When buying USD Coin, factor in your financial goals and see if the risks make it the right buy for you. If you want to use your USDC to purchase other crypto coins like Litecoin or Dogecoin, you can make that happen on KuCoin. USDC investors generally use their holdings to earn passive income. You can lend USDC directly through its issuer, Circle, or with a hardware wallet like Ledger. That recent move now means either one dollar or asset-equivalent backs every USDC. Similar to concerns made about Tether, USDC was flagged last year for not backing each USDC with an asset or dollar equivalent.
- Just because USDC might be perceived as a safer, more credible port to ride out the stablecoin storm than other coins, current economic conditions should be considered.
- It’s easy to use, whether you’re sending, receiving, or lending.
- Another popular option is USD Coin staking on decentralized crypto exchanges.
- We’ll get more into the difference between USDC and USDT later on in this USD Coin guide.
- In July 2021, Mastercard (MA -0.08%) announced plans to incorporate USD Coin as a payment method.
- Before the issuance of USDC, the equivalent amount of USD is with one of Circle’s accredited partners.
Increasing some transparency, accounting firm Grant Thornton audits those accounts and posts monthly draft attestation reports accessible to the public. Many exchanges have trading pairs that include USDC against Bitcoin and other cryptocurrencies. USDC is thought to have value because of the assets backing it.
Understanding USD Coin
As with any investment, there are risks involved, and investors would be wise to do their own research first. Once an exchange account has been set up, it’s simply a matter of placing a sell order instead of a buy order. USDC can often be sold for other cryptocurrencies or regular U.S. dollars. Note that depositing or withdrawing U.S. dollars typically requires additional user verification and linking a bank account. If you’re looking for a cryptocurrency investment, it makes more sense to compare other types of cryptocurrencies that aren’t stablecoins. Bitcoin (BTC 2.16%) and Ethereum are popular choices, but there are many other interesting projects out there.
USD Coin is built on an open-source fiat stablecoin framework developed by Centre. New USDC tokens are minted when people buy them, and they’re removed from circulation when people sell their tokens for U.S. dollars. Another point in USD Coin’s favor is the type of funds backing it. While some issuers back their stablecoins with a variety of financial instruments, the USD Coin reserves consist of only U.S. treasury securities and cash deposits. USD Coin is also available to trade on a number of other popular cryptocurrency exchanges, including Binance, Bitfinex, Coinbase, Crypto.com, Kraken, and Uniswap. USD Coin is a stablecoin with a fixed value of $1 per coin.
EthereumPoW
To achieve this, USDC is fully backed by assets of equivalent value. USDC is an ERC-20 token, so when it comes to security, it relies on the underlying Ethereum network. If you’re worrying about the security of its peg, then that What is USD Coin responsibility lies with Circle. To be transparent, USDC is audited by a third party that publishes information on its reserves periodically. These features mean USDC is reasonably secure both technically and financially.
USD Coin and Tether (USDT) together account for 80% of the capitalization of the global stablecoin market. USD Coin is a stablecoin built on the Ethereum (ETH) blockchain. Like other collateralized stablecoins, USD Coin’s value is pegged to the U.S. dollar. That means that one USDC should ideally always be worth one dollar. However, there are crypto lending services that allow investors to deposit their USDC and get paid interest in return. Like a bank, the platforms lend out the USDC at interest and pass on some of the profits to the depositor.
Who created US Dollar Coin?
That means you can transfer USDC without a middleman tampering with the transaction or taking a cut of the fee. U.S. lawmakers have been working on a regulatory framework for stablecoins and their issuers that could affect how they’re used. It’s worth mentioning that USD Coin follows current regulations and would likely have fewer issues with any new rules compared to other stablecoins. 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. Every USDC is backed by a U.S. dollar in a bank account audited monthly by accounting firm Grant Thornton.
- To achieve this, USDC is fully backed by assets of equivalent value.
- The benefit of USD Coin being a stablecoin is also one of its downsides.
- Compared to other popular crypto coins, this price fluctuation is practically nothing.
- The main unique feature of USD Coin is that it’s always worth $1.
Through lending programs, you can easily earn an annual percentage yield of more than 5% on USD Coin. Be careful about doing this with large amounts of money, though. As mentioned earlier, crypto lending programs have failed in the past, leaving users high and dry. There is the possibility of losing funds if borrowers default on their loans or if the lending platform goes through financial difficulties. It halted withdrawals in 2022, and then filed bankruptcy, leaving users without access to the crypto they had deposited.
While stablecoins like USDC have less price volatility than other cryptocurrencies, stablecoins may be subject to increased scrutiny by regulatory agencies like the U.S. There is a business behind USDC also, so it must function well for the coin to remain pegged to the dollar. USD Coin (USDC) is a stablecoin, a cryptocurrency backed by U.S. dollars or dollar-denominated assets like U.S. USDC’s reserve assets are held in segregated accounts with regulated U.S. financial institutions. All examples listed in this article are for informational purposes only.
- Since USD Coin price is pegged to the value of the US Dollar, its value is incredibly stable.
- Circle has also partnered with two of the largest payment networks in the world and some popular payment processors.
- Tether courted some controversy over the reserves backing the stablecoin.
- But, like with all financial instruments, it’s not without its intricacies and nuances.
- Stablecoins like USDC are used differently than cryptos like Bitcoin (BTC) or Ethereum (ETH), which fluctuate in price.
- USD Coin was launched in 2018 by Centre, a consortium founded by Circle and Coinbase.
Since USDC operates primarily as an ERC-20 token, it is supported by countless DeFi platforms and crypto apps and services. It’s also readily available on centralized and decentralized exchanges, meaning buying it is relatively simple too. Since USDC is a great method of exchanging https://www.tokenexus.com/binance-review/ value across borders, it also has a unique positioning in terms of remittances. To explain, political or economic instability in some countries makes receiving funds from friends and family members challenging. Using USDC, there are no hidden costs such as exchange or service fees.
