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About USDC
Key Points
- USDC is a stablecoin pegged to the U.S. dollar on a 1:1 basis.
- Each unit of USDC is backed by $1 held in reserve, in a mix of cash and short-term U.S. Treasury bonds.
- The Centre consortium, behind USDC, says it is issued by regulated financial institutions.
Founders and History
- The Centre Consortium has two founding members: Circle and Coinbase.
- Circle and Coinbase collectively announced a major upgrade to USDC’s protocol and smart contract in 2020.
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About USDC: A Stablecoin Pioneer
What is USDC (USD Coin)?
USDC is a stablecoin that is pegged to the U.S. dollar on a 1:1 parity basis, ensuring a consistent value equivalent to the American currency. Each unit of this cryptocurrency in circulation is fully collateralized by a corresponding $1 reserve, comprising a diversified mix of cash and short-term U.S. Treasury bonds. According to the Centre consortium, the entity behind this asset, USDC is issued by reputable, regulated financial institutions.
The stablecoin initially debuted on a limited scale in September 2018. At its core, USDC’s philosophy revolves around the concept of “digital money for the digital age” – a notion that resonates with a world where cashless transactions are increasingly becoming the norm.
Several use cases have been unveiled for the USDC, showcasing its versatility. Beyond providing a safe haven for crypto traders during periods of market turbulence, the stablecoin’s proponents assert that it can also facilitate businesses in accepting digital asset payments, thereby disrupting a diverse range of sectors, including decentralized finance and gaming.
Ultimately, the objective is to establish a comprehensive ecosystem where USDC is universally accepted across a vast array of wallets, exchanges, service providers, and decentralized applications (dApps).
The Visionaries Behind USDC: A Founding Story
The Centre Consortium boasts two esteemed founding members: Circle, a pioneering peer-to-peer payment services company, and Coinbase, a prominent cryptocurrency exchange. The consortium remains open to welcoming other crypto ventures to its ranks.
Circle co-founders Jeremy Allaire and Sean Neville eloquently articulated the vision behind USDC, stating: “We envision an open internet of value exchange that can profoundly transform and integrate the world, ultimately dissolving artificial economic boundaries and giving rise to a more efficient and inclusive global marketplace that connects every individual on the planet.”
In 2020, Circle and Coinbase jointly unveiled a significant overhaul of USDC’s protocol and smart contract. The primary objective of these enhancements is to facilitate the seamless integration of USDC into daily payment systems, e-commerce, and peer-to-peer transactions, thereby rendering it a more viable option for everyday use.
Unveiling the Uniqueness of USDC (USDC)
The stablecoin landscape has become increasingly saturated in recent years, yet USDC has endeavored to distinguish itself from the competition in several key aspects.
One of the primary concerns revolves around transparency, providing users with the assurance that they can seamlessly withdraw 1 USDC and receive $1 in return, free from any obstacles. To achieve this, a prominent accounting firm has been entrusted with the task of verifying the cash reserves and ensuring that they align with the number of tokens in circulation, thereby fostering trust and confidence.
Notably, Circle and Coinbase have distinguished themselves from other crypto endeavors by achieving regulatory compliance, thereby facilitating their international expansion. Furthermore, their well-funded status has instilled confidence in the stability of their stablecoin.
Coinbase briefly entertained the notion of diversifying the funds backing USDC, but swiftly retracted the proposal in the face of vehement community opposition. The unwavering transparency surrounding the provenance of its funds has been a pivotal factor in USDC’s success. In stark contrast to its rival USDT, which has been mired in repeated investigations, USDC has consistently maintained an unblemished reputation, never having been implicated in any wrongdoing. Consequently, USDC has made significant inroads into USDT’s dominance in the stablecoin market: whereas USDT held a commanding 74%:16% lead in market share in February 2021, this advantage has narrowed to a 45%:30% lead in February 2022.
The Composition of USDC Asset Reserves: A Breakdown of Holdings
In the aftermath of TerraUSD’s collapse, stablecoin issuers have faced heightened scrutiny regarding the quality of the reserves underpinning their tokens. In a bid to promote transparency, Circle Internet Financial LLC (Circle), the esteemed issuer of the USDC stablecoin, has released its reserves report as of July 31, 2022.
According to the report, the company’s aggregate USDC reserves comprise $42.3 billion in US Treasury Securities and $12.2 billion in cash deposits, as disclosed in the monthly reserve report issued by Grant Thornton, a renowned global accounting firm.
Subsequently, the accounting firm issued an independent attestation report dated August 24, 2022, which states:
“
In our opinion, the information presented in the accompanying USDC Reserve Report as of July 31, 2022 is accurately represented, in all material aspects, in accordance with the criteria outlined in the USDC Reserve Report.
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What Is the Circulating Supply of USDC (USDC)?
It’s challenging to provide an exact figure, as the potential supply of USDC is theoretically limitless. New coins are minted on demand, whenever an individual seeks to acquire one in exchange for their US dollar.
Notwithstanding, several factors have contributed to USDC’s remarkable surge in popularity over the years, particularly in 2020. One notable catalyst has been the rapid, exponential growth of decentralized finance. As a widely accepted onramp to the broader ecosystem, USDC has become a ubiquitous presence on numerous DeFi protocols.
The Security Architecture of the USDC Network
All circulating USDCs exist as ERC-20 tokens, residing on the Ethereum blockchain. A significant advantage of this setup lies in its seamless integration with Ethereum-based applications. As previously mentioned, the security and trustworthiness of this stablecoin are ensured by the transparent proof that U.S. dollars are safely held in reserve.
Where to Acquire USDC (US Dollar Coin)?
As anticipated, one of the most ardent proponents of USDC is Coinbase, given its instrumental role in the stablecoin’s inception. Moreover, USDC can be readily acquired and traded on prominent exchanges such as Poloniex, Binance, OKEx, and Bitfinex, as well as decentralized platforms like Uniswap.
Notably, USDC is often acquired in tandem with Bitcoin — and if you’re new to purchasing Bitcoin, we recommend exploring our exhaustive guide, available
here
.
Global Investment Giant Sets Sights on USDC
In the relatively uncharted territory of cryptocurrency, USDC has consistently set itself apart from other stablecoin initiatives by cultivating strategic partnerships with esteemed traditional financial institutions.
Following a substantial $400 million funding round, which boasted participation from esteemed investors such as BlackRock, Fidelity, Fin Capital, and Marshall Wace LLP, BlackRock disclosed that it had “forged a comprehensive strategic partnership with Circle, encompassing the exploration of capital market applications for USDC.”
Beyond its partnership with the world’s largest asset manager, the stablecoin provider has forged alliances with other prominent players in traditional finance. Notably, in March, it was announced that BNY Mellon, America’s oldest bank, would assume the role of primary custodian for the assets underlying USDC stablecoins. Furthermore, a press release disclosed that BlackRock would take on the responsibility of primary asset manager for USDC’s cash reserves.
Associated Resources:
A stablecoin is a type of cryptocurrency that is designed to mitigate the volatility associated with traditional cryptocurrencies, thereby maintaining a stable value, typically pegged to a fiat currency such as the US dollar.
Discover USDT, a prominent rival to USDC in the digital currency landscape
A comprehensive delineation of stablecoins can be found in the CoinMarketCap glossary, providing an exhaustive explanation of this cryptocurrency subset.
CoinMarketCap Blog: In-Depth Insights and Expert Analysis