Feb 1, 2021
What Is USDC?
The USDC is a stablecoin pegged to the US dollar (1 USDC=1 USD).
As we mentioned in the last episode, USDT has been criticized for its opacity, and has been repeatedly accused by relevant departments. Compliance is hanging on the Damoselian sword of USDT. Therefore, the world’s first compliance stablecoin was born — USDC.
USDC (USD Coin) was born in September 2018. Unlike USDT, USDC gained a lot of support once it was born.
USDC is issued by Circle, which has the largest number of licenses in the crypto asset industry worldwide and currently holds payment licenses in the US (including New York State BitLicense), the UK and the EU, thus providing compliance access to crypto assets in and out of the three major currencies: USD, GBP, and Euro.
It’s worth noting that New York is the most tightly regulated state for digital currency transactions in the United States, and its BitLicense application threshold is extremely high, close to that of banks. The fact that Circle was the first crypto organization to receive a BitLicense is a testament to the strength of its background.
Moreover, Circle has won the favor of IDG Capital, Everbright Capital, Baidu, Bitmain and other international capital, and has conducted 5 rounds of financing in total, among which Bitmain invested 110 million US dollars.
With license in hand and its strong capability, Circle started to improve its transparency.
Grant Thornton, the professional service provider, will make monthly public reports on the financial position of the USDC issued by Circle. Independent third-party audit ensures the safety of clients’ funds to the greatest extent, and solves the pain point of the transparency of the depository account in the current market for the use of USDT.
If it were not for the early launch of USDT, the stablecoin leader would have already changed. According to the data from www.bixiaobao.com, USDC’s market capitalization at the beginning of this year was only $500 million. Just a few months later, USDC’s market capitalization has soared to $2.9 billion, and its market capitalization has risen to 12th place at one point.
The soar of USDC is related to Coinbase.
As is known to all, Coinbase is the largest exchange in the United States. This year, companies such as Grayscale Fund and Microstrategy frequently increase their holdings of Bitcoin, leading to a sharp rise in the price of Bitcoin, which in turn brings about a surge in demand for Bitcoin and an increase in demand for stablecoins. USDC is the only stablecoin supported by Coinbase, and its market value rises naturally.
Despite many benefits, USDC has some disadvantages.
USDC is issued based on the Ethereum ERC20 protocol, limiting its scope of use to a certain extent, while USDT is not only issued based on Ethereum, but also based on TRON and the Bitcoin network. Once the Bitcoin network is congested, users can transfer money through the TRON network, while USDC can only transfer money through the Ethereum network.
USDC has higher compliance than USDT, but is not widely accepted by mainstream exchanges. Because many exchanges still use USDT as the gold channel of fiat currency and take USDT as the basic trading pair, it is difficult for many exchanges to avoid the monopoly of USDT, such as OKEx, Huobi and bitstamp, all of which do not support USDC trading pair.
User habits. Since USDT has been born for a long time, most people are still accustomed to using USDT for transactions and transfers. It may take some time for users to get to know the new token.
In short, we believe that, despite the challenges, USDC can be able to compete with USDT one day. After all, apart from the market, all aspects are better than USDT. We will wait and see how it will develop in the future.
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