How to Buy USD Coin

Rajarshi Mitra

December 16, 2019 (Updated: January 2020)

TLDR:

How to buy USD Coin is 3 simple steps
  1. Get a USD Coin wallet (e.g. Coinomi)
  2. Find an exchange that sells USD Coin (e.g. SimpleSwap)
  3. Deposit cryptocurrency and wait for confirmations.
  4. The coins will arrive to your wallet shortly after.

USD Coin or USDC for short is a stablecoin from exchange giant Coinbase. One USD Coin is always worth one dollar, which should mean this cryptocurrency maintains a stable price throughout its life. Here’s everything you need to know. Given the current calls for safer systems that more businesses can tap into, this is a very good time to buy USD Coin. Let’s take a closer look at why and how to buy USD Coin.



What Is USD Coin?

USD Coin lets you transfer money quickly and easily all over the world. While this statement could apply to many cryptocurrency projects, USD Coin has a special ability: it’s a stablecoin. This coin aims to maintain a stable price of one US dollar per token. Even its name is a subtle nod to its USD origins. It has a total supply of 335,934,742 USDC, although this may change, as discussed below in the “How Does USD Coin Work?” section.

This should mean (in theory) that $500 of USD Coin purchased today will be worth $500 at any point in the future. Sure, it won’t go up in value and net you 10,000% returns, but it won’t go down and crush your hopes of a Lambo.

Like traditional fiat currencies are often backed by a central bank’s gold reserves (know as the gold standard), each USD Coin gets backed by a dollar in Coinbase’s bank account. If you live in the United States, you can exchange one USDC for one dollar into your bank account, with no fees!

Coinbase launched USD Coin in September 2018 in partnership with the financial partnership company Circle. Coinbase state:

Our mission is to build an open financial system for the world. As part of this mission, we want everyone to enjoy the stability of the world’s fiat currency, the US dollar. USD Coin allows unbanked and under-banked individuals in any country to hold a US dollar–backed asset with nothing more than a mobile phone.

Coinbase is aiming to dominate the market with USD Coin. A cryptocurrency that isn’t volatile, and is not subject to the wild swings experienced by most other projects is an enviable project. Countries with hyperinflation may love to buy into a project linked to the US dollar.

Coinbase has partnered with Circle to found CENTRE. This is an open-source technology project responsible for governing USD Coin. This organization helps USDC to act as an on-ramp from USD to USDC and they commit to financial transparency. Not only do they hold the full reserves for every USDC, but they provide monthly reports on their holdings, and follow all required licenses and regulations.

How Does USD Coin Work?

USD Coin runs on Ethereum as an ERC-20 smart contract. This means that the Ethereum blockchain itself handles all the hard work, but there’s still some effort put in by CENTRE.

The USD Coin smart contract lives at the smart contract address 0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48. There are more than 32,000 accounts with over 360,000 combined transactions at the time of writing.

The CENTRE white paper covers the technical details for USD Coin and any other future stablecoins not yet issued or even designed. While there’s nothing new about the code, CENTRE takes a unique approach to USD Coin itself.

CENTRE run an affiliate system of sorts to handle the minting of new coins. Suitable financial institutions can apply to handle funds and mint new USDCs. Once authorized, people like you and me can transfer USD to these accredited institutions, and they will, in turn, mint new USDCs. As every USD Coin gets backed by US dollars, they will have to protect these funds to follow CENTRE’s regulations.

If you want to exchange USDC back to USD, the opposite happens. The financial institution “burns” your coins, removing them from the market. They then transfer the USD funds back to your bank account from their ring-fenced reserves.

This system of minting new coins whenever someone buys in and burning them when someone cashes out means the total market supply is in a constant fluid state. In theory, there will always be people buying and selling, in roughly equal numbers, so the total supply will stay roughly the same. In reality, it may experience peaks and troughs, whereby users trade into USDC during market turmoil and trade back out when the situation improves.

Because every single USDC gets backed by a real US dollar, the potential for speculation is minimal. As you can always exchange one USDC for one dollar, it doesn’t make sense to pay more than a dollar for one USDC. If you pay $2, $5, or $10 for one USDC, you will still only get $1 for it when you cash it in. Equally, You may make a profit paying less than a dollar for one USDC, but nobody is selling at this price! This tight coupling to the dollar is what keeps the price in check.

What’s USD Coin’s Future Potential?

USD Coin has massive potential. The ability to quickly and easily convert crypto to US Dollars and back again with zero fees is a game changer. While it may not be fee-free forever, it’s looks set to continue at this rate for the short to medium term future.

Coinbase is a massive company, turning over more than $1.3 billion last year, with close to $250,000 in profit. Whether you believe their efforts are altruistic or not almost doesn’t matter. Coinbase has no reason to see this project fail—they want it to do well!

You only have to look at Tether and the controversy with that project to see that the market is crying out for a stablecoin it can rely on. Tether continues to live in the top ten of projects by market cap, despite all the accusations of fraud, shady deals, and countless other deceptions.

How to Buy USD Coin

You can buy USD Coin (USDC) using Bitcoin (BTC) or any other cryptocurrency. We will explain how you can do exactly that, but first:

Get a good wallet

You’ll need a safe place to store your USDC. Popular choices include Coinomi, Exodus, Atomic Wallet and others. As with all cryptocurrencies, exercise caution in choosing a wallet and in your security measures. Look for wallet solutions that include 2-factor authentication, which will alert you via mobile or email if someone has your password and attempts to open your wallet. Hardware wallets like Ledger are recommended. A good google search will reveal more wallet options.

Buy USD Coin with SimpleSwap

SimpleSwap is a fast and relatively anonymous cryptocurrency exchange service that allows you to exchange almost any cryptocurrency out there with USD Coin. It's very easy to use, as they require the least amount of bureaucracy compared to other exchanges.

How it works: Simply select on the left drop-down list 'Bitcoin' or any other Cryptocurrency that you own. on the right side, select USDC. Then, you will need to enter your desired USDC address, and afterwards make the payment. you will recieve your USDC shortly after.

Pros: Secure, fast, No sign-up, over 200 cryptos to trade
Cons: Does not accept fiat (normal money)
Available countries: Worldwide
Fees: 1% – 1.5%
Transfer methods: Cryptocurrency-based

Buy USD Coin on SimpleSwap

Conclusion

USD Coin (USDC) provides crypto traders with an unprecedented level of trust, speed, and ease to move in and out of risk-on trades in the digital asset markets. That’s why more than $1 billion of USDC was issued in its first year alone-making it the fastest-growing stablecoin in the world. Also, USD Coin falls into the first, fiat-collateralized coins category, and is a centralized stablecoin. In general, all the projects within the same category work in a similar fashion but have some key differences. The more outstanding ones are Tether (USDT), known for refusing to conduct a genuinely transparent audit, and Digix Gold (DGX), whose value is pegged to gold.

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