What is USDC, the USD Coin cryptocurrency?

USDC

There are thousands and thousands of different cryptocurrencies. The vast majority are low value projects that get little traction in the market. In fact, the top 10 cryptos according to various metrics (popularity, market volume, etc…) vary very little. And in this top you can find a coin called USD Coin whose price is always close to the dollar, what does this crypto consist of?

USDC or USD Coin is a stablecoin, i.e. a cryptocurrency whose price is much more stable than the other cryptocurrencies.

USD Coin or USDC is what is known as a stablecoin, i.e. a digital currency designed to maintain a price as stable as possible. In the case of USDC, the price it maintains is that of a U.S. dollar, hence its name, although it is not affiliated in any way with the U.S. government. This stable price is achieved by being backed by real dollar reserves.

This parity is achieved, in part, with its own dollar reserves contributed by its creators, a conglomerate called Centre created by the exchange Coinbase. and a financial company called Circle. The other part of this dollar backing is achieved when users buy USDC with fiat money, at which point that fiat money is added to reserves and a new USDC is created and “burned” when the USDC is sold and the fiat money returns to the owner.

But why make a cryptocurrency whose price does not vary? The purpose of USDC and other stablecoins is not investment, but. portfolio protection. If the market is very volatile and prices are falling significantly, a response move is usually to sell all or part of it and buy USDC or another stablecoin, so that money is protected.

Moreover, USDC is compatible with several blockchain networks such as Ethereum, Solana, TRON or Algorand, so it also serves as a unified payment system between different ecosystems.

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