US dollar currency (USDC): what it is and how it works – Lavocedigenova.it

US Dollar Coin: What is the USDC stablecoin and how does it work

USD Coin (USDC) is a US dollar stablecoin with a 1:1 exchange rate, and it is a cryptocurrency designed to match the value of the US dollar. It was created to serve as a stable and reliable representation of the US dollar in the digital crypto world.

USDC is developed by the Center Consortium and launched in 2018. The cryptocurrency is issued and maintained by a network of regulated partners from the Center, who peg its value to the US dollar by holding an equivalent amount in US dollars in their reserves.

Now that we have seen briefly What is the currency of the US dollar? Let’s analyze its role as a stable currency.

US Dollar Coins (USDC): What are the stablecoins?

The US dollar coin (USDC) falls under the category of cryptocurrencies known as stablecoins. These cryptocurrencies differ from others in an important way: their price is tied to another asset and holds its value in relation to that asset, rather than being determined by supply and demand in the market. Stablecoins can be linked to different assets: fiat currencies, gold, other cryptocurrencies, etc. USDC is linked to the US dollar.

Stable currencies like Bitcoin are not mined or minted like Ether on Ethereum, nor are they issued together or periodically. When it comes to USDC, new units are issued at the request of users, with an authorized financial institution supporting them by blocking the same amount in US dollars for deposit.

How are USDCs issued?

The process by which US dollars are converted into USD tokens is called coding. If you want to receive USDC, you must first send a corresponding amount in US dollars to the bank account of one of the institutions approved by the Center for the issuance of USDC. The issuer generates the USDC equivalent amount using a smart contract. Then, the newly issued USDC is delivered to you and your USD is kept in the issuer’s reserve.

The US dollar held in reserve ensures the value of the USDC and also ensures the safety of the stablecoin. Just as the gold standard that was the basis of the US dollar in the past was regulated so that you can literally walk into a bank and exchange your money for an equivalent amount of gold, you can always convert US dollars into US dollars back by freeing it from the reserve at the institution that issued it.

Technically, there are no strict limits on the number of USD coins that can be issued since USDC does not have a maximum bid (unlike Bitcoin and other Proof of Work cryptocurrencies). Instead, the supply of USDC is determined by the number of US dollar people who decide to token.

USDC . uses

In an environment where cashless transactions are becoming more and more common, converting US dollars into USDC gives fiat currency greater access and ease of use around the world, removing many of the obstacles associated with moving money globally.

It also reduces the time and costs required to conduct international transactions. Basically, this makes trading in US dollars easier, faster and cheaper. In addition, during times of increased volatility in the cryptocurrency markets, USDC can be a stable asset for users, as its price is unlikely to deviate from the US dollar by more than a few percentage points. USDC can also make it easier for companies to accept cryptocurrency payments and support various industries, such as decentralized finance and entertainment.

Conclusions

In short, these are the main things to consider in the USDC currency:

It is a stable currency pegged to the US dollar at a 1:1 exchange rate.

It is intended for ease of use on the Internet and the public blockchain.

It is issued through tokenization by exchanging USD for USDC using an Ethereum smart contract.

– Backed by US dollars when depositing with the approved partners of the center.

There are no strict restrictions on the number of tokens that can be issued.

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