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What is USDC ($USDC)?
What is USDC ($USDC)?

Learn about USDC and how to buy/swap it in Best Wallet.

Updated over a week ago

USD Coin ($USDC), commonly referred to just as USDC, is a stablecoin cryptocurrency that is pegged at a 1:1 value with the US Dollar.

Essentially, it serves as a tokenized version of the US dollar, with the value of one $USDC designed to mirror that of one US dollar as closely as possible (1 $USDC = $1).

USDC is designed to offer the stability of a fiat currency (US Dollar) but with the operability and function of a normal cryptocurrency.

What is a stablecoin?

Stablecoins are a special type of cryptocurrency engineered to maintain a steady value, typically pegged to a fiat currency like the US dollar.

Stablecoins like USD Coin offer stability in crypto, especially in times of market volatility. There are several major types of stablecoins:

  • Fiat-backed stablecoins: Tied to traditional currencies like the US dollar, ensuring stability through tangible asset backing.

  • Crypto-backed stablecoins: Supported by other cryptocurrencies, ensuring value through collateralisation.

  • Algorithmic stablecoins: Utilise algorithms to regulate token supply dynamically, aiming for price stability.

How does USDC maintain its stable value?

USD Coin is designed to have a full reserve backing, meaning that for every $USDC token in circulation, there exists an equivalent amount of US dollars securely held in reserve.

This means that USDC is entirely backed by reserves, ensuring holders can redeem their tokens for USD at any time, maintaining the 1:1 ratio.

This level of collateralisation not only ensures USDC maintains its stable 1:1 pegging with the US dollar but also instils trust and confidence, making USDC the second largest stablecoin by market capitalisation.

Why owning USDC can be useful

Holding USD Coin tokens offers many advantages.

It offers a means to store funds in a stable cryptocurrency, meaning you can buy and hold $USDC and know that it will have the same value in six months. This is rare when buying cryptocurrencies, and many major cryptocurrencies such as Ethereum ($ETH) are volatile and their prices fluctuate daily.

Because USDC is backed by real dollars, it offers the stability of the US dollar with the capability of cryptocurrencies. You can swap USDC for other cryptocurrencies, and engage with presales and other projects with your USDC, all with Best Wallet.

By buying and holding a large amount of USDC tokens in Best Wallet, you can quickly swap for trending or pumping cryptocurrencies, allowing you to react quickly to market movements. It essentially allows you to store fiat currency in the form of a crypto token in your Best Wallet, making it easier to buy new cryptocurrencies.

Overall, USDC provides a secure and stable means to engage with crypto and crypto projects and acts as a hedge against market volatility.

Disadvantages of holding USDC

Whilst holding and trading USD Coin can offer many benefits, it's important to note that there can be drawbacks.

For one, there can be no price appreciation - which offers stability but can also never offer any form of profit. Whilst many cryptocurrencies, such as Ethereum ($ETH) can rise in value by 10-50% in 6 months, USDC will never.

Additionally, there are drawbacks to being tied with a fiat currency like the US dollar, because this therefore links the cryptocurrency with the traditional finance system.

In March 2023, USDC became unpegged to the US dollar due to the collapse of lender Silicon Valley Bank. Because USD Coin had tied up almost 8% of its $40 billion reserve at Silicon Valley Bank, when the bank collapsed, not only were the USD Coin reserves threatened, but so was user confidence. This led to a drop in its 1:1 peg, meaning at its lowest time during this period, 1 $USDC equalled $0.87. USD Coin quickly addressed the issue, regained a 1:1 peg, and placed safeguards and regular audits to avoid a repeat, but it exemplifies the risk when buying a stablecoin like USDC.

Can I buy USDC in Best Wallet?

Yes, you can buy USDC directly within the Best Wallet app. By going to the "Buy" option with Best Wallet, you can exchange your fiat currency for USDC directly. Because Best Wallet has integrated Onramper, you get the most competitive prices for your USDC purchase.

Can I swap my USDC for another crypto in Best Wallet?

Yes, you can easily swap your USDC for another crypto, as long as it's on the same network as your USD Coin. You can own USDC on all three supported networks in Best Wallet (BNB Smart Chain, Ethereum, and Polygon).

To conclude

USD Coin offers a stable and relatively secure cryptocurrency, with its deep US dollar reserves and regular audits. Owning USDC can not only help hedge against market dips but also allow you to quickly swap for quick-rising cryptocurrencies. Buying and holding an amount in USD Coin allows you full speed and flexibility when transacting in Best Wallet.

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