Stablecoin Links to Value of US$
Cryptocurrency traders, as well as institutions, will now be able to carry out overseas trading and other cross-border transactions using a cryptocurrency named “stablecoin”. The altcoin’s creator is Boston-based Circle. The new cryptocurrency’s value is equal to that of the U.S. dollar and goes by the nickname “USD Coin”, or USDC. The investment banking giant Goldman Sachs is backing the initiative by the Boston-based crypto finance company.
One of the notable things about stablecoin is that it is designed for its value to not fluctuate to the degree of traditional cryptocurrencies. The cryptocurrency will have a 1:1 correspondence with the US Dollar. As news.Bicoin.com reports, the new stablecoins are “ERC20 tokens backed one to one by fiat US dollars held at US-located and FDIC-insured banks.” Dubbed Bitlicense, the financial regulator intends to ensure safe products for investors in the New York marketplace.
A lot of traders are seeking to invest in assets, which are more regulatory-compliant but less volatile. Apparently, the USDC has received immense support and has continued to become popular in the digital currency sphere. Many more companies, wallets, and exchanges are coming out in support of the USD Coin. It is an open standard model of operation according to the founder and CEO of Circle Jeremy Allaire.
He says, “What makes us different is that it is launched on an open sourced framework, meaning other companies can issue it (assuming they are a member of the CENTRE consortium).”
USDC Joins Growing List of Stablecoins
For a very long time, the controversial tether (USDT) has remained the dominant USD-backed cryptocurrency token. However, in a world, which envisions to use digital assets and payments for transactions, it is likely to lose its market position. Other major cryptocurrency wallet services, which are in support of USDC include imToken, Ledger, and BitGo. Another is a cryptocurrency payment processor BitPay. According to its CEO, Stephen Pair, BitPay has supported open source crypto communities and blockchain initiatives by all means.
The chairman of broker OSL, a Hong Kong-based cryptocurrency, Dave Chapman also confirms that the demand for stablecoins is growing by the day.
Stablecoins Claim Broader Applications
It is not all about its increasing popularity. Unlike traditional cryptocurrencies, the USDC claims to offer investors greater utility. It is easy to use stablecoins to short cryptocurrencies without necessarily having to cash them out. The user does not have to go through the traditional financial institutions. It is possible to transfer USDC to other entities because it is like sending any other token.
The availability of the USDC is a plus for hundreds of people living in countries facing hyperinflation or chronic inflation. They can convert the stablecoins into saving, which means they do not have to cross countries to open bank accounts. USDC’s regulation is under the New York BitLicense. Thus, it will be necessary to have policies, which will govern the use of stablecoins. Accordingly, one of the rules will involve sending of monthly audited reports.