USD Coin (USDC) has emerged as a full stablecoin asset. This currency is linked with the US dollar. That is, the coin will continuously be corresponded with one dollar and one USDC will constantly be interchangeable for 1$. If we talk about the main goal of USDC, like many stablecoins, it is related to gaining an edge against the price uncertainty in the crypto market. Even though it represents the USDC coin, this coin isn't supported by the US government. This property is usually dollarized through the market, rather than by the United States government because it appears as private property. Start your trading journey with confidence by using a trusted website like bitcoin trader.
What is a stablecoin?
A stablecoin is a crypto whose value is usually found to be tied to an external mechanism. While most cryptocurrencies are controlled through market supply and demand forces, when it comes to stablecoins, they can be made resistant to those forces. Moreover, stablecoins were made to be viewed as an option in contrast to the high unpredictability present in the crypto market. Stablecoins are tied to a single currency and are always able to maintain a stable value. Therefore, one can be reasonably sure that they already have a stable store of value, and can use it to transact.
USDC is like a stablecoin that is managed by a federation called the Centre. The USDC token was coined by the Centre back during the year 2018 when it made its foray into the crypto world. Speaking of the Centre, it is itself an association that was created with the main objective of “providing standards and governance for the digital financial ecosystem of the future”.
USDC was made by the consortium since it needed its very own token so it very well may be utilized by the whole ecosystem to work in fiat, without really utilizing fiat. The USDC token was planned as an open-source blockchain solution, which empowers the simplicity of significant worth exchange across various blockchains. As crypto adoption grows, so does the growth in the tokenization of services and goods. USDC is a token that can likewise be utilized to exchange esteem in these chains commonly.
Centre, Circle, and Coinbase
While the Centre is, in effect, the sole authority that issues USDC, the consortium does not own the coin outright. However, the Centre is also not independent. The entire consortium originated from the brainchild of Coinbase and Circle. So, let us know what these two organizations are and why the centre was co-founded by them.
Circle has emerged as a global financial technology firm with the main objective of completely changing the way money moves. Accordingly, the firm is broadly considered a Web3 currency issuer. Talking Circle's mission is focused on making money more efficient, accessible, and inclusive, and the way they do it right now is by being a currency solutions provider in the web3. Then again, if we discuss Coinbase, it is viewed as an internet-based platform for trading cryptos. As such, it is an exchange.
Furthermore, with the collapse of FTX, Coinbase is seen as the second-largest exchange in the world and has emerged as the most regulated. Although, since the company is domiciled in the US, it is vigorously controlled by the SEC and other such offices. During the year 2018, these two companies came together and formed the Centre Consortium, and then the USDC stablecoin was created by that consortium.
How does USDC maintain stability?
Here if we talk about the strategy for USDC to remain stable then it is quite simple. There is always one dollar available for every USDC in the market. For example, if someone uses the Circle app to buy USDC, they will need to use real fiat as well. And once they've bought USDC and paid Circle in fiat, a new token is minted, deemed necessary to support the price previously paid.