Coinbase’s USD stablecoin – what is it and why should you use it?
USD Coin is a stablecoin created by cryptocurrency exchange Coinbase and offers a safer way to invest in and hold cryptocurrency. Here’s what it is and how it works
Here’s everything you need to know about USD Coin (USDC), a stablecoin offering from cryptocurrency exchange Coinbase. This handy guide includes everything you need to know – from what a stablecoin is, to how you can access it.
What is Coinbase?
Coinbase is a publicly traded cryptocurrency exchange platform. The company is hoping to provide a fairer, more accessible, and efficient way to access and trade cryptocurrency via its easy-to-use and secure platform.
What is a stablecoin?
Put simply, stablecoins are digital money. Their prices are tied to a reserve asset such as the US dollar or gold. This reduces volatility compared to other cryptocurrencies such as bitcoin. Because they are far less volatile, they are better suited to day-to-day commerce and transfers.
What is USDC?
USD Coin (USDC) is a type of stablecoin. 1 USDC is always worth the same as US$1, because it’s pegged to the US dollar. USDC is backed by dollar reserves that are at least equal to the USDC in circulation. These reserves are held in transparent, segregated accounts in regulated financial US institutions.
The currency operates on the Ethereum blockchain. This is the leading smart contract platform and is well supported by developers. It also allows for speedy transfers – they can be completed in under an hour – and also means there are none of the costs associated with traditional banking and transfer methods.
Back in 2018, Coinbase co-founded the Centre Consortium to develop USDC. The stablecoin has become one of the most popular options: its market capitalisation has grown by 150 times in three years. USDC also powers many innovative decentralised finance applications.
What are the pros of USDC?
The fact that USDC is always redeemable on a one-to-one basis with US$1, makes it far more stable than most cryptocurrencies. Cryptocurrencies, such as bitcoin, are usually associated with volatility, and their value can vary greatly depending on many external factors.
However a stablecoin, such as USDC, offers a safer way to trade in and hold cryptocurrency. It’s an attractive option for those who want to hold cryptocurrency even when the market is in turmoil, as it has been as of late, but don’t want to expose themselves to heavy losses.
You don’t need a bank to hold USDC – you can sign up to an exchange like Coinbase. USDC can easily be used in online transactions. Stablecoins also offer ways to earn interest on your holdings, usually at a higher rate than you would get from a bank.
Owners of USDC will also be able to interact with new decentralised applications – known as dApps – allowing access to trading, insurance, saving, lending and borrowing, all while using a trusted form of digital currency. Check out Coinbase Wallet for access to DeFi here.
Is USDC easily accessible?
You can convert US dollars to USDC by creating or signing in to your Coinbase account. As part of its mission to increase economic freedom in the world and in order to make USDC more available and accessible Coinbase is waiving commission fees when customers buy or sell USDC via any fiat currencies on the platform – from Australian dollars to South African Rands.*
Additionally, users can earn 1% interest on their USDC holdings. Coinbase will distribute rewards for the days you have a balance of at least $1 of USDC on Coinbase every month, meaning the higher your USDC balance the more rewards you will earn.**
Coinbase’s research shows USDC has been more readily adopted in the US, but it is hoping to increase its use throughout the globe. Currently three times more USDC is bought with US dollars versus non-US dollar currencies.
Coinbase believes this is likely because users outside the US have to pay fees to convert their local currency into USDC which creates a “barrier to broader international adoption”.
* No commission fees attributed to Coinbase will be charged until further notice. However, spread, and processing fees charged by third party processors, will continue to apply. This feature may not be available to all regions.
Disclaimer
Cryptocurrency is unregulated in the UK. The value of investments can go down as well as up. Profits may be subject to Capital Gains Tax. See terms for USDC APY
Upgrade to smarter living
Get the latest news, reviews, deals and buying guides on gorgeous tech, home and active products straight to your inbox.
For 25 years T3 has been the place to go when you need a gadget. From the incredibly useful, to the flat out beautiful T3 has covered it all. We're here to make your life better by bringing you the latest news, reviewing the products you want to buy and hunting for the best deals. You can follow us on Twitter, Facebook and Instagram. We also have a monthly magazine which you can buy in newsagents or subscribe to online – print and digital versions available.
-
Hands-on with the Richard Mille RM 65-01 Chronograph McLaren W1
We try out the new £340,000 watch from Richard Mille
By Alistair Charlton Published
-
This could be the Nokia flagship phone we've been waiting for – there's just one thing missing
Nokia under HMD's guidance didn't dally in flagship phones, but this could change things
By Chris Hall Published
-
Thanks a latte – get yourself a free supply of coffee when you buy a Curry’s coffee machine
Nab yourself up to six bags of Mount Blend beans from Volcano Coffee Works when you spend over £350 on a coffee machine from Currys
By T3.com Published
-
Load it up: Rely on Hotpoint’s new Maxi Space to make the post-dinner cleanup a breeze
Skip the scrubbing and get a sparkling clean with a new Hotpoint dishwasher from AO
By T3.com Published
-
For a more sustainable home, take a look at the John Lewis energy-efficient technology range
These products could help you save on energy bills – and come with a host of neat benefits
By T3.com Published
-
Samsung unveil their most powerful cordless vacuum cleaner ever
Plus, get £200 off the Samsung Bespoke Jet AI vacuum when you pre-order
By T3.com Published
-
If you love tech, these are the businesses you should aspire to work for
Great Place To Work® has announced THE best places to work in the tech realm
By T3.com Published
-
Enjoy better coffee with a bean to cup machine from Currys, and get up to a year’s worth of free coffee beans
What’s that delicious smell? Fresh-brewed coffee and tasty savings!
By T3.com Published
-
The gift of sleep: 7 present ideas guaranteed to impress
Give the gift of the best night’s sleep with Panda London
By T3.com Published
-
Sleep tech: 6 reasons to invest in the Panda Hybrid Bamboo Pillow
Looking for a new pillow? The Panda Hybrid Bamboo Pillow should be the top of your list
By T3.com Published