In the search for the most profitable cryptocurrencies out there, we came across a currency that is a hidden gem of the cryptocurrency market. USD Coins or USDC have bottomed out and held their value in the market for quite a while.
Monetary policies are expected to remain loose, leaving investors with unimpressive returns in the traditional finance sector. Because of the unstable and no-profit investment market, naturally, this motivates investors to look for alternatives. Ideally, equities had taken care of the investors’ plight. But who will stick around to take all the risk for low yields?
In such an investing landscape, USDC offers compelling opportunities to investors with high yields. This means that this table coming can easily edge out traditional investment plans. In fact, you can even earn high rates of interest on USDC with a platform like AQRU. Their innovative investment platform allows you to invest in multiple cryptocurrencies, and it’s really beginner-friendly. USDC is a great choice for investors as it hedges against volatility, and its peg to the US dollar ensures that each USD Coin is worth the equivalent of 1 US dollar.
Although USDC has so many things to offer, it seems that many people are still not aware of it. This is why we are here with this article to educate investors about USDC and why it is worth investing in it.
Stablecoins
Firstly, let’s take a look at what a stablecoin is. Stablecoins are a less volatile digital asset compared to well-known, popular cryptocurrencies like Bitcoin. Stablecoins are a type of cryptocurrency that peg their value to another currency or financial instrument e.g. the US dollar. Due to their value being attached to something else, they are more stable, thus more attractive to investors.
There are many different types of stablecoin.
1. Fiat-collateralised stablecoins
USDC is an example of a fiat–collateralised stablecoin as its value is pegged to the US dollar, which acts as collateral in assuring the value of the coin.
2. Crypto-collateralised stablecoins
As suggested in the name, these stablecoins are attached to the value of other cryptocurrencies. For example, although DAI is backed by the US dollar, it is also backed by the Ethereum blockchain.
3. Algorithmic stablecoins
The main distinction of algorithmic stablecoins is their use of an algorithmic strategy to stabilise the value of the coin. The algorithm is a computer program which runs to present a formula. However, there is more risk involved with algorithmic stablecoins.
What Are USD Coins?
USDC is a new stablecoin backed with US dollars. This coin was released in the market due to Circle and Coinbase joining hands. Right now, this stable currency is among the top currencies and is in direct competition with Tether and TrueUSD.
Overall, USDC is a service that helps investors tokenise the US dollar and convert them into digital currencies to be used on the public blockchain. The best part of USDC is that you can easily convert it back into US dollars.
Putting US dollars on the blockchain allows the users to send money anywhere in the world and gives much-needed stability to the cryptocurrency market.
What Makes USD Coins Unique?
USDC stablecoin and the US dollar work very similarly in terms of functionality. By pegging its value to the dollar, USDC aims to maintain a value of $1, whilst working like any other cryptocurrency in the market. The most important factor about a USDC stablecoin is its transparency and trustworthiness. Because cash and US government obligations back it, it is the fastest-growing, fully regulated digital coin.
Centre – The Consortium – manages USDC. It releases monthly attestations as one of the top accounting firms in the country. This attestation provides information on how many USDCs are in circulation and the total value of the reserve banking USDC.
Another fact that makes USDC more reliable than any other stablecoins out there is that its USD reserves backing the USDC are used to have a mix of bonds, assets, and other commercial papers.
How Does USD Coin Work?
The USD Coin is built on an open-source fiat stable framework created by the Centre. New USDC is minted when people buy them. And when people sell USDC, they are removed from circulation.
Let’s just say you want to buy USDC through crypto-exchange. These are the steps you need to follow.
- You send US dollars to the Crypto exchange to purchase USDC.
- The exchange uses the USD smart contract to mint out equivalent USDC.
- In exchange, they give you the newly minted USDC.
The process is quite simple and ensures that the reserve backs the USDC you are buying. If you are selling the USDC, the same process happens; this time, it’s the reverse. The exchange uses the smart contract to remove USDC tokens from circulation and pay you dollars equivalent to USDC.
Is A USD Coin A Good Investment?
As a stablecoin, USDC is not designed as an investment. If it works as it is supposed to work, the price of one USDC will remain the same for the next one, five, and ten years.
Even though USDC is not exactly meant for investment, it can be a great choice to earn passive income. You can easily earn high APYs through a lending program, or by putting your investment into a yield-bearing account to earn interest on your holdings.
Whether cryptocurrency is the future or not, one thing is clear: It is not advisable to just put all your money in cryptocurrency as an investment. Before making any investment decision, it is important to do thorough research and know its pitfalls.
Investing in Cryptocurrencies is not a new phenomenon. But the recent surge of popularity and value, coupled with the failing traditional financial structures, have made people look for cryptocurrencies with hope.
If you are looking for any type of cryptocurrency investment, it makes more sense to compare different cryptocurrencies before making an investment decision. And, if you have decided to invest in cryptocurrencies, you should ensure you do your research and never invest more than you can afford to lose!
