Summary
USD Coin (USDC) is a stablecoin cryptocurrency backed by the US Dollar.
It was launched in September 2018 and always maintains a price near or at $1 USD due to its one-to-one backing of US Dollars. 1
USDC can be used on top of multiple blockchains (ETH, ALGO, SOL, XLM) to transfer funds at anytime in seconds. 2
History
USDC was launched in September 2018 by Coinbase (NASDAQ: COIN), a cryptocurrency exchange company, and Circle, a global fin-tech firm focused on blockchain technology. CENTRE Consortium, a network of members that provides technology protocols and governance standards, governs USDC and maintains the inner-workings behind USDC.
USDC was initially launched as an ERC-20 token on the Ethereum blockchain but has since integrated with the Solana (SPL), Algorand (ASA), and Stellar (XLM) blockchain. Since launch, it has surpassed a $25B market cap, growing $24B in one year, and settled over $700B in total transaction volume. 3
Tokenomics
USDC is a 100% fiat-collateralized stablecoin where fiat assets (USD in this case) are placed in reserves to collateralize the tokens and “peg” the token value to the reserve asset. Every time one USDC is created, one US Dollar must be exchanged and placed in a reserve account. In reverse, one USDC can always be redeemed for one US Dollar, thus pegging the value of USDC to $1. 4
Since October 2018, the USD reserves of USDC have been attested to by Grant Thornton LLP on a monthly basis and are linked here near the bottom of their website. This is to make sure that there is always at least an equal amount of US Dollars, if not more, held in custody by Circle to back up every USDC token issued and outstanding.
Applications 5
USDC maintains many properties that distinguish it as an asset. These properties provide multiple advantages when compared to the US Dollar.
Stability: Due to the stability of USDC, it is a trustworthy asset that can be used to borrow against, move assets, purchase goods and assets, pay people, etc.
Availability: USDC operates on blockchain technology, meaning it runs 24 hours a day, 7 days a week. Unlike traditional banks, blockchains do not shut off after 5pm, on the weekends, or during holidays.
Speed: Blockchain technology can confirm, deliver, and settle transactions within seconds compared to a bank transfer that can take 3-5 days to settle.
Borders: USDC is not limited by any international borders and any nuances of the international transfer of money. Due to the global nature of blockchains, USDC can be transferred to anyone who has an account address, no matter their physical location.
Fees: As a user, you would only pay the minimal transaction fees to use the service of the blockchain network. This is typically based on network usage and demand at the time. This is still typically much less than the fees that come with using the traditional banking system to transfer money, especially across international borders.
Transaction Size: Traditional banks have various limitations on how much money can be sent at one time depending on the institution. USDC has no such limitations while transacting on the blockchain.
Security: Cryptocurrencies run on blockchain technology which utilizes cryptographic technology to ensure that all transactions are valid and agreed upon in a public ledger.
Other Details
On September 21, 2020, the Office of the Comptroller of the Currency (OCC) published a letter clarifying national banks' and federal savings associations' authority to hold "reserves" on behalf of customers who issue certain stablecoins. The letter concluded that national banks and federal savings associations may hold "reserves" on behalf of customers who issue stablecoins, in situations where the coins are held in hosted wallets. 6