If you are interested to the previous posts of this series, check it out here:
What is it?
USD Coin is a stable coin, which is a cryptocurrency that has the same value as a classic currency, in this case the US dollar. It is a similar project, in several ways, to other stable coins. It is also the stable coin managed directly by the Coinbase and Coinbase PRO exchanges, one of the most important exchanges in the world. USD Coin, as it should be more than clear from the name, is pegged to the dollar. What does this mean? It means that the value of a USDC token will always be equal to the value of one dollar. We will always be able to convert (we will see the special cases later) a token of this type into dollars. As we can then see on the main markets that change it, the price can fluctuate very slightly with respect to that of the dollar, generally in the order of thousandths of a percentage. These are very small variations that are mostly dependent on the small inefficiencies that can be created on the market. Perhaps one of the best qualities of USDC is that it is controlled by a consortium, in which partecipate several players in the cryptocurrency industry. It was in fact founded by Circle, and today also hosts the popular Coinbase exchange, and the mining company Bitmain, which is one of the largest investors in Circle. An internal project? No. A project that today has behind it the most serious groups circulating in the world of cryptocurrencies.
How does it work?
Like all stable coins, USD Coin also has as its main use to act as a counter value on high-frequency exchanges, obviously being tokenized. Therefore, its first use is to act as a counterparty in the negotiations that take place within the main exchanges. Coinbase aims to use it as a means of payment, offering free wallets and above all the possibility for everyone to exchange a crypto with a stable value expressed in dollars without the delays and costs that are instead connected to classic banking. USD Coin is a ERC-20 token, which is a token that is compatible with the Ethereum blockchain. A choice of this type has proved to be a winning one over time because the Ethereum network today offers reliability and allows this stable token, USDC, to be used in many decentralized finance projects. USDC is not mined, that means it is not created by solving very complicated algorithmic calculations. In fact this product is issued on demand. Anyone who buys USDC from Coinbase will have new ones delivered and never released. The doubt in this case is that Coinbase, as well as the other agents involved in the project, can issue more money than they will actually be able to convert one day. This problem can be overcome, provided that the exchange actually has US dollars or equivalent in cash.
Where to store it?
The best hot wallets for USD Coin are Coinbase Wallet, TrustWallet and Atomic Wallet. If you want more security, a cold storage like Ledger or Trezor is the right choice.
Pros&Cons
*DISCLAIMER* These lists are subjective, it depends from person to person
Pros
- Solid backers
- Useful
- Future projects
Cons
- High competition
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