When Circle raised its $110 million funding round, the company used this opportunity to talk about its stablecoin — USD Coin, or USDC for short. And you can now buy, sell and send USD Coins on Circle Trade and Circle’s exchange Poloniex.
But what is a stablecoin? As the name suggests, 1 USDC is worth 1 USD. Unlike traditional cryptocurrencies, you can be sure that the value of USDC isn’t going to fluctuate like crazy.
There are multiple reasons why you’d want to use stablecoins. First, if you want to short cryptocurrencies without cashing out, you can convert your bitcoins or ethers to USDC. This way, it’ll be easier to buy cryptocurrencies again in the future.
Second, if you want to avoid traditional financial institutions, you can send USDC to other people without going through a bank. Sending USDC is like sending any other token — you just need to tell your recipient to get a wallet and ask for their wallet address.
Third, I’m sure many people are going to use stablecoins to avoid taxation issues. It’s easier to hide a bunch of tokens than a big wire transfers hitting your bank statement.
Many people living in countries suffering from hyperinflation or chronic inflation, such as Venezuela or Turkey, could also rely on USDC to convert some of their savings. This way, you don’t have to open a bank account in another country.
USDC is an ERC-20 token, which means that it’s easy to add support for USDC if you’re running an exchange or a wallet. But Circle wants to make sure that issuers are not just printing money without any actual USD in their bank accounts.
Multiple companies partnered to create CENTRE, a consortium that is going to define policies around stablecoins and governance. If you want to issue USDC, you have to comply with a bunch of rules. In particular, you have to send monthly audited reports proving that you have as many USD on deposit as issued tokens.
Multiple companies have already announced that they will begin trading USDC soon, such as DigiFinex, CoinEx, KuCoin, OKCoin, Coinplug and XDAEX. On the wallet front, BitGo, Cobo, Coinbase Wallet, CoolWallet S, Elph, imToken, Ledger, Status and Trust will add native USDC support soon.
Powered by WPeMatico