USD Coin: AKA “The Digital Dollar”

There’s been rumblings that the FED is looking to replace the dollar with a digital counterpart. In this article let’s talk about a stablecoin called the “USD Coin”.

Cryptocurrencies are leading the charge for a decentralized world. They’re known for being protected from inflation, secure, and unfortunately extremely volatile. However, with the introduction of stablecoins there are ways to mitigate this issue.

Investopedia’s definition of stablecoins is that they’re a new class of cryptocurrencies that attempts to offer price stability and are backed by a reserve asset. Stablecoins have gained traction as they attempt to offer the best of both worlds — the instant processing and security or privacy of payments of cryptocurrencies, and the volatility-free stable valuations of fiat currencies. Tether is known as one of the most influential and controversial stablecoins which released in 2015 and currently has a market cap of $21.41B. It’s also facing a lawsuit that’s accusing them of deceptive, anti-competitive and market-manipulative behavior.

At number two is the USD Coin (USDC) with a market cap of $3.59B. USDC was first announced in May 2018 by Circle, and launched in September 2018. It’s also managed by Coinbase. USDC is a Fiat-backed stablecoin. It can be traded on exchanges and are redeemable from the issuer. Its value is pegged to the US dollar and the tether is realized off-chain, through regulated financial institutions which serve as depositaries of the currency used to back the stablecoin. To put it simply, this means that you can always exchange 1 USD Coin for US$1.00. Recently, Forbes has reported that Visa is linking its 60 million-merchant-strong international payments network to the U.S. Dollar Coin (USDC). Circle is rapidly adding value for the entire blockchain ecosystem!

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ERC20 Tokens

USDC is available as Ethereum ERC-20. ERC20 tokens are used for all smart contracts on the Ethereum blockchain for token implementation and provides a list of rules that all Ethereum-based tokens must follow. Now all Dapps on the Ethereum blockchain can begin to use USDC. Currently the coin is being used in various marketplaces, such as Crypto Kitties, as a stablecoin to allow users to purchase items using credit and debit card systems. With the flow of credit and debit card payments along with the many ways that financial institutions can program USDC the future will truly be something to look forward to. In fact the current fractional reserve system where only 10% of your balance is backed by cash may be overthrown as USDC is 100% backed by cash.

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