USDC, or USD Coin, is a type of stablecoin digital asset that is pegged to the value of the US dollar (1:1). USDC was created by The Center Consortium, a partnership between The Circle and Coinbase. USDC can achieve a value close to the US dollar by the fact that its creators hold US dollars in reserve equal to the total number of USDC in circulation.This is what makes USDC's value closely tied to the US dollar almost all the time.
The advantages of USDC (USD Coin)
The main advantage of USDC is that it can be used for cashless transactions. One of the key benefits is that USDC is integrated with blockchain-based applications such as Ethereum, allowing users to withdraw 1 USDC and receive 1 US dollar without any conditions, which increases transparency and reliability. In addition, financial institutions have verified the reserve of USDC's cash every month and published to circle website to ensure that the amount of cash is always proportional to the circulating number of USDC coins.
Advantages and Disadvantages of USD Coin
Pros
- Low price volatility
- Fully backed by U.S.-regulated reserve assets
- Can be used as a hedge against inflation
Cons
- No price appreciation
- Mix of reserve assets not fully disclosed
