What Are USDC?
USD coins are a type of fully-collateralized stable coins that works on the fiat stablecoin framework. The USDC are different from digital currencies like bitcoins because unlike them, it uses the US Dollar as the relative value. It means that a single token will be worth exactly 1 USD and will always stay stable against it.
The currency works as ERC-20 based token, which enables you to transfer it to any ERC-20 compatible wallet and redeem it with ease. It is also termed as Power of the Dollar at the Speed of Crypto due to this advantage.
Who Introduced USDC?
Circle, a global Finances services company along with some other companies joined hands to develop USDC. They announced it for the first time during the CoinDesk’s Consensus Conference in May, under the affiliate CENTRE Project.
Coinbase also became a part of this new stable currency system and joined Circle as the co-founding member of the CENTRE Consortium. It allowed the US customers outside New York to buy and sell USDC and also gave them the flexibility to transfer them.
It was the first time that Coinbase came forward for stablecoins, as it mostly deals with cryptocurrencies only.
Pros of USDC
USDC was a completely new approach to stablecoins. It solved numerous problems, which ultimately, removed a lot of barrier from the stable coins world.
The following are some of the advantages that this currency offers to its customers.
US Dollars Backed
Circle employs complex algorithms to stabilize and maintain the value of USDC. They regulate it against the US dollar, under the regulation of the financial institutions. In fact, the institute itself issue the token.
So, you can buy, transfer, or redeem your USDC at any time without worrying about the value. The returns will be identical to your investment.
The most significant part of digital currency is the data building and regulating system. Circle and CENTRE have paid particular attention to it. The USD coins are ERC-20 token that works on the Ethereum network rather than the usual banking rails.
Ethereum is an open source blockchain-based computing platform with support for smart contract functionalities. This network makes USDC decentralized, secure, immutable, and very fast. It allows you to move dollars anywhere in the world within a few minutes.
No Third-party reliance
Most of the fiat-backed digital currencies rely on a third party maintenance reserves, but not USDC. The founding members of USDC, Coinbase, and Circle has created a specialized firm for regulating the exchanges and rules of this digital currency.
CENTRE independently looks after the issuance and the redemption of the USD coins, which helps it to maintain 1:1 backed reserves. They also ensure that the issues remain compliant to both the USDC and the state laws.
Taking loans or conducting exchanges in volatile digital currencies is a big mess. It was a risk for both the sender and the receivers as the values could change any moment. For instance, if a borrower transfers coin worth $100 each, but before the receiver pays it back, the cost of currency decrease to $80 each.
It will create imbalance returns and end up in a loss of investment. However, USDC is free from any such problem. The values of the coins will remain equal to one dollar, and you can go for a programmable loan without any risk of loss. It will allow you to track your interest and payment 24/7 and throughout the globe.
In the initial stages, the supporting sites of USDC were limited but not anymore. Currently, it is available in 85 out of the 103 countries having Coinbase. You can use it on both Coinbase and Coinbase pro.
Moreover, the customers who live in areas with high inflation rates are also moving towards USDC. They are using it to convert their savings to a smaller sum of money and tax saving. So, it has a high scope of spreading to more regions in the coming times.
There are many software and websites that will allow you to transfer money globally. However, most of them are bound by the applications, like you cannot send money from PayPal to Alipay or vice versa.
Therefore, USDC developers build it on an open standard. You can send money from your USDC Circle’s app to any digital wallet that is compatible with ERC-20 tokens.
Cons of USDC
The digital currency has always been vulnerable to cybercrime at both the provider and the user end. The same theory applies to Cryptocurrency. No matter how secure cryptocurrency protocols get, there is always a risk of cybercrime.
To deal with this problem, Circle and Coinbase have taken some essential steps to secure the data. These steps ensured the safety of your data, but that comes at a cost. The following are some of the issues that you may have to face due to their central policies.
Account Can Freeze
CENTRE (the firm that regulates USDC), holds power to control the ins and outs of every account. CENTRE can easily freeze your account and cancel all your transactional rights any time. They keep a regularly upgraded record of the blacklisted addresses and works according to them. The freezing can arise due to illegal activity, inclusion in restricted trade, legal order, or ongoing judicial process.
CENTRE even has the power to block the reserves of the blacklisted area permanently without communicating with the USDC holder.
Not ideal for Investment Assets
USDC offers excellent flexibility, transfer speed, and stability, but in doing so, it takes over one of the most significant advantages of bitcoins, profit. The coins that you buy today will be worth the same cost, regardless of the time and market changes, you won’t earn any profit.
For instance, if you buy 100 USDC today and redeem them after 2 years, they will still be worth $100. So, buying USDC is not an ideal future investment.
Legal Rules and Regulations
Legal terms and conditions are a common problem for almost every digital currency. There are always countries whose cyber connections and laws don’t support this future trend.
They usually have strict rules against cryptocurrency and restrict its flow. It’s not much of USDC flaw, but its drawback, which may disappear in the coming times.
Getting Started With USDC
The USD coins are utterly easy to buy and redeem. You can buy them by creating an account on its official website. Log on to their website, sign up for the USDC, verify your details like the phone number, tax information, and you are all set to use the services.
Once in the site, you can connect your account to your bank account and use it to buy USDC token. They will get transferred in your ERC-20 wallet, and you can freely use or transfer them from there.
In case you need to redeem them, simply transfer them back to your circle USDC account and have them wired to your associated bank account.
Exchanges For USDC
Until now, USDC’s parent companies Coinbase and Circle were the only ones who could provide you with USDC. However, Circle recently started allowing other institutes and exchanges to issue or redeem their USDC. They are even allowing non-native exchanges to trade USDC, which is very rare for stablecoins.
The following are some of the cryptocurrency exchanges that you can refer to:
How Can You Become A USDC Issuer?
CENTRE is openly welcoming new members into their network. To become an issuer, you will have to contact the CENTRE and agree with their policies. The Circle has some operating regulations and liability frameworks that you need to know before you sign up for USDC. You will also need to belong to a group of institutions which are licensed, compliant, custodians, and technically advanced.
As for the fees structure, you will be free to decide your charges for redeeming USDC. You will also get a degree of autonomy.
Wallets For USDC
Since USDCs are ERC-20 tokens, anyone with an Ethereum address can hold or use them. You can even transfer them across the accounts using a compatible wallet.
Here’s a list of supportive wallets that you can use:
● Coinbase Wallet
Coinbase is a power, user-controlled crypto wallet and Web 3 decentralized application powered by Ethereum smart contracts. It allows you to send and receive all popular ERC-20 and ERC-721 collectibles. You can use it for USDC, BTC, BCH, ETH, ETC, LTC, and XRP.
The wallet secures user administrative right using a private key, and the company doesn’t have any access to it. The key is encrypted and stored on your cell phone in the form of a secure element component. However, if you want, you can create an online backup of the private key on your Google drive.
● Ledger Nano S
Ledger Nano S is one of a kind, hardware type cryptocurrency wallet. The wallet is certified and approved by ANSSI (Agence Nationale de la sécurité des systèmes d’information), the National Cybersecurity Agency of France for its security. Ledger Nano S comes in the form of a small USB like device that you can plug-in to your smart device for accessing your crypto account. You will need the private administrative key to access it.
The wallet supports 3-18 application including Bitcoins, Ethereum, XRP, Bitcoin cash, EOS, Stellar, and a lot of others. It enables you to set up or manage over 22 coins directly from its application and even support external wallets.
Moreover, the device has a confidential recovery phrase protocol, which allows you to restore your data to any ledger devices, in case you lose the original one.
● Ledger Blue
Ledger blue is an upgraded version of the Ledger Nano S. These devices work with identical security protocol and standards. However, unlike the other Ledger devices, this wallet comes with a large capacitive touch screen. You can use this screen to verify transactions and check all your apps at a glance.
It has a secure chip, similar to the once used for credit cards and passports to ensure the safety of your currency. No one can access it without the administrative pin, not even the parent company of the wallet.
Further, it allows you to manage over 11 assets from the same devices and support over 30 types of cryptocurrencies, including USDC, Bitcoins, Tether, Tron, XRP, Altcoins, and more.
Coinomi is a secure, multi-asset crypto wallet that works with both smartphones and desktop devices. It is an HD (Hierarchical Deterministic) wallet and uses unique algorithms to create a seed phrase of your accounts. This phrase provides an extra security layer over your account and forms backup to restore your access credentials if you lose them.
Coinomi is also widely accepted for its hard to track transactions. The wallet creates a new wallet address for every transaction, which makes it difficult to relate a series of coin transfers to a single address.
Coinomi’s parent company also pays attention to the IP address of your account. They anonymize it so that no one can hack your details.
As for the currency support, Coinomi is Seg-Wit enabled wallet, and you can use it to over 168 types of fiat currencies. It can store, USDC, Bitcoins, Flash Coins, GCRcoin, Zcoins and a lot more. The biggest catch is that you can program this wallet for your native language. It has support for over 25 global languages.
Controversies of USDC
CENTRE has taken care of every aspect of USD coins and do not have any significant disputes. However, they have received some policies that are receiving criticism from the customer end.
The aspect that received the worst reviews is their abnormally high fees. There are tweets of customer explaining how they have to pay a high amount for making payment through bank account while there are no charges for payment made through the USD accounts. Circle launched this currency with a tagline “Customers can deposit USD and click to convert to USDC with no fee,” so these transaction fees demolish their basic policies and claims.
Another controversial issue about the currency is its account freezing. CENTRE reserves the power to seize any account that seems suspicious to it. The parent company can apply this action in return to any weapon, controlled substance, money-laundering, or any other illegal activity. The policy faced criticism because the company can skip prior notice or explanation for the freezing. In fact, they can erase the whole account and your asset permanently without notifying you.
Moreover, their account seizing policies don’t align with your regional law. Like, they will count gambling as an illegal activity, even if your provincial laws allow it.
Alternative for USDC
The Circle has taken an excellent approach toward the stablecoins with USTC, but their digital currency is somewhat new. There is a lot about USDC, which is not clear or need upgrades. Therefore, before you plan to buy USDC, you should have a look at their alternatives. Here’s a list of stable currencies that you can choose against USDC. Have a look:
● USDT (Tether) view website →
Tether limited announced this digital currency by the name “Realcoin” in 2014. The coins were fiat-collateralized stable cryptocurrency backed by 1:1 currency. In the initial stages, it pegged with the United States dollar but in 2019, Tether changed their policies.
The investors recognized it as the leading stable currency for future investment.
However, Tether has faced some controversy in the past year. The company has been accused of manipulating the customer and the market. Bitfinex, the company behind Tether also faced criticism for covering up $850 million of missing funds using Tether funding. The claims were never proven, and investigations never found a link of Tether to the money manipulation.
● TIED view website →
TIED Coins are the first Japanese Cryptocurrency backed by fiat. Tiedcoin launched it with the help of a cryptocurrency trading platform BeaXchange.com. The same exchange is also responsible for taking care of liquidity, security, and website interface for TIED coins. Tiedcoin follows an escrow based method for the deposit of the coins and KYC/AML screening to ensure safe transactions.
The unique and the most interesting part of this currency is its collateral. TIED offers you two different options, Tied2EUR, and Tied2JPY. The first option uses EUROs as the collateral, and the other depends on the Japanese Yen as the base.
Moreover, Tiedcoin works in tie-up with BeaXchange, so you don’t have to face any fees for exchanging coins. You can use Tied to buy or sell Ethereum, Bitcoins, or other popular digital currency without any chargers. The same rules apply to the purchase of Tiedcoins through other cryptocurrencies.
● MakerDAO (DAI) view website →
A company known as Makerdao or simple Maker came up with DAI coins in 2017. They introduced it as a reliable and transparent alternate for the stable currencies of that time. The new currency pegged with USD dollar like most other cryptocurrencies, but unlike them, DAI didn’t have a central power. It worked with governance token for management and collateralized debt position system for its functionality. There was no centralized no bank backing the currency or centralized facility regulating it.
Moreover, DAI lived entirely on the blockchain network in the form of smart contracts. It is stable to the volatile cryptocurrency environment, and no person or firm could shut it.
● TrueUSD (TUSD) view website →
TUSD is a United States dollar value backed ERC-20 stable coin. It appeared as a transparent alternative for the Tether coins and is one of the first legally protected digital currencies. TUSD was also the first token build on the TrustToken platform. It is an asset-backed (gold, metal and some other assets) token builder, which provides simplified options for buying and selling tokens around the globe.
The unique part of this currency was that it has centralized power, but no single company has claimed it. A group of companies signed an escrow agreement and divided the central power into parts. They have a daily publishing system to keep a note of the coins and conduct monthly audits to maintain transparency.
Additionally, their coins are very secure, and you have to pass a KYC/AML check to access them.
The only drawback you will face with TUSD is the limitation in transfer amount. You have to deposit or withdraw a minimum of $10,000 to utilize TUSD with your bank account.
● EURS view website →
EURS is one of its kind stable coins, which worked with the same principle as Tether, DAI, and TUSD, but with different collateral. This system switched the US dollar with the world’s second largest trade currency, EUROs.
It first appeared in 2018 and has maintained the title of being the most secure digital currency since then. There is a group of companies who joined hands for this cryptocurrency and currently handle its affairs. Moreover, the founding members have followed a rigorous distribution system and allow only a few limited firms to liquefy them.
You can purchase them from STASIS, EURS, Globitex, HitBTC, changelly and a few more.
As the world is moving toward the blockchain based digital currencies, it has become vital to be able to use digital currencies for regular payments and trades. Stable currencies can facilitate you in this aspect. It is stable, fast, secure, and possess every feature that you need for mainstream use of cryptocurrency. You can use it for loans, property, tokenized securities, and any other smart contract platform without the risk of loses.