What is USD Coin (USDC), fiat-backed stablecoin explained
USDC offers instant payments, saves users from the cryptocurrency market’s price volatility and is audited by a regulated auditing firm, making it a transparent stablecoin. However, it does not offer price appreciation opportunities, and investors may incur high transaction and withdrawal fees while dealing with USDC.
One of the key advantages of the USD Coin is the speed of the transaction. Usually, one must wait a long time to send and receive USD because institutions such as banks and their complex procedures slow down the processing of transactions. Nonetheless, USDC allows instant clearing and settlement of payments.
In addition, stablecoins like USDC saves users from the price volatility of cryptocurrencies, as leading American financial institutions ensure that Circle’s reserves are 100% backed by the U.S. dollar or short-term treasuries at all times. Moreover, there are numerous digital asset exchanges where one may buy USDC. Many exchanges also enable the withdrawal of USDC across various blockchains.
Furthermore, using a cryptocurrency wallet, one can quickly make cross-border payments or remittances. Similarly, one can earn passive income by lending USDC on decentralized finance (DeFi) platforms like Aave.
Regardless of the above advantages, the USD Coin may not be an ideal investment asset for those looking to earn money from digital assets because USDC may not offer potential price appreciation opportunities to yield profits.
Also, some exchanges charge a high fee for withdrawing USDC stablecoin, and transaction fees may be higher than a typical bank transfer or a PayPal transfer for smaller transactions. Moreover, even if DeFi platforms offer more interest for each USDC lent, they are riskier, as evidenced by various crypto heists.