What is USDC, the USD Coin cryptocurrency?

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There are thousands and thousands of different cryptocurrencies. The vast majority are low-value projects that get little traction in the market. In fact, the top 10 cryptos according to various metrics (popularity, market volume, etc…) vary very little. And in this top you can find a currency called USD Coin whose price is always close to the dollar. What is this crypto?

USDC or USD Coin is a stablecoin, that is, a cryptocurrency whose price remains much more stable than that of other cryptocurrencies

USD Coin or USDC is what is known as a stablecoin, that is, a digital currency designed to maintain as stable a price as possible. In the case of USDC, the price it maintains is one US dollar, hence its name, although it is in no way affiliated with the US government. This stable price is achieved by being backed with real dollar reserves.

This parity is achieved, in part, with the dollar reserves contributed by its creators, a conglomerate called Center created by the Coinbase exchange and a financial company called Circle. The other part of this backing with dollars is achieved when users buy USDC with fiat money, at which point that fiat money is added to the reserves and a new USDC is created that is “burned” when the USDC and money are sold. fiat returns to owner.

But why make a cryptocurrency whose price does not change? The goal of USDC and other stablecoins is not investment, but portfolio protection. If the market is very volatile and prices are falling significantly, a response move is often to sell all or part of it and buy USDC or another stablecoin, so that money is protected.

On the other hand, USDC is compatible with several blockchain networks such as Ethereum, Solana, TRON or Algorand, so it also serves as a unified payment system between different ecosystems.

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Brian Adam
Professional Blogger, V logger, traveler and explorer of new horizons.