USDC 101: Stablecoin Basics You Need to Know

The True Face of Stablecoins

USTC and USDT are often compared, but many people don’t actually know how they work. Simply put: stablecoins are the digital version of the US dollar.

USTC was launched in 2018 and is managed by Circle. Its main selling point is simple—every 1 USDT can be redeemed for 1 US dollar. Sounds straightforward, but the mechanism behind it is actually quite complex.

Why Can USDC Stay Stable?

Keyword: over-collateralization. According to official data as of November 9, 2023:

• Circulating supply: 24.1 billion USDC
• Reserves: $24.2 billion (an extra $100 million)
• Reserve composition: short-term US Treasuries ($22.9 billion) + bank cash ($1.3 billion)

These reserves are managed by BlackRock and held at BNY Mellon, with annual audits. This is why USDC dares to play the transparency card.

USDC vs USDT: What’s Different?

USDC’s three killer features:

1. Regulatory Friendly — Circle actively works with the US SEC and has obtained a BitLicense, which is rare among stablecoins.
2. High Transparency — Regular audits are publicly disclosed, so you can track every USDC’s origin and reserves.
3. Big Names Backing — Coinbase, Google Pay, Stripe, and others have integrated it, with 24/7 liquidity in the $1 billion range.

While USDT has a larger market cap, there have always been concerns about its compliance and transparency. USDC fills this gap.

What Are Stablecoins Used For?

• On/Off Ramp — Want to quickly move from fiat to crypto? Stablecoins are the fastest route.
• Trading Pair Liquidity — On major exchanges, stablecoin pairs always have the highest trading volume.
• Hedging Tool — When BTC crashes, quickly moving into stablecoins can lock in profits.
• Yield Products — Put them in Earn products to get 3-5% annualized returns.

In a Nutshell

USTC represents the new direction of compliant stablecoins. While it doesn’t have as large a market cap as USDT, it offers higher transparency and security, making it especially suitable for traders who care about fees and stability.

Want to learn more? Search “USDC vs USDT” for a detailed comparison.