USD Coin

USD Coin (USDC) is a stablecoin issued by Circle.

Brief

Circle, the issuer of USDC, is a P2P technology company founded by Jeremy Allaire and Sean Neville in October 2013. Circle’s mission is to move traditional fiat business payments onto a unified global platform. It achieves this by converting USD($) to USDC allowing business transactions to be more scalable and efficient globally by implementing blockchain infrastructure.

Circle

Key Takeaways

• Circle is moving traditional payment methods onto the blockchain.

• Circle is the issuer of the stablecoins: USD coin (USDC) and Euro coin (EUROC)

• USDC is 100% backed by cash and short-dated U.S treasuries meaning that they are always redeemable 1:1 for USD ($)

• EUROC is 100% backed by euros held in euro-denominated bank accounts

What is Circle:

Circle is a peer-to-peer payment company; that helps businesses to accept payments and send payouts globally on one unified platform. By converting fiat currencies to digital currency, traditional transactions become more global, scalable and efficient. Circle has a multitude of products that are available for customers, whether they are a company, an individual or investors. Their products include Circle APIs ( Payments, Payouts, Accounts), Circle Yields and SeedInvest. Circle also uses these products to solve current problems facing the transition from fiat to crypto for example Banking, Fintech, NFT platform and many more. Circle can facilitate all this and more by making USDC available on a growing roster of public blockchains like Ethereum, Solana, Avalanche, Tron and many more.

History

• In October 2013, Circle was founded by Jeremy Allaire and Sean Neville.

• From 2013 to 2016, Circle received over $135 million in venture capital; including $50 million from Goldman Sach.

• April 2015, The New York Times wrote that Goldman Sachs investment “should help solidify Bitcoin’s reputation as a technology that serious financial firms can work with”.

• In September 2015, Circle received the first BitLicense from the New York State Department of Financial Services (NYDFS)

• As of 2015, a Circle account can be funded by USD via a “US-issued visa and MasterCard credit and debit card” In April 2016, Britain approved the first virtual currency licensure.

• In June 2016, Circle raised $60 million in series D funding back by new and previous partners.

• As of 2016, European customers can use Circle in Europe and Great Britain.

• In June 2019 it was announced that Circle Pay (their mobile banking app) would be discontinued.

• 30th September 2019, Circle pay was discontinued.

• In 2019, Circle acquired SeedInvest.

• In February 2020, Circle sold its digital asset trading platform to Voyager Digital.

• In April 2022, Circle announced an agreement for $400 million funding with investment from BlackRock, Fidelity Investments, Marshal Wace LLP and Fin Capital.

Circle Products:

Circle Accounts

Circle Accounts are the main product of Circle. Circle implemented this product to help other businesses to gain access to the crypto ecosystem by moving traditional payment rails onto the blockchain and removing the barriers of entry to crypto. This allows businesses to become more scalable, this is achieved by the accounts converting $ to USDC or EUROC. This means money can be moved freely over the globe.

Circle Yield

Circle Yield is an account that allows accredited investors to allocate to a crypto-based investment. For the security of investors the accounts are Bitcoin collateral, clearly regulated, daily collateral measures and rebalancing procedures. As the account uses circle’s native coin USDC it is 1:1 redeemable to $. These accounts benefit from the same advantages as all Circle accounts.

SeedInvest

Circle acquired SeedInvest in 2019. SeedInvest was created to bridge the gap between the everyday person and Private start-ups. Historically just a small fraction of the US population could invest in private start-ups. However recently laws have made it more equitable for people to invest.

Solutions:

NFT Platforms

NFTs are getting more and more mainstream, so having a product that has access to a lot of public blockchains and a native coin that is equal to a dollar means most of the barriers to entry are reduced. This means that new customers can have access to NFTs and previous customers can build their portfolios. One of the biggest NFT (NBA Top Shot) collections last yearly sales were $700 million

Crypto Gaming

Like NFTs, Crypto gaming is becoming more mainstream. To innovate the users’ experience they need scalable and stable solutions to attract and retain players and developers. Circle is bridging the gap between traditional banking and blockchain technology. Meaning payments can be embedded in-game. The expected value of the global gaming market in 2026 is $ 314 billion.

USD Coin:

USD Coin or USDC is a stablecoin that is the main native coin issued by Circle. At the time of writing, USDC is currently sitting at number 4 on Coin Marketcap. USDC is pegged against the U.S. Dollar at a 1:1. Obviously this means $1 is equal to 1 USDC. USDC is 100% backed by cash and short-dated U.S. treasuries allowing them to be equal in value to $. So as a Cryptocurrencies USDC benefits from all the advantages like being available 24/7 and moving at internet speed. As USDC transcends banking hours and international borders USDC is always available whenever and wherever for customers. This means customers can send, receive and save USDC to anyone with an internet connection, no bank account required. USDC also unlocks more opportunities than fiat currencies. It gives access to opportunities in crypto capital markets for trading, lending, borrowing and fundraising. Being a cryptocurrency USDC is also transparent meaning both parties of the transaction have records on the blockchain allowing more ethical transactions. With all of the benefits of a cryptocurrency USDC being a stablecoin backed by the dollar it inherits some other benefits compared to other cryptocurrencies. One of the benefits is that U.S. Dollar is the global currency that all currencies are compared. This means that USDC might be easier crypto for firms to use in transactions when implementing crypto transactions. More importantly, USDC will fluctuate in value with Dollars meaning USDC will not crash so this leads to USDC having more utility rather than becoming an asset like Bitcoin. This results in a safe cryptocurrency for transactions hence the name stablecoin.

On this graph, you can see how USDC's price fluctuates. At your first look at this graph, you might think USDC was quite volatile for a stablecoin. However, you can see the price between 2019 and 2021 USDC only fluctuated by a maximum of 4 cents. In comparison, Bitcoin has had a fluctuation of $30,000. Also since September 2020, you can see that USDC has had minimal price fluctuations

Business:

Firms benefit from using USDC compared to fiat currencies because if they are a larger international cooperation payments and payouts can be sent anywhere to anyone at a fraction of the cost of previous methods. With USDC firms increase their Capital efficiency at a larger scale. Also, the 1:1 allows firms to redeem dollars quickly and efficiently.

Individual:

Individuals benefit from USDC as it allows people to send or receive money to friends and family all over the globe at the speed of the internet, and they can use that money to pay for goods and services. Customers can be commercial, tangible goods like coffee, TVs, or going out to a restaurant. Or crypto-based assets like NFTs. Also being on the blockchain there is no need for banks.

USDC current figures as of August 2022:

• $52 Billion in circulation.

• 5.81 Trillion total on-chain transactions.

• 190+ countries supporting

Euro Coin:

Euro Coin or EUROC is a stablecoin that is also native to Circle. EUROC was introduced by Circle to allow European customers to use their services more efficiently. EUROC is like USDC is a stablecoin pegged against a fiat currency, however, unlike USDC, EUROC is pegged against the Euro. This meant existing European customers now have fewer barriers to entry, by only having to convert to crypto rather than converting to dollars and then to crypto. Euro coin also benefits from the same advantages that USDC benefits from. EUROC is 100% backed by euros held in euro-denominated bank accounts.

Where can you buy USDC and EUROC:

USDC and EUROC are available to purchase on a multitude of Cryptocurrency Exchanges; including but not limited to Scallop Exchange. Remember these coins are stable coins so this means the price of these coins won’t fluctuate in price. However, if their fiat counterparts increase in value or decrease in value the number of goods and services that can be consumed changes. You can buy USDC on Scallop exchange here https://www.scallop.exchange/en_US/newTrade/USDC_USDT

Conclusion:

Overall these coins allow Circle to achieve their objective which is to move traditional banking into the crypto ecosystem. However, their inherent value from fiat means that these coins get affected by the same risks as fiat for example high inflation in the dollar. This means that for them to progress further Circle might need to build their own value to these coins. But currently in this crypto winter USDC has shown that cryptocurrencies are the best possible future for finance.

Disclaimer: The content on this website is for informational purposes only. You should not construe any such information as financial or other advice. Please do your research before making an investment decision.