USD Coin (USDC) is one of the most popular stablecoins on the cryptocurrency market today, outmatched in fame only by Tether (USDT). If you’re not sure what a stablecoin is or want to learn more about USDC in particular, this article is for you. Here we’ll explain how a cryptocurrency can be anything but volatile and will go into more detail about this coin. Keep reading to learn the most important information about USD Coin here.
What Is USD Coin (USDC)?
As mentioned in the introduction, USD Coin is a stablecoin whose value does not fluctuate much over time and is linked to the value of a specific real currency. In the case of USDC this is the US dollar. The companies behind USD Coin are Circle, a peer-to-peer payments tech company, and Coinbase, one of the most popular crypto exchanges.
Its exchange rate is close to 1:1 to the dollar, although the price usually tends to vary a little. Compared to other cryptocurrencies, price fluctuations are very rare and mainly caused by the rise in the value of the US dollar, which can bring the stablecoin to slightly lower values than normal.
Like all stablecoins, the greatest risk is linked to the liquidity available to those who issue USD Coin. At any time it is possible to change this cryptocurrency into dollars, so those who issue USD Coin must always have a reserve of dollars to satisfy the requests.
For this reason it is necessary to rely only on stablecoins with solid financial groups behind them, to avoid a sudden collapse of the cryptocurrency linked to the lack of liquidity by volume of coins distributed. It’s very much possible even for a stablecoin to lose its value, though, don’t get fooled by its name. The most famous case so far is with TerraUSD in May 2022.
The Current USD Coin Price
As we established, the USD Coin price moves with the US dollar, since its pegged to it. However, there are possible fluctuations. For example, in the last year, the lowest price for USDC was $0.9874 and the highest was $2.35. You can notice that the price of USDC doesn’t change much from the dollar, even if it moves up and down. That’s why it has “stable” in its name. Unlike this coin, other cryptocurrencies can go from the top to zero in minutes, meaning they are much more volatile. In normal conditions, coins like USDC are likely to remain with a relatively stable price.
Where to Buy USD Coin (USDC)
The easiest way to buy USD Coin would be on a cryptocurrency exchange. You can find the stablecoin on both centralized and decentralized exchanges.
Centralized cryptocurrency exchanges, or CEXs, like Coinbase (one of the companies behind USDC as mentioned), Binance, and Kraken will allow you to buy and sell this cryptocurrency. There, your transactions will be monitored by a third party to ensure their legitimacy and safety.
However, if that sounds too much like traditional banking systems and you’re not a fan, you can also find USDC on decentralized exchanges or DEXs. The most popular DEX Uniswap allows you to swap other cryptocurrencies for USDC. There you won’t be asked to verify your account nor will your transaction be monitored by anyone else but you and the second person in it.
If you pick to buy USD Coin on an exchange that also offers a built-in wallet, you can spare yourself the time to look for an outside service. Coinbase and Binance allow your to store you USDC tokens on them and save you up the time and sometimes the money to find a separate wallet.
What Is the Best Wallet for USD Coin (USDC)
You can store your USDC tokens in either a hot storage wallet or a cold storage wallet, if you choose not to use a built-in wallet in an exchange. Your choice will depend on whether you want to store your coins online or offline. Let’s revise your options.
Hot storage wallets like ZenGo and Trust Wallet allow you to store your USDC online. This means that the wallet will always be accessible for you through any electronic device and the internet. Your coins will be kept online as well as your private key.
Cold storage wallets, also known as hardware wallets, don’t need internet connection to keep your private keys and tokens. Instead, they’ll be stored on external devices, some resemble USB flash drives, that you connect to your computer and the internet only when you buy and sell assets. Examples of cold wallets that are suitable with USD Coin are CoolWallet and Ledger.
How to Make Money With USD Coin
Being a stablecoin, USD Coin is a different cryptocurrency from the others, since its stability does not lend itself to large investments or effective trading operations. Buying USDC is equivalent to buying US dollars on the Forex markets and its use for crypto conversions, long term investments, or for acquisition speed. We’ll go over the three options you have for earning money with USDC.
USDC makes the cryptocurrency conversions on exchanges very fast and the commissions for it are very low or none at all. You can use this stablecoin to capitalize a profit of a very volatile cryptocurrency (such as Bitcoin) by stabilizing its value in USDC. You can also use USDC to invest in the long term. Obviously, you won’t be able to get as big returns as with normal cryptocurrencies, since stablecoins lack the volatility. But you can use it as a dollar alternative and keep your savings in USDC coins instead. The last thing you can benefit from by using USDC is the speed you can acquire it at. Unlike other cryptocurrencies, you can’t mine USDC or any other stablecoin. Instead, they are issued by the organizations behind them, in the case Circle and Coinbase, in return for the same amount of the pegged fiat currency paid. That’s one very fast way for you to convert your money to USDC tokens and keep them that way. But do keep in mind, the organizations behind stablecoins can freeze your funds, so always consider it when using this type of currencies to earn money or for any other purposes.
What Are the Pros and Cons of USD Coin (USDC)
Pros of USD Coin
✔️ Value pegged to the US dollar, making it considerably less volatile than other coins
✔️ Backed by one of the biggest exchanges, Coinbase
✔️ Quick issue times
Cons of USD Coin
❌ Not suitable for generating big returns, like non-stablecoins
❌ Dependable on the current state of the Ethereum network on which is based, thus transactions fees can be high
Is USD Coin Worth Following?
The best use of the USD Coin would be on cryptocurrencies exchanges for exchanging it for other cryptos with minimal commissions. The fact that you can’t get-rich-quick from USDC doesn’t make it less valuable, it can be used as a way to store your fiat money in crypto while avoiding the usual volatility.
One of the biggest advantages of this stablecoin is the solid backing it has from the organizations behind it. Since reputable companies like Circle and Coinbase are supporting USDC, people are more willing to trust it. Why? Because if the organization behind a stablecoin doesn’t have enough money in its reserves, then the stability of the coin is immediately shaken, along with the public’s trust.
An example of this is the stablecoin we’ve already mentioned – Tether (USDC). Tether is the first and still most famous stablecoin. However, through the years the organization with the same name behind it has made people question is Tether really 1:1 with the dollar. This is due to the poor way the company behind USDC manages to declare its funds and since this is the most important part for a stablecoin, it has affected the reputation of the asset.
So far, USD Coin seems like a reputable stablecoin with good companies that support it. You can expect that if this continues, USDC will be adopted in more places and used more in the future.
FAQs About USD Coin (USDC)
USDC is a stablecoin, which is a cryptocurrency whose value does not change much over time and is linked to the value of a real currency. It can be used to quickly trade cryptocurrencies, freeze earnings or have the dollar correspondent in a cryptocurrency that is easy to manage and trade.
Both are stablecoins whose value is linked to the US dollar. What changes are the companies that manage and guarantee the value for the resources placed on the market. In the case of Tether (USDT), the company behind it with the same name has had reputation issues through the years and USD Coin’s organizations so far have proven reliable.
The USD Coin value can’t get much further from the US dollar’s one, since its pegged to it. It can fluctuate and it’s usually a little less than a dollar, but you can’t expect it to reach $10 for example. However, if the whole market suffers or something related to Coinbase happens, it could influence badly the price of the asset.