What’s USDC? How to Use It
USD Coin, or USDC, is a cryptocurrency created by Centre, a nonprofit consortium founded by Coinbase and Circle with a mission to “provide governance and standards for the future digital financial ecosystem.”
USDC aims to mirror the value of the U.S. dollar and act as the "U.S. dollar of the crypto ecosystem." Because of this, it maintains a relatively consistent value even if other cryptocurrencies fluctuate. But before we dive into the details, let’s first understand what’s a stablecoin.
Use Stablecoins with Worldcoin
USDC is a relatively stable asset in a volatile crypto world, so you don’t have to worry about losing all the hard-earned money you’ve invested. The only thing better is receiving free cryptocurrency. Fortunately, you can do just that with Worldcoin. At Worldcoin, we aim to share our cryptocurrency with the world by offering a free share to each individual on the planet.
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What are stablecoins?
Stablecoins are cryptocurrencies that usually have a value attached to real-world assets like the U.S. dollar or gold. The purpose of stablecoins is to have a cryptocurrency whose value remains stable.
Any given “traditional” cryptocurrency might experience fluctuations in value that make it unreliable as an everyday medium of exchange. For example, today’s price of one bitcoin (BTC) may not remain consistent in a month.
USDC is a stablecoin. As its name suggests, USDC’s value ties to the U.S. dollar, where each stablecoin attempts to maintain a value roughly equal to $1.
USDC initially operated on Ethereum’s (ETH) blockchain. However, it currently functions on the Algorand and Solana networks, with it supporting more networks over time. USDC allows users to tokenize the U.S. dollar, making it usable across blockchains, crypto exchanges, and other transactions. Additionally, USDC tokens are convertible to USD. It’s a vital component of the crypto world and significantly impacts DeFi (decentralized finance) and other financial instruments.
How does USDC maintain its peg?
Circle and Centre's open-source fiat stablecoin infrastructure created serves as the basis for USDC's design.
USDC is completely backed by reserves and is redeemable for USD on a 1:1 ratio, which you can find on crypto trading platforms. It maintains its peg by employing a straightforward collateralization method. For every $1 of USDC in circulation, there is $1 backing it in a bank account. USDC can only be created via bank deposit
Circle even has a trust and transparency website that you can visit to keep track of USDC's reserves and audit reports.
- USDC is audited monthly by one of the world’s leading accounting firms. Since USDC's inception, Circle has released monthly audits via Grant Thornton, one of the world's leading accounting firms. The audits prove that users can access the equivalent amount of fiat-backed reserves as the total circulatory USDC supply.
- USDC is registered with the Financial Crimes Enforcement Network in the U.S. As a provider of financial products and services, Circle is a legally recognized business in the U.S. As a result, it's registered with the Financial Crimes Enforcement Network (FinCEN), which aims to combat financial fraud.
- It’s quicker to send USD through USDC than through a bank. The key benefit of USDC is that it makes it possible to exchange crypto without requiring users to transfer fiat currency in and out of cryptocurrency exchanges. Sending USDC is quicker than sending fiat currency since payments happen near-instantly, and it's possible to do so around the clock. Also, depending on the network where USDC resides, it may be more cost-effective.
- It’s NOT decentralized. Unlike cryptocurrencies such as Bitcoin and Ether, USDC is issued by a centralized authority that must adhere to regulations. If a regulatory body decides action is required against a USDC holder, all their crypto may be frozen. For example, somes users that interacted with the crypto mix Tornado Cash saw their assets frozen.
How to use USDC
USDC can be used via two methods. If you want to buy USDC, you’ll have to convert your fiat currency into crypto. You can also convert your USDC into fiat currency.
Converting your fiat currency into USDC
- Open a cryptocurrency exchange account: Look for a cryptocurrency exchange that accepts USDC. A few USDC-compatible exchanges include Coinbase Pro, Bitfinex, Kraken, and Huobi Global.
- Add fiat money to your account: Deposit your fiat currency into your exchange account. You can do so via bank transfer or your credit card.
- Use your funds to buy USDC: You’re all set to buy and convert your fiat currency into USDC.
Converting your USDC into fiat currency
- Find a platform to convert your USDC: Find a crypto exchange that can convert your USDC into the fiat currency of your choice.
- The exchange removes USDC from circulation: Once you’ve entered an amount, the crypto exchange will send a request to USDC’s smart contract, enabling the blockchain to remove the necessary amount of USDC from global circulation.
- Receive the money in your account: The USDC smart contract will approve the transaction, and the crypto exchange will send the converted fiat currency to your bank account. You may have to incur transaction charges, so your final amount could differ depending on the rate at the time of transfer.
Use USDC with World App
In World App, users can buy and hold USDC, depending on their region and our third-party payment providers. You can learn more about World App here.