also mitigated the drawback USDT consisted of. The result of efforts soon started reflecting the popularity of USDC among users. Despite being launched years after USDT, it gave a formidable challenge to stablecoin and made it the top five cryptocurrencies in the world. 

The gaps USDC filled in stablecoin space

Stablecoin users had skepticism with Tether whether it had US dollars in reserve or not; USDC sensed it and removed that paint point of users. They started publicly publishing a monthly attestation of 100% reserves of fiat assets on CENTRE. 

The Rules and guidelines were also made for members clarifying the issuance and redemption of USDC. The members at the CENTRE consortium must follow the rules related to licensing, technology and operations, compliance, accounting, and custody of fiat reserves. 

Primary users of USDC became the exchanges as they have used it as an alternative to fiat assets and currencies. Using the USD Coin, their dependence on the banking system to maintain the account holdings of fiat was minimized drastically. 

The exchanges can now hold USDC instead of having actual physical currency as CENTRE, or USDS would do this on their behalf. An additional advantage found in USDC is that it is the only stablecoin supported by the DeFi ecosystem to date. 

Tokenomics of USDC

Its working is not sophisticated at all. An ERC-20 asset based on the Ethereum blockchain possesses Ether and other ERC-20 cryptos. 

To redeem USDC, users can send the tokens to CENTRE members’ controlled addresses. After collecting the token from users, they destroy the tokens, as they call it to burn, and transfer the amount in fiat currencies to the bank account of the same user. 

As we have discussed earlier, let’s try to get the use cases of USDC. It’s clear that the USD Coin token removes the need for a bank dependency to transfer funds; this feature is available to both users and exchanges. 

It’s an Ethereum based token, and it’s an open-source stablecoin, too, so it’s possible to integrate with various Ethereum based applications, perks of being on the same ecosystem. 

Also, when it’s being said that DeFi protocols can use USDC as well because of the simple fact that they both are connected with Ethereum blockchain, they will follow the earlier mentioned principle. On DeFi protocols, the USDC can be used for lending, borrowing, staking, and trading purposes.  

Final Thoughts over USDC

To date, the collaboration of Coinbase and Circle resulted in USDC creation seems going well and resulted fruitfully. Some rumors and criticism for the token are also scattered here and there, but that’s the case with almost every famous and well-known crypto, after all. 

Earlier, USDT had dominance in the stablecoin market with a share of approx 74%, whereas Circle’s USDC had only 16% of it. But now the former has limited to 45% market share whereas the latter one rose to 29%. 

According to the reports, Tether has seen an expansion of 275% in market cap while at the same time Circle’s stablecoin showed remarkable growth of 987% in 2021. 

Still, it has proved to be one of the excellent and legitimate stablecoin which can be trusted, especially when compared to other available options. Currently, the total market capitalization USDC holds more than $52 billion, and its current market supply for tokens also stands at over 52 billion.