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UCDC (USD coin) token review

USDC (USD Coin) is a cryptocurrency coin with a value equivalent to the US dollar called a stablecoin. With a twenty-four billion dollar capitalization, this coin was issued on different blockchain platforms, including Ethereum and Solana, and it is the second most popular stablecoin after Tether.

History

USDC was launched in 2018 by the Centre consortium in collaboration with Circle and Coinbase on the Ethereum blockchain. In a short period of time, this token became a popular medium of transactions, and to make it more popular, it was decided to release USDC on other blockchains: Solana, Algorand, BNB chain, Fantom, etc. 

How USDC works

USD Coin value is pegged to the US dollar, meaning that for every USDC on the market, the Centre consortium has collateral in US dollars deposited in the company bank account. 

USDC issuance and redemption

Any organization that wants to receive USDC should send US dollars to the Centre consortium; after deposit confirmation, a special smart contract on a chosen blockchain issues an equal amount of USD Coins. And vice versa, if a company wants to exchange USD Coins for US dollars - it should send these tokens to a special blockchain address, where they will be destroyed, and in return, the Centre company will send dollars to the company’s bank account.

All processes have strict compliance with various regulatory requirements, including KYC and AML protocols.

Also, to maintain transparency and trust, all Centre consortium reserves are regularly checked by independent auditors. This action distinguishes the company favorably in relation to Tether, Ltd.

USDC use cases

1. Trading and Hedging - USDC is a popular token that traders and investors use to fix the portfolio value or hedge risks in the process of work on the crypto market. 
2. Remittances - because of the popularity and versatility of tools that allow the exchange of this token on local fiat currencies, USDC is widely used in remittances and payments. 
3. DeFi applications - many decentralized applications allow users to stake, lend, and borrow USDC in return for rewards. 
4. E-commerce - some online merchants started accepting this token as a means of payment for their goods. 
5. Value transfer and storage - because USDC is considered more secure and reliable than USDT, many crypto enthusiasts use this token to transfer their funds from one blockchain to another or store it in the long run.

Challenges and critics

1. Regulatory issues -USDC is entirely dependent on regulators, and new laws could make it much more difficult to use this token, including making it non-liquid on the market.
2. Centralization - only a few entities are controlling the token issuance (mostly Circle and Coinbase), so all questions about the issuance and circulation of a token, which addresses can accept tokens and which ones should be banned, who has the right to request a withdrawal of money and who does not - depend on a small number of people.
3. Technical risks - USDC uses smart contracts that were launched on chosen blockchains, so it is potentially vulnerable to bugs, hacks, or blockchain particularities of work.