USDC Crypto Stablecoin Coinbase

PLEASE READ: This article is for educational purposes only and is NOT financial advice!

With the Luna and Terra fiasco that happened a few months ago, people have become more weary of stablecoins. USDC is crypto currency that is supposedly always going to be equivalent to the US dollar, but is that actually true?

How USDC Works

USDC was created by Circle, CoinBase, and others. Each USDC coin is redeemable for exactly a dollar. That redeemable dollar is stored in regulated US financial institutions. So yes, USDC is centralized, which for many crypto diehards will push against. However, USDC allows for the US dollar to be used with the decentralized web.

Applications of USDC

Sending US Dollar Internationally

Currently, if you want to send US dollars to someone internationally, you need to get their bank account and wire it to them. Usually, the bank will take some fees for international transfers and it will take at least a day if you are lucky. However, in the blockchain world all I need to do is send them USDC to the crypto wallet. You will have to pay gas fees and it will take some time. Nevertheless, in comparison, it is extremely fast and cheap compared to the traditional bank to bank transfer.

Converting Crypto to Stablecoin when Anticipating a Crash

This is a pretty simple use case. If I have 20 Ethereum and I believe it will go down soon, I can transfer it into USDC. This is much better than converting it directly into cash because I can still use it in the blockchain world and decentralized web.

Easing People from the Web2 World to the Web3 World

This is a potential use case that I believe has been underutilized. More companies should better market how you can interact with the decentralized web using the USDC stable coin. I understand and agree with the purpose of blockchain being decentralization and trustlessness. However, numerous people still have a stigma against crypto and this will at least be a way to show them the power of decentralized web with them having to purchase crypto.

How is USDC different from Luna and Terra

Terra is an algorithm stable coin that uses the Luna coin to algorithmically maintain a stable price. However, the story of Luna is more than just code that did not run as intended and I suggest that you do your own research on the topic. On the other hand, USDC is coin to dollar because of the fact that it's centralized and backed by regulated US financial institutions.

Is USDC truly a Stablecoin?

Since the USDC coin is backed by US financial institutions, the only question that needs to be asked on whether it is a true stablecoin is do you trust these US financial institutions.