USD Coin, known by its ticker USDC, is a stablecoin that runs on the Ethereum, Stellar, Algorand, and Solana blockchains. Its aim is to provide a currency for the digital age and it has seen a surge in popularity – more than $1 billion of USDC were issued in the first year alone – making it the fastest-growing stablecoin in the world. As well as offering security for cryptocurrency traders, its stability has the potential to revolutionize the DeFi industry.
Continue reading to find out more about how the crypto works and whether it’s a good investment in 2023. We also list the best brokers and exchanges offering trading on USD Coin.
USD Coin Explained
USD Coin was launched in September 2018 and was developed by Centre Consortium, a joint venture by peer-to-peer payment services company Circle and cryptocurrency exchange Coinbase. The goal of the founders was to create an ecosystem in which USDC is accepted by as many wallets, exchanges and service providers as possible.
As a stablecoin, USD Coin is tied to the U.S. Dollar and redeemable on a 1:1 basis. It is issued by regulated financial institutions and backed by fully reserved assets which are audited by Grant Thornton, LLP.
In recent years, USD Coin has seen an explosion in popularity due to the rise of decentralized finance and driven by the currency’s guarantee that users can withdraw 1 USDC and receive $1 in return.
USD Coins are ERC-20 tokens found on the Ethereum blockchain, making integration with Ether-based applications easy.
The amount of cash held in reserve is verified and matched with the number of tokens in circulation by major accounting firm Grant Thornton, LLP, which issues monthly reports on the holdings.
Centre and Coinbase, both well-funded and regulated organizations, provide certainty to the future of USD Coin unlike other digital currencies.
In March 2021, Visa announced its use of USDC for transactions on its payment network.
Other similar projects to USD Coin include Tether (USDT), TrueUSD (TUSD), Gemini Dollar (GUSD), Paxos Standard Token (PAX), and Dai (DAI), all ERC-20 stablecoins pegged to the U.S.Dollar.
How Does USD Coin Work?
Tokenization is the process by which Circle guarantees that every USD Coin is backed with a U.S.Dollar. This is a three-step process:
- A user deposits cash to the token issuer’s bank account
- The issuer uses a USD Coin smart contract to create an equivalent amount of USD Coin
- The deposited cash is held in reserve, while the user receives a newly minted USD Coin. This ensures that there is always 1 USD held for every USD Coin, providing stability to the currency
Redeeming your USD Coin for fiat cash is also straightforward:
- A user sends a request to redeem their USDC for USD
- The issuer uses the USDC smart contract to exchange the tokens for USD and removes the equivalent amount of tokens from circulation
- The requested amount of USD is deposited directly into the user’s bank account from the reserves
The user will receive the equivalent amount of USD Coin requested, minus any fees that have been incurred
USD Coin Chart
Benefits Of Trading USD Coin
- Stability – Centre’s pioneering technology for fiat-backed stablecoins brings stability to cryptocurrency trading.
Confidence and security in USDC are delivered by proving that U.S. dollars are being held in reserve. In a market renowned for its extreme volatility, traders can be reassured knowing that in holding USDC, you are in possession of a fiat-backed currency that is regularly audited.
- Accessibility – Holding USD Coin, unlike regular U.S. dollars, does not require a bank account and it doesn’t matter where you live. All you need is a mobile phone and you can send USD Coin around the world in seconds. Furthermore, as the crypto market is open for trading 24 hours a day, 365 days a year, it is possible to trade USD Coin with other cryptos while other major markets are closed for business.
- Leverage – One of the ways to maximise profits as a day trader is to use margin trading.
- Many brokers offer a range of leverage options on USD Coin which can increase exposure for greater gains. However, using multipliers increases risk and therefore potential losses and should be used responsibly.
- Liquidity – Another advantage of USD Coin being tied to the U.S. Dollar is its high liquidity. Unlike other cryptocurrencies, withdrawals at a rate of 1:1 to the U.S. Dollar can be carried out with ease. High volumes also suit multiple trading strategies.
Like other cryptocurrencies, it is possible to mine USD Coin. However, these days it is important to research whether or not your setup will be capable of generating any profit. GPU miners use an incredible amount of electricity and can often result in losses rather than gains. The most efficient way to mine is by using an ASIC setup, however this hardware has become expensive – usually several thousand dollars for a decent setup.
Mining profitability calculators are a good way to find out what hardware is capable of generating profits and can easily be found online.
How To Buy & Store USD Coin
Coinbase, one of the most renowned crypto brokers on the market, was a founding partner of USD Coin, so it is no surprise they are one of the most enthusiastic proponents of the currency. Coinbase users in the U.S.A (excluding residents of Hawaii) are eligible for monthly rewards earned for the days in which you have a balance of at least $1 of USDC on Coinbase. The higher the balance, the more rewards you earn.
However, Coinbase is not the only exchange where users can buy and trade USDC.
The Binance platform now widely supports the currency, paired with BTC and BNB. Poloniex also supports the currency, paired with BTC, ETH, XRP, BHC, STR, LTC, ZEC, XMR, and DOGE. If you decide to buy, sell, or mine USD Coin, you will need to have a place to store it. As mentioned earlier, USDC follows the ERC-20 standard and can be used with any app that supports the Ethereum blockchain. This means that digital assets can now be bought and traded using a stable digital dollar on any platform that supports the ERC-20 standard. The three most popular types of ERC-20 wallets used today are hardware wallets, software wallets, and exchange wallets. Exchange wallets are the easiest setup but offer the least security. Hardware wallets are the most secure option for storing your crypto. Software wallets come in desktop, mobile, and online variants and are the happy medium between security and convenience. When deciding which crypto broker to go for there are a number of factors to consider. Fees vary drastically from broker to broker and can take many forms such as commission, overnight fees or percentage cuts of earnings. Research is key to finding a broker with attractive fees. Different platforms offer a range of leverage options for USD Coin.
- High leverage options are an enticing route to maximising profits when trading, but can also result in higher losses. Go for a broker that offers low-interest rates when trading with leverage.
- Accounts – Most platforms offer a tiered account system in which different features and rewards are available on each level. Although the cheapest option might seem the most appealing, more advanced options may increase profit in the long term. Good advice is to look for brokers who offer customisability, competitive spreads, and straightforward withdrawals.
- Customer service – The cryptocurrency market is booming and brokers are expanding at an extraordinary rate to meet the needs of their customers. With trading open 24/7 and markets being highly volatile, it is important to find a broker with around the clock customer service provisions. Many brokers offer a live chat helpline and phone support, however responsiveness and waiting times vary. Check out customer service reviews online when considering a broker to trade USD Coin.
- Regulation – Your options as a trader vary depending on where in the world you are. Regulation of cryptocurrency trading is different in every country, so make sure you know what the limits are where you live. In the UK for example, as of January 2021, regulatory changes prohibit speculation on crypto prices via leveraged products such as CFDs.
USD Coin is proving popular amongst crypto traders because of the level of trust, speed, and ease to move in and out of trades it provides.
This stability makes USD Coin a popular choice for traders who want to avoid the volatility of other cryptocurrencies. However, it is important to conduct research and stay updated with the latest market trends before making any investment decisions.
- Stay Updated – The cryptocurrency market is always open and extremely unpredictable, so staying up to date with the latest developments and trends is crucial. Many brokers offer tutorials, blog posts, and demo accounts to help you improve your skills.
- Conduct Research – There are many websites and blogs available that provide current insights and analysis. YouTube has hundreds of free tutorials, and many traders use Reddit forums to share tips and hints with each other.
- Technical Analysis – Most brokers offer various features to assist with market analysis. It is important to understand charts and indicators to ensure that you are maximizing your profits. Bar, line, and candlestick charts are common and provide the most information in an easy-to-understand format.
- Money Management – It is impossible to predict what will happen in any market, so having a good money management strategy is essential when you begin trading. As a beginner, you should never invest more than you are willing to lose. Effective money management can minimize your losses when you make a mistake and increase your gains when you make the right move.
USD Coin is a highly stable digital currency that offers a level of certainty that is uncommon among other cryptocurrencies.
Regardless of whether you use USD, GBP, INR, or NZD to buy USD Coin, each currency will be redeemable for one US dollar. This stability makes it a popular choice for traders looking to avoid the volatility of other cryptocurrencies. However, as with any investment, it is important to do your research and stay up to date with the latest market trends before making any moves.
It is important to monitor inflation rates when considering the future of USD Coin, whether that be in 2023, 2025, or 2030. As a stablecoin, USD Coin has the potential to revolutionize the world of digital assets by facilitating fast and easy trades and seamless exchange arbitrage. Compared to other stablecoins, such as Tether (USDT), USD Coin has the advantage of being issued by a regulated financial institution and having its reserve holdings audited monthly.
For investors seeking a secure and dependable digital currency for trading, USD Coin is an excellent choice.
Is USD Coin a Good Investment?
USD Coin is a popular stock due to its low transaction times and global accessibility, among other benefits. However, while price predictions for 2025, 2030 and beyond may seem promising, the future of cryptocurrencies as a whole is still uncertain as governments worldwide seek to implement regulations that could lead to a drop in value.
Is USD Coin a Stablecoin?
Yes, USD Coin is a stablecoin with a value pegged to the USD at a rate of 1:1.
Should You Consider Investing in USD Coin?
USD Coin (USDC) is a legitimate cryptocurrency that offers promising returns for active investors.