Una of the majors stablecoin or stablecoins of the crypto world is USDC. And it is not for less, since this project has become a benchmark of its kind around the world. But how did this project start? What's your objective? How does it stand in front of Tether (USDT)? Well, this and more you will be able to know below.
USDC, the arrival of a new stablecoin
Stablecoin or stablecoins are nothing new in the crypto world. The arrival of Tether (USDT) marked a before and after in this regard, allowing fast transactions between those who use cryptocurrencies such as Bitcoin o Ethereum, and want to make quick changes to a currency "Less volatile" on exchanges.
However, Tether had serious problems on his shoulders. In principle, it was slow, expensive to mobilize and was not suitable for the future of decentralized exchanges because it worked on OmniLayer and Bitcoin (although a version of USDT on Ethereum has been around since September 2017).
Additionally, USDT has transparency policies that many people see as unacceptable, especially regarding audits that verify that Tether indeed has in its possession the expected 1: 1 backing for each USDT token issued.. On the other hand, the issuance of Tether tokens is only given to companies or private parties that meet the acquisition requirements, and only in amounts greater than $ 100 USD. These weaknesses led various industry giants to find a way to cope and take the emerging market that followed from their hands.
This is how Coinbase and Circle joined their efforts and created Center, a company that would be in charge of managing USDC. Thus, USDC would be a new stablecoin pegged 1: 1 with the dollar, which is actually a ERC-20 token running on Ethereum (ETH).
Although Ethereum is not extremely faster than Bitcoin, certainly its scalability and the way its commissions are managed made the existence of this new stablecoin much more agile and economical. Not only that, because USDC was an ERC-20 token, it could be easily integrated into the DApps y DEX created on Ethereum, something that USDT could not do at the time.
The birth of USDC was completed on September 26, 2018, at which time the Smart contract of USDC and began its circulation in the crypto space. Additionally, USDC from the beginning guaranteed a wide development access around this cryptocurrency, something that we can see in this GitHub.
A currency without emission limits
Since USDC is a currency anchored 1: 1 to the dollar and, this fiat currency does not have an issuance limit (nor will it ever have) the USDC smart contract is special, since the issuance of USDC is infinite.
The issuance of new currencies only responds to dollar deposits in Center's protected accounts, which then enable the smart contract to create the same amount of USDC within the smart contract and release it to an ETH address where the buyer's USDC will be stored. Yes, it is the same model that Tether follows, for example, where the bank deposit in dollars is transformed into USDT for the buyer.
This form of issuance can certainly generate all kinds of suspicions for those who support the transparency and security of cryptocurrencies, but many institutional actors trust this system, and this is what has led USDC to become one of the great stablecoins of the world. crypto world. Either way, trust is what gives cryptocurrencies strength, and as long as USDC is trusted it will be used in the crypto space.
For its part, the definitive withdrawal of USDC funds from the smart contract of this token, leads to the burning of USDC tokens. This is that, if a user withdraws 1000 USDC and takes them from the blockchain to a bank, those 1000 USDC are withdrawn from the Center accounts to make an effective withdrawal, and with it the 1000 USDC token is burned, balancing what exists in the blockchain with what exists in bank accounts. Thus, it is guaranteed that, at all times, there is a 1: 1 support for each currency within USDC.
Center, and its vital role for USDC
Now, Center has the following objectives with respect to USDC:
- Provide R&D capacity (Research and Development), support and maintenance of the Center open source software project. This includes managing the open source code repository, facilitating and supporting external developers to participate in the project.
- Provide the business development, governance and compliance functions for the Center network, including the business development necessary to usher in new nodes on the network for consumer, merchant, payment controller and other wallets.
- Provide optional certification testing, trust authority, services, compliance reviews, and due diligence programs to enable node owners to choose to test, maintain and disseminate high degrees of trust to meet legal obligations and increase reputation and presence among other network participants.
- Contribute engineering services and support to the underlying distributed ledger infrastructure (such as Ethereum) on which Center operates.
Transparency and trust within USDC
Center is a company created jointly by Coinbase and Circle, all of which are registered in the United States, and not only that, they are under the strongest regulations in the country as they are located in New York. This means that they are registered as a registered money services company (MSB) with the endorsement of the Financial Crimes Enforcement Network (FinCEN) of the United States Department of the Treasury, and maintains money transmission licenses (or equivalents) in 48 states and territories of that country. It also has a license New York BitLicense, and endorsement by Financial Conduct Authority from United Kingdom.
In addition to this, the Center periodically publishes transparency reports on the status of USDC and its operations, which you can download from here website.