What is USDC? - Reading time: about 4 minutes
In general, stablecoins are a subgroup of cryptocurrencies that have the element of stability and are less open to fluctuations in value. Unlike volatile cryptocurrencies, a key differentiating characteristic of stablecoins is that they are tied to a reserve asset such as fiat currencies (e.g., USD, EUR) or commodities like gold or oil.
USDC is one of the most well-known stablecoins.
Launched in 2018, USDC is a stablecoin pegged to the U.S. dollar. Or, put another way, it is always redeemable 1:1 for U.S. dollars hence it is considered a tokenized U.S. dollar. As a fiat currency and safe asset, the U.S. dollar’s real world value is behind USDC. On its part, USDC makes it easier to use the U.S. dollar on the internet including over a blockchain-based platform.
That says it all: USDC is widening the U.S. dollar’s reach and use for business transactions on a global scale including being accepted for payments. Its multi-chain approach aims to be a bridge with the traditional financial system to improve financial inclusion for the unbanked in various parts of the world.
How is USDC backed
One of the most important questions to ask when dealing with stablecoins of the fiat-backing category include how and where their reserves are backed. In the case of USDC, the cash equivalent and short-duration U.S. Treasuries (of 90 days or less) of the USDC in circulation (currently at a total of $54B in USDC as of June 6, 2022) are held with U.S. regulated banks and financial institutions.
Monthly attestations on the sufficiency of dollar-denominated reserves to meet demands for USDC outstanding are usually issued and are publicly available.To improve on transparency, the monthly attestations of all USDC reserves - a periodical check - is conducted through assertions by one of the world’s foremost accounting firms, Grant Thornton LLP.
On March 31, 2022, BNY Mellon was announced as the primary custodian for the USDC reserves. Weekly updates on USDC reserves as well as any changes to the floating supply based on the current rate of issuance and redemption are also provided by its founder, Centre.
USDC has seen accelerated adoption with Moneygram and Stellar adding the crypto-fiat rail, particularly due to the tailwinds created by the massive gap in the stablecoin sector left behind by UST.
In fact, a report from the U.S. Federal Reserves was ominously published right before USD’s peg began to collapse, with the aftermath leading to a flurry of discussions surrounding the viability of the various stablecoins on the market.
The USDC digital dollar project was a collaborative effort by an organization called the Centre Consortium representing Circle and Coinbase. The joint effort is aimed at accelerating the adoption and real world use cases of digital dollars. With a primary objective of widening the entry into crypto usage along with quicker global remittances and expanded fiat options on behalf of both merchants and customers.
Essentially, the service helps onboard the gap between traditional businesses and the increasing growth of the crypto sector by facilitating stablecoin payments that can be readily accepted across integrated payments ranging from Mastercard, Visa, to Moneygram.
Why USDC was founded
Enabling wider access to crypto
Fair exchange of value particularly in fiat-based investments
Merchant payment rails for global payments (USDC serves as a fiat-crypto rail)
Why hold USDC
To get U.S. dollar exposure + volatility hedge
To hedge against depreciation in local and other markets for wealth preservation
Trusted for stability as it’s held in regularly audited reserve bank accounts
How to buy USDC on ProBit Global
1) ProBit Global users can buy USDC using a credit card by accessing the fiat-on ramp which currently supports over 40 fiat currencies.
2) USDC can also be purchased on the exchange by placing a limit order.