Bitcoin was first created as a decentralized digital currency with the intention of payment for goods and services (i.e. to exchange). Its use has changed from its beginning, but now it is utilized for different purposes, such as as a place to store worth that is more like that of gold.
On the contrary, USD Coin was developed to place U.S. dollars onto the Blockchain. This allowed them to move anywhere in the world within just a few minutes. Additionally, they were created to provide stability to cryptocurrency. USD Coin’s website explains that: “A price-stable currency such as the U.S. dollar (and similar stable currencies like EUR GBP, JPY, RMB, etc.) is crucial for enabling widespread use of blockchain technology for payments, and also to facilitate maturation of financial contracts based using smart contract platforms, including tokenized securities, loans and real estate.”
Understanding USD Coin
In 2018, USD Coin was launched by Centre, the consortium formed with the help of Circle Coinbase and Circle Coinbase. USD Coin was developed as a stablecoin that is regulated and is based on blockchain technology.
KuCoin is among the few platforms with the trading currency BTC/USDT. If you’re looking to change USDC direct to UST, the best alternative to choose from is KuCoin.
The primary purpose behind this cryptocurrency is to offer the ability to store value safely and stably and not to provide an asset that theoretically increases in value over time.
How Does USD Coin Work?
USDC is secured by tangible assets and is often called an unstable fiat currency. As the name implies, the fiat-collateralized currency is backed by a government currency like the U.S. dollar or the British pound.
To keep USDC price stable, equivalent to $1, USDC is secured by short-term U.S. government bonds as collateral. For each USDC token in circulation, $1 is connected in collateral.
When crypto investors purchase USD coins, they expect one USDC to always be equal to one U.S. dollar. So why own USDC? The most popular use-case is to buy USDC, keep it in an exchange platform or within a wallet, and then use it later to finance purchases made with other cryptocurrencies.
Overview of Bitcoin
Bitcoin was designed to be decentralized. This means that Nakamoto did not have the primary influence, but rather, it was created as a result of members of the Bitcoin community. Bitcoin is a Bitcoin network managed by a community of developers spread across the world who are involved in their management and management on a non-committal basis. The Bitcoin network is not governed by any government, bank, or other organization.
Bitcoin is a cryptocurrency made when the participants of the community mine it. When fiat currencies originate from central banks, brand new bitcoins are distributed to miners in the form of the block reward system for adding new blocks containing authentic transactions on bitcoin’s Bitcoin blockchain. This is accomplished by employing special hardware to tackle a complex computational problem that produces the hash, which is a seemingly random output of 64 characters. Numerous multiple attempts to obtain this number. The block is sealed and placed on the Blockchain when the soup is discovered. When a block is successfully mined mining, miners receive new bitcoins and transaction fees.
USD Coin vs Bitcoin
What sets USD Coin from cryptos like Bitcoin is that it’s entirely secured by collateral.
Although USDC’s value is based upon the dollar U.S. dollar’s worth, Bitcoin’s value is determined by the limitless quantity. It is only going to exist 21 million bitcoins on the market. If you’re keeping track, at present, there are 19 million Bitcoins available in the market. The crypto community believes that this shortage will increase Bitcoin’s value over time.
However, there are some challenges to the idea of defining an asset’s worth just by the perceptions of others which is evident by Bitcoin’s volatility.
In contrast, the value of USDC has been relatively stable throughout its existence, even though there is a possibility of temporary volatility in extreme market times, Manoppo says.
The other side of the investment story is that an electronic asset tied with a fixed currency such as dollar U.S. dollar isn’t an investment that will appreciate.
Purchase of USDC isn’t going to offer any investment return for the buyer since it was created to be a stable cryptocurrency. But the advantages of buying this currency are more about how valuable it is, rather than how much you could earn by a rise in value.
Based on its characteristics, USDC makes it a feasible option for companies and people to transfer funds within a matter of minutes and also save time and money by removing the need for banks and other intermediaries.