USDC’s increased adoption has paved the way for it to become the second-largest Stablecoin.
But, do you know why USDC has achieved such unprecedented success in comparison to other stable coins?
Read on to understand what USDC is, how it differs from other stable coins and why it is gaining popularity.
What Is USDC?
USDC is a dollar-backed stable coin which means that for every USDC that is issued, there is a dollar somewhere in a bank account that is backing it.
At any point in time, the USDC holders could convert the USDC into dollars. This they can do on exchanges like Coinbase without spending any extra money. Apart from that, users with dollars could convert them into USDC on such exchanges.
A consortium named Centre controls the issuing of USDC. Coinbase and Circle are founding members of Centre, and mostly Circle plays an essential role in the further development of USDC.
The Centre has also issued USDC on other blockchains, some of which are Algoraland, Stellar, and Solana.
What Makes USDC Special?
While Decentralized finance has moved the adoption of stablecoins, the market has accepted USDC relatively fast.
There can be many reasons why USDC has progressed so fast. One of the main reasons is that market believes in Circle and Coinbase to issue these USDC correctly. The market views both of them as conservative companies who follow each law strictly.
Apart from that, Circle even collaborated with the US government to allow USDC usage as a tool for their foreign policy.
The US government then coordinated with Circle to distribute these USDC to healthcare workers in Venezuela. This way, they could ignore the traditional financial system that their dictator Maduro operates.
The relationship that Circle and Coinbase has with the US government is close and signifies trust in the market. They believe that the Government will not restrict companies that are actively supporting them.
Another primary reason why USDC has become a fast-growing stable coin is that USDT was experiencing trust issues.
More so, in April 2019, Tether’s lawyers confessed that there was not a dollar for every tether issued sitting in a bank account which was a setback.
Tether had to settle this issue with NYAG for $18.5 million. They also had to comply with other requirements like mentioning their cash and cash equivalents to the NYAG and share the transactions between corporates. Thus, many people prefer USDC over USDT as the latter has serious backing issues and lacks transparency.