USDC is a stablecoin developed by Coinbase and Circle and pegged at a ratio of 1:1 to the US dollar. In this article, as Kriptokoin.com, “What is USD Coin?” We will answer the question. In addition, we will touch on other questions about the project.
What is USD Coin? What does it do?
USDC is a stablecoin, a type of cryptocurrency backed by an underlying asset such as the US dollar, gold, or other cryptocurrencies. In the case of this stablecoin, the underlying asset is the US dollar. This means that every USDC in circulation must have $1 backing it.
Unlike more speculative cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), a stablecoin, as the name suggests, is valuable because it is a stable unit of exchange. It also makes currencies like USDC critical for DeFi (decentralized finance) protocol functionality.
What is USDC coin?
USD Coin is stablecoin pegged at 1:1 against the US dollar, backed by cash and US treasuries. As a stable currency in a volatile market, USDC is a popular exchange within DeFi protocols and on its own. It can also be used to earn interest by providing liquidity to lending, staking and clearing protocols.
How does USD Coin work?
USD Coin is built on an open source fiat stablecoin developed by Centre. New USDC tokens are minted when people buy them. When people sell tokens for US dollars, they are removed from circulation.
Let’s say you want to buy USD Coins through a crypto exchange. Here’s how the three-step tokenization process works:
- To buy USD Coins, you send US dollars to the crypto exchange.
- The exchange uses a USD Coin smart contract to mint an equivalent amount of USD Coins.
- You receive the newly minted USD Coin and the exchange puts the US dollars you paid into the USD Coin reserves.
- The tokenization process ensures that there are reserves to support the entire USD Coin supply.
If you’re selling USD Coins, the same process is just the reverse. The exchange uses a smart contract to circulate the USDC tokens you sell and pays you the equivalent amount of US dollars from the reserve.
How to buy USDC coin?
USD Coin is currently traded on numerous cryptocurrency exchanges. People who want to invest in the project should open an account in one of the exchanges where the project is traded. The exchanges where USD Coin is traded are listed as follows: Binance, OKX, Bybit, BTCEX. Users who want to invest in the project should open an account on one of these exchanges.
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