USDC is a fully reserved stablecoin, a type of cryptocurrency, or you can say a digital dollar. Unlike other familiar cryptocurrencies like Bitcoin and Ethereum, one USDC maintains a price equivalent to one dollar.
USDC is available 24/7 and can be transferred within seconds. It is a store of physical USD value with the speed and security of blockchain technology. It is a stable, transparent, and widely used digital coin in major crypto exchanges and is natively available on 15+ blockchains.
The stablecoins meet the demands of digital asset traders who need a stable medium of exchange throughout the year. Let’s learn what more it does and how you can buy USDC.
What is USD Coin (USDC)?
USD Coin is a cryptocurrency also known as a stablecoin. USDC’s value is pegged to the US Dollar so that one USDC value is always stable and equal to one dollar. Hence, the name stablecoin.
It’s price stability is one of the biggest USP. This stablecoin is a secure and cost-effective way for users to own a digital currency and participate in cryptocurrency spaces. As a digital asset, it’s relatively stable compared to other cryptocurrencies and unfit for investment. But it has many uses like exchange for fiat money, lend, and trade. It makes USDC a popular stablecoin among crypto users.
Keep reading to know more about how USDC works and how and where to buy USDC.
How Do USD Coin (USDC) Work?
USD Coin uses an open-source fiat stablecoin framework. Centre, a consortium co-founded by Coinbase, developed the stablecoin framework and now manages USDC.
Cash, physical assets, and government-funded bonds back USDC. And so it is referred to as fiat-collateralized stablecoin also. In USDC’s case, the US dollar is the currency backing the USD Coin’s reserve. The major part of the USDC reserve is held in the Circle Reserve Fund (USDXX). It is an SEC-registered 2a-7 government money market fund. The reserve holds remaining cash among the world’s largest banks with the highest capital, liquidity, and supervisory. The USDC reserve was designed to provide ready liquidity even under extreme conditions.
For example, if you use a US Dollar to buy a USDC, you get a newly minted USDC token while your US Dollar is stored in a regulated bank account. Next, when you sell your USD Coin, the USDC blockchain network ‘burns’ the USD Coin and moves it to an inaccessible account. This process of converting a US dollar into digital currency is called tokenization.
USD to USDC is a three-step tokenization process:
You send US Dollars through a cryptocurrency exchange platform to purchase USD Coins.
The platform uses the blockchain to create a smart contract to mint USDC equivalent to US Dollars.
You own the newly minted USDC while the equivalent dollars are held in reserve.
The exchange of USD Coins to US Dollars is the same as in the above steps. But only in reverse.
You request the platform to redeem USD for USD Coin
The platform asks the Smart Contract to exchange USD for USDC and burn the exchanged USD Coin
The platform receives the equivalent USD from the reserves and sends them to your bank account (minus platform charges).
In 2023, Circle minted and redeemed more than $180 billion between the banking system and the blockchain.
Since its inception in 2018, USDC has settled about $12 trillion in blockchain transactions. People from different continents and countries are experiencing the benefits of digital dollars on the blockchain. The popularity of this stablecoin has only motivated the developers to build new apps, strengthening the USDC ecosystem of services and making it easier to obtain, send, and store USDC.
How Stablecoins Can Scale Up Economic Opportunities
Most of the continent is widely adopting the stablecoin for easy cross-border transactions. Let’s see two more ways to scale up economic opportunities with stablecoins.
Cross-Border Payments: Stablecoin like USDC is an exceptional choice for individual users and businesses to transfer funds across the border efficiently.
Trade Finance: Stablecoins like USDC can help secure trade financing such as letters of credit, trade loans, guarantees, and insurance by offering easier access to dollars over the internet.
Remittance: The rough average cost of sending $200 is about 5.7%. In 2022, the Asia Pacific region received $130 billion in remittances. But by using USDC, people can send USD dollars equivalent USDC faster, almost freely, and in real-time.
Where to Buy USDC? 5 Best USDC Crypto Exchange
Coinbase: It has high throughput APIs to connect users to the deepest liquidity pool of regulated crypto spot exchange.
Crypto.Com: It’s one of the fastest-growing crypto apps serving 10+ million users.
Kraken: It’s a global blockchain asset financial service provider offering storage, trade, exchange, and wallet.
Okx: It is a global crypto exchange for multiple digital assets and cryptocurrencies serving 8+ million users across 207 countries.
Robinhood: It’s a stock brokerage firm for users to sell stocks, ETFs, and cryptocurrencies with zero commission.
How to Buy USDC? Step-by-step
You can buy USDC through a centralized exchange like Coinbase. It’s easy and quick. Let’s look at the step-by-step process:
Create a Coinbase Account
Download the crypto exchange app (Coinbase, in this case) to sign up. Upload proof of address and a valid ID and create your account.
Connect a payment method by using a bank account and debit card.
Select USDC from the List of Assets
Search USD Coin and click buy on the app to go to the purchase screen.
Enter the Amount You Want to Buy
Input the amount of local currency you want to spend and exchange for USDC. The app will automatically convert the local currency into USDC.
Finalize Your Purchase of USDC
Tap “Preview buy” if you are ready. You’ll receive the full details of the purchase. Check If everything looks good. Confirm your purchase by clicking the ‘Buy Now’ button.
Buying USDC is Done
You will go to the confirmation screen. Congratulations, you have successfully bought USDC. Now, access your portfolio and check the available USDC tokens.
How to Use USDC?
Businesses: Instantly convert USD to USDC and vice-versa with no fees.
Developers: Build new Web3 experiences and Integrate USDC into existing apps using robust APIs and SDKs.
Individuals: Own USDC and easily convert USDC to any local currency.
The Future of USD Coin
USD Coin is the second largest and most widely-used stablecoin network. This stablecoin empowers almost anyone, anywhere, by offering access to and use of dollars on the internet. Some features that make the USD Coin stand out among its peers are instant settlement, global payments with near-zero cost, and wide adoption among users. Global access from anywhere by anyone as a replacement for physical cash is driving the USD Coin toward a new direction in the crypto space.