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What is USDC?

USD Coin, also known as USDC, is a form of stablecoin. It is a cryptocurrency that works similarly to other crypto structures such as Bitcoin and Ether/Ethereum. However, it is designed to be less volatile than other forms of crypto, as it is tied to a fiat currency.

The coin was initially developed by the company behind Circle, a peer-to-peer payment solution, back in 2018. Circle itself had only been around for five years before the launch of USDC and had already achieved significant successes in the digital payments sphere. They decided to create a currency that provided an antidote to the uncertainty and volatility of the more traditional crypto market. This was achieved by attaching the currency's value to the United States Dollar — hence, USD Coin.

Many traders like the volatility offered by cryptocurrency and try to use this to their advantage as they buy and sell crypto on exchanges. However, this does not fulfil the original aim of cryptocurrency: to create a decentralised alternative monetary system that would rival already established forms of currency. Stablecoins can still be traded on exchanges, but they are also more suitable as an alternative form of currency.

What is USDC used for?

USDC can be traded and speculated on, just like other forms of cryptocurrency. For example, users can buy USDC and hold it with the expectation that it will increase in value in the future — but this is never guaranteed, even with a stablecoin.

Due to the relative stability of the USD Coin, users are more likely to adopt this coin as an alternative form of payment. The Visa network now supports the USD Coin, demonstrating the currency's increasing viability as a payment method and its growing reputation in the market.

Traders can also exchange USDC for other forms of currency. They might decide to change USDC to AUD, for instance, to receive the equivalent amount in Australian Dollars. USDC can also be used to exchange for other forms of cryptocurrency, a popular strategy for traders seeking to diversify their crypto portfolio and other investments.

How is the price of a USD Coin determined?

The price of the USDC Coin is tied to the value of the United States Dollar. If the USD goes up or down in value, the USD Coin should follow suit, moving in the same direction and at the same magnitude. As the United States Dollar is one of the world's most commonly accepted and traded currencies, this is intended to add an element of trust and reliability to the USD Coin.

When a trader buys USDC, they must first have access to US Dollars. The trader will send these dollars to their traditional bank account and will be held in reserve. The issuer then uses smart contract technology to send the USDC currency to the buyer, maintaining the decentralised elements of a crypto transaction. The US Dollar reserve is intended to act as a reliable basis for the USDC, further increasing public trust in the stablecoin.

Get started trading USDC with BTC Markets

Many Australians are interested in diversifying their crypto assets and connecting with viable alternative payment methods. This is why stablecoins like USDC are becoming increasingly popular in today's market. Here at BTC Markets, we provide a convenient, secure and reliable platform, making it easy to buy USDC, whether you are an experienced investor or still honing your skills. Sign up for a BTC account today on our website, or get in touch with our team to learn more.

Frequently asked questions

How much does USD Coin cost to buy?

The cost of the USDC fluctuates with the United States Dollar. In practice, however, there may be some lag between the value movements of the USD and those of the USDC. For example, in early September 2022, the cost to buy one USD Coin was AUD$1.45, while the cost to buy one United States Dollar was AUD$1.46. These small discrepancies result from a slight delay while the value of the USDC follows that of the USD.

To buy USDC, you will first need to purchase United States Dollars. These dollars act as the reserve currency for the USDC, helping the network's founders to maintain parity with the US Dollar in the market. The trader will use these dollars to purchase the USDC, which will then be transferred to the trader's crypto wallet via a smart contract.

Is it safe to buy USD Coins?

This is one of the most frequently asked questions regarding cryptocurrency, as traders are understandably nervous about buying into lesser-known coins. The idea of the USD Coin is to provide additional stability and reliability for traders working with crypto, which is why it is tied to the value of the United States Dollar. In this sense, the USD Coin may represent a safer option than other forms of crypto simply because it displays less volatility than other cryptocurrencies.

That said, there are no guarantees with any crypto investment. The value of the USDC still has the potential to fall, and investors may experience a drop in their investment. All investments in cryptocurrency, even stablecoins, are potentially risky, and traders need to be aware of this before they begin. So, always trade responsibly in the crypto market.

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New Listing: USD Coin (USDC)
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New Listing: USD Coin (USDC)

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