In this review of how USD Coin works, we will examine the origins of USD Coin, special features of USD Coin, and how you may want to use USD Coin to transact in cryptocurrency without the considerable risks of many other cryptocurrencies.
What Is USD Coin?
USD Coin is a stablecoin with a fixed value of $1 per coin. It was developed by Centre, a technology project backed by cryptocurrency exchange Coinbase and Fintech company Circle. Because it’s always worth $1 and is very safe and secure, at least in cryptocurrency terms, holding USDC in a secure cryptocurrency wallet is the closest thing to a traditional savings account in the crypto markets. It works with many ERC-20 compatible wallets, a long list of cryptocurrency exchanges, and has real-world use in global commerce and money transfers. It could also be useful as a store of value in your crypto portfolio. USDC’s founding companies have extensive experience in the cryptocurrency world. Coinbase is one of the leading cryptocurrency exchanges. Circle is not only backed by crypto-focused investors such as Bitmain and Blockchain Capital, it also owned crypto-exchange Poloniex between 2018 and 2019. In 2021, Circle announced its intentions of becoming a national digital currency bank.
Special Features of USD Coin
The main unique feature of USD Coin is that it’s always worth $1. That’s a big difference from highly volatile coins including Bitcoin, Ethereum, and Dogecoin that may see big price swings in a single day. USD Coin isn’t the only stablecoin. Other major stablecoins pegged to the dollar include Tether (USDT), Binance USD (BUSD), and Dai. Binance USD is a similar stablecoin backed by a major cryptocurrency exchange. Tether courted some controversy over the reserves backing the stablecoin. Dai runs on the Maker protocol and acts as an alternative major player in the crypto community.
How To Mine USD Coin
You can’t mine USD Coin. New coins are minted every time someone buys or converts currency and acquires USD Coin. If that happens, a new dollar is added to the bank account behind USD Coin.
How To Invest in USD Coin
As a major force in creating USDC, Coinbase is the easiest place to buy USD Coin. That’s better than many traditional savings accounts but falls short of the typical high-yield savings account. USD Coin is also available to trade on a number of other popular cryptocurrency exchanges, including Binance, Bitfinex, Coinbase, Crypto.com, Kraken, and Uniswap.
Wallets
Because USD Coin runs on the Ethereum blockchain, it is widely supported by popular cryptocurrency wallets. These include software wallets such as Coinbase Wallet and Exodus or hardware wallets such as Ledger.
Transaction Times
According to Kraken, USD Coin transactions take about five minutes to complete and require 20 confirmations. That’s similar to other coins that run on the Ethereum blockchain.
Fees and Expenses
Because it uses the Ethereum blockchain, USDC transactions require Ethereum gas fees. Ethereum gas can fluctuate based on network congestion.
