What Is USD Coin USDC?

Cryptocurrencies are currently going through an accelerated period of growth. Research from the Cambridge Centre for Alternative Finance suggests that the number of global crypto users has increased from 35 million in 2018 to 101 million in 2020. Visit coinbase.com or review our stablecoin white paper for more information on USDC. Stablecoins first emerged around 2014 but their use has grown rapidly since the start of this year.

To do so they might have to transfer across several exchanges, or even wait several days. A stablecoin is a cryptocurrency that aims to maintain price stability by pegging its monetary value to a given fiat currency, typically what is a stablecoin on a one-to-one basis. A cryptocurrency worth $2 million might be held as reserve to issue $1 million in a crypto-backed stablecoin, insuring against a 50% decline in the price of the reserve cryptocurrency.

Commodity backed stablecoins

It holds promise for payments due to its speed, scalability and low transaction costs, helping to make it a good candidate for efficient blockchain settlement rails using stablecoins like USDC. The Solana blockchain network incorporates a number of key features and novel innovations that are worth unpacking for anyone interested in payment technologies. Circle’s USDC is a prominent stablecoin, bridging the gap between TradFi and the dynamic world of cryptocurrencies. Its aim to have unwavering value, seamless transactions, and integration into the DeFi landscape could make it a cornerstone of modern finance. As the cryptocurrency ecosystem continues to evolve, USDC aims to exemplify stability and utility, driving the financial transformation forward. Circle has committed to maintaining transparency and regulatory compliance in its operations, regularly publishing the above-mentioned attestation reports conducted by auditing firms.

Stablecoins achieve stability by pegging themselves to a less volatile asset such as gold or fiat currency. Crypto volatility, both long term and short term, has made coins largely considered a speculative investment. Stablecoins backed by more traditional investments give markets greater confidence in their price. For this reason, stablecoins are often the go-to option for financial decisions from both institutional and retail users of cryptocurrencies. If stablecoins aren’t properly regulated, there’s concern from governments that they could also enable illicit financial activity like money laundering and tax evasion.

What Are the Main Use Cases for Stablecoins?

Check out Ethereum’s dapps – stablecoins are often more useful for everyday transactions. You can earn stablecoins by working on projects within the Ethereum ecosystem. Demand for stablecoins is high, so you can earn interest for lending yours. Stablecoins are Ethereum tokens designed to stay at a fixed value, even when the price of ETH changes.

• If it is trading at above $1, the protocol decreases the collateral ratio.
• The idea is that, unlike cryptocurrencies like Bitcoin, stablecoins’ prices remain steady, in accordance with whichever fiat currency backs them.
• Taking advantage of blockchain networks without exposure to massive price volatility.
• “I’ll be a little bit of a broken record on the stablecoin issue, which is just that we have a moment, it’s a here-and-now moment.
• Reuters provides business, financial, national and international news to professionals via desktop terminals, the world’s media organizations, industry events and directly to consumers.
• Finder.com compares a wide range of products, providers and services but we don’t provide information on all available products, providers or services.

Transactions specify the state or accounts they interact with, allowing validators to run non-conflicting transactions simultaneously. Unlike other chains such as Ethereum, which use a single-threaded model, Solana employs a multi-threaded approach to enable parallel transaction execution. In simple terms, while blockchains like Bitcoin and Ethereum process transactions sequentially, Solana’s architecture allows for multiple transactions to be processed simultaneously. This design helps prevent congestion in one part of the network from affecting overall network performance. Circle, the entity behind USDC, meticulously designed it to mirror the value of the US dollar and enforces this through a reserve system, holding a stash of US dollars equal to or exceeding the circulating USDC tokens.

Cryptoverse: Bitcoin miners get stuck in a bear pit

Your portfolio as a whole will be more resistant to market price swings, and you will also have funds on hand in case a good opportunity comes up. You can also sell crypto for stablecoins during a market downturn and repurchase them at a lower price (i.e., shorting). Stablecoins allow you to enter and exit positions conveniently, without the need to take money off-chain.

Crypto’s total market capitalization can rise and fall by billions of dollars a day. Even the top cryptocurrency—Bitcoin (BTC)—is subject to significant fluctuations in value. Over the past month, investors have seen around a 4% daily change in the value of BTC. A stablecoin is a cryptocurrency whose value is pegged to the price of another asset, hence the term “stable.” For example, if functioning correctly a stablecoin https://www.tokenexus.com/sell-ethereum/ pegged to the U.S. dollar should always be valued at $1. A payments network can only be effective if it is always available to initiate and execute a transaction at the very moment a user needs to make a payment. For blockchain networks, availability is best measured by the number of independent participants or nodes that jointly operate the network to make it available for consumers to initiate transactions.