What is USD Coin (USDC)?

USD Coin (USDC) is a type of cryptocurrency that is referred to as a stablecoin. It’s designed to make transactions faster and cheaper than traditional payments while reducing the volatility typically associated with cryptocurrencies like Bitcoin.

A new class of cryptocurrencies, stablecoins have their price fixed to a reserve asset (often the US dollar) at a one-to-one ratio. Stablecoins, which usually have their price backed by one or multiple reserve assets (often the US dollar), are one of the most popular and versatile classes of cryptocurrency to emerge in the last few years. USD Coin (USDC), as its name would suggest, is a digital dollar. USDC, as its name would suggest, is one such dollar-pegged cryptocurrency. Each USDC is backed by dollar denominated assets held in segregated accounts with US regulated financial institutions. Its goal is to make crypto payments via the blockchain more reliable by reducing price fluctuations.

How USDC works

Cryptocurrencies are now used to make payments, to engage with decentralized services and tools, and to store value. But they tend to have a trait that limits their day-to-day usability: volatility. Even Bitcoin, which has seen less volatility compared to its earliest years, moves too much relative to fiat currencies to be a comfortable everyday currency for most users.

By providing assurances that token holders can redeem one USDC for exactly one US dollar at any time, the potential for price speculation is significantly reduced – resulting in a crypto asset that maintains a fixed value.

USDC runs on Ethereum, which is a decentralized, programmable blockchain that allows developers to create a huge range of apps and tokens. USDC was created to be a highly useful form of digital money that wouldn’t see value swing dramatically in the middle of a transaction.

USDC is an Ethereum token and can be used to facilitate blockchain payments and transfer of value in the context of Ethereum smart contracts. This allows users to keep cryptocurrencies in a wallet, ready to send to a friend or interact with decentralized financial tools and services, and with minimal any exposure to the risk of their holdings falling in price before they get a chance to spend them.

It is backed by dollar-denominated assets of at least equal fair value to the USDC in circulation, in segregated accounts with U.S. regulated financial institutions. You can buy USDC via exchanges like Coinbase, and hold it in an Ethereum compatible wallet. There are no fees for transferring a US dollar to USDC on Coinbase. The launch of USDC was powered by a collaboration between Coinbase and Circle through the co-founding of the CENTRE Consortium.

Stablecoins like USDC have a wide range of uses. You can:

• Send money cheaply and near-instantly anywhere in the world without a traditional bank account (a huge improvement over wire transfers which can be expensive and take days).

• Earn rewards on USDC held in a Coinbase account.

Think of USDC as being a programmable dollar. Being programmable unlocks a whole new world of applications and businesses: developers can create accounts to store money with one line of code; lending that is faster, cheaper, and more transparent; faster and cheaper payments, including payroll; global crowdfunding; transparent and stable donations to charity.

Released: September 2018