USD Coin (USDC)

USD Coin (USDC) is a stablecoin. This is a cryptocurrency whose value is always equal to an underlying product. In the case of USD Coin, this is the US dollar. Thus, one USDC token is equal to one US dollar. The value of the coin will never rise or fall, so you can assume the same value at all times.

The makers of USD Coin cannot simply make the value equal to the dollar. To do this, the USDC token must be backed by underlying assets. The creators have solved this by keeping a US dollar (or assets equal to this value) for each USDC token. Even if everyone sells their USDC token, and demand completely collapses, the token will still retain its value. After all, the assets that serve as collateral protect the crypto currency.

USDC runs on the blockchain of Ethereum. This means that it also uses the ERC20 protocol. This is a token protocol used for Ethereum tokens. A token protocol ensures that all tokens are programmed in the same way so that they can also communicate with each other. If such a token does not comply with the protocol, the systems within the blockchain network cannot consider the tokens as full tokens.

In December 2021, it became clear that there were 42.5 billion USDC tokens in circulation. According to the founders of USDC, all tokens are covered, which means that there is collateral of $42.5 billion.

In general, USDC is known to be a safer stablecoin than many other types because they are more transparent about how they operate. For example, in 2021 it came out that Tether (USDT) had backed almost all of its tokens with commercial bank money. This caused a lot of outrage within the crypto world.