Circle Internet Financial Ltd. joins the world of stable coins with USD Coin. The joint effort of Circle and CENTRE’s open-source and transparent stablecoin framework aims to ensure crypto stability for consumers.
Stablecoin is a cryptocurrency backed by a stable assets like gold, silver or USD even. The need arises because of extreme volatility of cryptocurrencies. Price variation of 5-10% is normal for currencies but what it effects is the consumer market that cannot safely proceed with the transactions. For example, a $5 purchase could be worth 1% in the next hour or $15 the next day.
To negate this, cryptocurrency is pegged with a stable assets so that to calm the horse from taking off. For example, tether is a stablecoin pegged to USD. Following is the trade chart for tether in the past week. Notice the small variations? That is the characteristic of stable coin. Any other currency in the same time period would have wide strokes of ups and downs in their graphs.
In a blogpost, Circle announced the introduction of USD coin.
This solution (USDC) will enable customers to purchase and use USDC fiat tokens for payments and trading in the crypto ecosystem.’
The future of USD Coin was also discussed by the partners Sean & Jeremy:
We believe that an open internet of value exchange can transform and integrate the world more deeply, eventually eliminating artificial economic borders and enabling a more efficient and inclusive global marketplace that connects every person on the planet. The future of the global economy is open, shared, inclusive, far more evenly distributed, and powerful not only for a few chosen gatekeepers, but for all who will connect.
Let’s get into the two partners behind the introduction of USD Coin.
Backed by $250M from investors, Circle is a peer-to-peer payments technology company. It was founded by Jeremy Allaire and Sean Neville in October 2013 which currently offers four projects to consumers:
1.Circle Invest:allows customers easy-invest opportunities.
2.Circle Pay: allows you to send money between currencies, countries and friends.
3.Circle Trade: trading desk with $2B+ monthly trading volume.
4.Poloniex: introduces as a major crypto exchange.
Centre is currently the first and only USDC issuer. It is a partnership of multiple companies, a consortium that is going to define policies around stablecoins and governance. The bunch of rules for being an issuer will be devised by Centre. For instance, issuers will have to report with audited reports with Centre to prove that they have deposits equivalent to tokens that were issued.
USDC will soon by supported on many decentralized exchanges such as IDEX, Paradex, Radar Relay and Tokenlon while wallet providers such as BitGo, Cobo, Coinbase Wallet, CoolWallet S, Elph, imToken, Ledger, Status, Trust are also providing native support for USDC. DigiFinex, CoinEx, Poloniex, KuCoin, OKCoin, Coinplug, and XDAEX are exchanges which will add USD coin trade option in near future.
While Circle has big goals, it won’t be easy for the USD Coin to become the ‘ultimate’ stable coin because of the existence of other stable coins in market such as Tether (USDT), USDX, Havven, and TrueCoin (TUSD). Regardless, it is a great step for stablecoins in particular and cryptocurrency in general.