As we learned in the Practical Guide: what is a stablecoin, how and when to use it a stablecoin is a cryptocurrency whose price is always very close to 1 dollar, or in literal translation, a “stable currency”. You combine the transparency and security of the blockchain with the stability of fiat currencies, those currencies we know and use daily.
A little history
As we presented in this short video on Youtube , stablecoins arose mainly from the need for investors and cryptocurrency users to maintain their balances in fiat currencies, without the need to withdraw exchanges to their bank accounts or maintain balances on exchanges.
The first stablecoin created, the USD Tether, still remains the most traded in the world. However, due to the lack of transparency and governance, it suffers a lot of criticism and distrust from investors and users, as we can read in this Forbes article , for example.
In summary, for the creators of USD Tether, or USDT, to keep the price of stablecoin always at one dollar, they must always have one dollar as collateral in a bank account for each USDT issued. The problem is that this data is not very transparent or easily auditable and, several times throughout its existence, it has been suspected that there are not all the dollars necessary to guarantee the currency price. That is, there is no ballast.
How does the USDC come about?
The USDC is, like the USDT, a stablecoin referenced in the US dollar and executed on the Ethereum blockchain (ERC-20). It was created by a consortium of two large U.S. blockchain companies, Circle and Coinbase. The consortium is called CENTER. The project is very concerned with regulation and all members must comply with local laws where they operate.
USDC has grown a lot in adoption and is currently the second largest US dollar-backed Stablecoin in the market ($ 750 MM, behind only the Tether which is at $ 6.4 Bi).
Which stablecoin to choose?
Every day, new stablecoin projects appear, mainly linked to the US dollar. One of the main questions that investors and cryptocurrency users are currently asking themselves is "What stablecoin should I use?" The answer to this question is not so simple, but we can help with some lines of reasoning.
Safety
A first point to analyze is the security of the network being used. Currently, the vast majority of stablecoins use the same blockchain, Ethereum, and create their currencies using ERC-20 tokens. Ethereum is considered to be a very secure network, considering that it is the second largest network in the capitalization market. But it is worth paying attention if any stablecoin decides to migrate to another network, in this important aspect.
Ballast
A second point to be analyzed is precisely the quality of the ballast, its transparency and governance. Where are the assets or fiat currencies behind stablecoin based? Is there a recurring report? Is there an audit? Is there supervision from any monetary authority or regulator? It is precisely for this reason that the USDC has been gaining more adoption in the market, and still, quickly.
Where to use
A third point to look at is where you need to use stablecoin. Some exchanges accept only one stablecoin, for example. There is no point in sending USDCs to an exchange that accepts only DAI, or Tether, for example. So if your interest is to use a stablecoin to make transfers between two exchanges, before selling your cryptocurrency through a stablecoin, it is worth checking the other exchange, if it will be accepted for deposit, avoiding unnecessary transaction fees.
You can buy USDC on the Bitcoin Market platform
Following the evolution of the market and acting to offer the best products to customers, but at the same time selecting partners very well and implementing the technology in a safe way, the Bitcoin Market is launching USDC on the platform.
Why trade USDC via Bitcoin Market
Since the start of the cryptocurrency market, several exchanges and companies in the field have suffered from hacker attacks and security breaches. The recommendation of all the experts is that you keep your crypto in your own wallets whenever possible. The saying says "Not your keys, not your coins", or "You don't have your private key, the money is not yours". For this reason, when choosing the exchange to buy your crypto, choose those that have a great history in relation to security.
It's one of my favorite stable coins with nice mass adoption but I stiil think that DAI is imcomparable 😅😅