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Stablecoin

USD Coin is one of the most popular stablecoins, but what is it and how does it work? Bybit Learn takes a look in this beginner's guide.

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Cryptocurrencies are known for their high level of volatility, as their prices may skyrocket or dramatically drop in a matter of a few hours, let alone days and weeks. Under such circumstances, a solution is required to keep a coin’s price stable while providing users with all the other perks of decentralized payment options.

In this guide, we’re going to review such solutions with a special focus on USD Coin (USDC), a stablecoin issued by 

 Consortium, LLC, consisting of Circle and Coinbase.

 as “digital units of value that differ from existing forms of currencies and rely on a set of stabilization tools to minimize fluctuations in their price against a currency or basket thereof.” 

Stablecoins are a digital representation of 

 on blockchains, developed to mimic the price of fiat using a stabilization mechanism. This type of cryptocurrency has a stable price, so users can always redeem a single coin for $1 (or for any other currency to which they’re pegged). Stablecoins can also be an instrument for traders to switch to a more stable digital asset when cryptocurrency markets are volatile. 

With the maintenance of a stable rate, regardless of market fluctuations, stablecoins are a financial tool that’s useful for the protection of capital and profits during periods of intense drawdowns. Also, the capability to transfer funds across exchanges without the need to convert them to fiat helps asset holders stay within the cryptocurrency ecosystem. Thus, they’re protected from negative consequences that can arise in some jurisdictions.

Stablecoins are a good solution for unregulated exchanges that don’t provide conversion to fiat currencies. The scope of their application has also been extended to customers with restricted access to foreign currencies. They’re faster and more cost-effective than fiat money. Payments are settled within a minute, as a rule, depending upon the underlying blockchain. Most stablecoins reside on the Ethereum platform. 

The challenges for the widespread adoption of stablecoins include 

 compliance and regulatory uncertainty. The benefits include features such as reduced cost, improved interoperability and speed. 

USDC is a stablecoin pegged to the U.S. dollar, backed by U.S. dollars held in reserve. The white paper for the USDC stablecoin says that it was developed for beginners who want to enter the world of cryptocurrencies safely and without high costs. 

The governments of different countries often resort to a method called quantitative easing, or QE, which implies the issuance of a new supply of money by central banks globally. Acting in this way, they take politically motivated measures to reach certain goals and save certain beneficiaries from collapse, which would harm the economy. QE can, however, cause a range of undesirable consequences, such as inflation or deflation, as well as create favorable conditions for the crypto revolution that’s currently forming the global financial landscape. 

All these changes are actively supported by tech-savvy users, throughout the world, who have become active participants of the cryptocurrency ecosystem. However, there’s still much to do regarding the widespread adoption of this technology. People who are interested in cryptocurrencies may still prefer using traditional money systems, due to security concerns. Factors keeping them away from cryptocurrencies include: 

1. Sophisticated systems employed by different blockchains

The UI and functionalities offered by cryptocurrencies are usually so complicated that only technically skilled customers know how to operate with them. USDC was designed to facilitate the onboarding process.

2. The volatility of the cryptocurrency market 

Cryptocurrencies exhibit excessive volatility, and sudden changes in the price of an asset may be off-putting. Therefore, stablecoins attract beginners looking for a reliable store of value. This is a way to avoid the inherent price volatility of cryptocurrencies, as the essence of a stablecoin is to be an equivalent of fiat currency. As for USDC, its value is equivalent to one U.S. dollar, and its price is kept stable. 

The Centre Consortium introduced the USDC stablecoin as a means of trying to solve these issues and to remove obstacles on the way to widespread cryptocurrency adoption. 

In September 2018, Circle announced the release of a fiat-backed stablecoin, USDC. Previously, Gemini and 

 had already announced stablecoins developed by their platforms. Circle designed USD Coin in cooperation with BITMAIN, a leading Bitcoin hardware mining manufacturer. It’s worth noting that BITMAIN 

 conducted by Circle in May 2018. The company presented USDC as a more regulated alternative to other cryptocurrencies.

In October 2018, USDC became the first stablecoin that was listed on the then-biggest trading platform, Coinbase. Circle and Coinbase then formed a joint venture known as the Centre Consortium to develop the underlying technology of USDC and to govern it.

USDC was listed on Coinbase in October 2018, and in November 2018 Binance added it to its listing, helping to bootstrap the liquidity of the stablecoin quickly. The popularity of the USD crypto coin increased even more after it became available for trading in over 80 countries. 

This explosive growth followed amidst the reality of the coronavirus pandemic, when people started using USDC as a 

 against fiat currencies. In addition, the development of the decentralized finance (

) sector helped to drive a massive amount of traffic to USDC. Innovative features such as 

 contributed to its growing popularity. This stablecoin has become one of the leading digital assets, with amounts deposited on different DeFi platforms. By 2021, the 

 of USDC exceeded 9 billion after having 

 in 2020, which resulted in its becoming known as the fastest-growing stablecoin in the market. 

In August 2022, Bybit announced its partnership with Circle to promote the use and growth of USDC by providing users with a range of USDC products, such as 

. To make transactions even easier for its customers all over the world, Bybit allows instant auto-conversions between USD & USDC (as well as other Circle-issued stablecoins). 

As of Mar 8, 2023, the circulating supply of USDC is close to 43.5 billion. The future is likely to continue to be positive with the maturity of the infrastructure around 

In August 2020, the Centre Consortium unveiled the 

. USDC 2.0 has advanced functionality for digital wallets and other services that support stablecoins. Previously, USDC holders and holders of other Ethereum-based tokens were forced to pay a commission to process transactions. At the same time, customers must keep ETH in accounts to pay for the 

. According to the developers, this was a barrier to mass adoption. 

To remove this barrier, Centre has integrated a gasless 

 feature into USDC. This allows wallet developers to pay commissions on behalf of a client or charge fees directly in USDC tokens, rather than in ETH. The platform’s team developed a public USDC 

 to integrate the support. Developers can provide this service on their own, or a third-party service can be used to pay the associated fees.

The Centre Consortium team believes that gas-free sends will significantly expand USDC’s capabilities in payments, peer-to-peer transactions and e-commerce. The update is fully compatible with previous versions of the protocol. This means that USDC 2.0 doesn’t affect wallets, exchanges or applications that are already integrated with USDC.

 standard) enable a tokenization process that includes the following steps:

A reverse process is required when the customer wants to convert stablecoins for U.S. dollars. After sending a petition to the issuer of the USDC, the smart contract is used again for the exchange. 

USDC is an ERC-20 token that creates payment, lending, investing and trading possibilities. The ecosystem grows with the addition of other tokens and tokenization of goods and services, while the smart contract facilities become the fundamental building blocks of value exchange. The open-source framework developed by the Centre Consortium team enabled the interaction of fiat money with smart contracts, thus providing the possibility of using real-world currencies in blockchain applications. 

The USDC token is used for quick remittances and payments throughout the globe. Customers only need to have wallets and internet access to take advantage of uncensorable interoperable transactions. It’s possible to send large amounts to any location at a low fee. Since it’s a matter of minutes, this type of cryptocurrency asset is irreplaceable for holders. Apart from almost instant settlement, the benefits include round-the-clock availability, irreversibility and lower counterparty risks. 

In comparison with fiat currencies, USDC offers a wide range of uses, including higher leveraged trading and low-cost and secure transactions. The asset can also be used in the DeFi sector when buying cryptocurrency products in 

With this cryptocurrency asset, banking becomes available for the unbanked. It is often regarded as an alternative to traditional finance that brings the democratization process to the international financial system via blockchain technologies. 

Transparency of USDC is guaranteed due to their regulation and full support by U.S. institutional bodies. The issuers of USDC issuers are obliged to deliver transparency to customers. 

The stablecoins developed by Centre Consortium — USDC and Euro Coin — are issued by regulated, licensed financial institutions that maintain full reserves of the equivalent fiat currency. The USDC reserves are kept in a special bank account that is monitored and regularly audited. You can find 

The combination of cryptocurrency properties and a guarantee of USDC’s value granted by leading cryptocurrency giants (Coinbase, Circle and Bybit) contributes to the adoption of USDC in the world. 

The transparency of USDC is highly assessed by experts, especially after the reputations of Tether and Bitfinex were compromised by the investigation initiated by the New York Attorney General’s office. However, it didn’t blemish the reputation of stablecoins. On the contrary, this case emphasized the need for a legitimate and regulated stablecoin. 

Sign up for a Bybit account, or log in to your existing Bybit account to buy stablecoins via the 

. Select USDC through the drop-down box, choose a preferred fiat currency, then go to your cart and check out with your preferred payment method. Upon any successful purchases, the USDC should reflect in your Spot Account within five minutes. Alternatively, you may also purchase USDT directly using your credit or debit card via the One-Click Buy portal and then convert the purchased USDT to USDC via the 

Select a preferred advertiser with your ideal USDC price listed on the 

, then proceed with the selected payment method. The purchased coins should reflect in the asset wallet once the seller has successfully released the coins.

Enjoy competitive P2P trading prices for purchases, with 0% trading fees and multiple payment methods. Users can buy and sell USDC with local currencies to choose from, such as HKD, IDR, JPY, MYR, PHP, RUB and UAH.

When USDC gained popularity in 2020, users started storing their USDC in personal wallets. Since USDC is powered by Ethereum, there are many ways to store the asset, with the two basic types being either ERC-20–compatible wallets or hardware wallets. 

Any Ethereum wallet can be used for this purpose, for example Atomic Wallet, Coinbase Wallet, MyEtherWallet, Coinomi, AlphaWallet, MetaMask, BitGo and others. As for hardware wallets, the Ledger wallet is the most secure option. 

Bybit has recently introduced its latest 

 campaign with events for you to enjoy additional yields and rewards. 

Looking to trade USDC? This is the best time to do so. Enjoy zero fees on all USDC Spot pairs and stablecoin pairs. This promotion will be available until further notice.

? The USDC Party campaign allows you to earn up to 30% APY when you stake USDC on 

. Simply stake up to 1,200 USDC any time from now till March 14, 2023 at 11:59 UTC, and you’ll be able to start earning yield. By Day 31, you’ll receive your yield and principal in your Bybit Earn Account.

Event 3: Extra Yield for USDC Liquidity Pools

In celebration of the campaign, Bybit has ramped up the yields of USDC Liquidity Pools with an additional 10,000 USDC in rewards. If you have an abundance of USDC, consider providing liquidity to the three USDC Liquidity Pools — BTC/USDC, ETH/USDC and BIT/USDC — to earn additional yield from now till March 16, 2023 at 10:00AM UTC. 

For more information regarding the events, visit the 

While Bitcoin’s currently high volatility makes the future of its mass adoption for daily payments questionable, there are high hopes that stablecoins such as USD Coin have a chance to change the situation. This stablecoin is a great solution, with many possible use cases and a bright future.

A Beginner’s Guide: What Is USD Coin (USDC) and How Does It Work?

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