In the world of cryptocurrency stability is hard to come by. Given that the crypto-sphere is a new market volatility is to be expected, meaning that values tend to be erratic. Stablecoins were established to beat that volatility, including the incredibly popular USD Coin (USDC.) But USD Coin stands apart for not only being a reliable stablecoin, but for also fully embracing regulations and transparency. This guide will outline how to Buy USD Coin, as well as cover how the crypto works on a fundamental level.
Before any smart crypto trader sets out to buy USD Coin, they should first get familiar with what exactly it is. A stablecoin pegs its value to a fiat currency, in this case the United States dollar. The decision to do so means that no matter what is happening elsewhere in the market, a USD Coin should always be worth almost exactly that of the fiat dollar. Thus traders can purchase USD Coin comfortable in the knowledge that what USDC is worth today, it should still be worth in a week, month, or even a year.
The stability makes USD Coin perfect for traders that seek a safe haven from fluctuating markets. Though, the stability also means that USD Coin can’t be considered a good speculative investment, simply because the balanced value forbids price gain.
On the other hand USD Coin can be considered the safest way to store crypto, or can otherwise be thought of as a way to comfortably trade for other cryptos. To put it simply; many traders buy USD Coin first before engaging in trading. To trade USD Coin is, essentially, to buy cryptos with the United States dollar itself.
How can a crypto currency maintain a stable value? It’s a question that many traders have asked, confused at how stability exists in an otherwise volatile landscape. The answer is that USD Coin is backed by equivalent value. This means that every USDC issued has its value covered by other assets, all of which have been legally verified.
So, even if Bitcoin (BTC,) for example, losses value, USD Coin will maintain its value. The value may not always be exact to the United States dollar, but will be near enough that USDC can be seen as a sound equivalent.
Tether, another stablecoin, was flagged for not declaring what assets or dollar equivalents it used to back its currency. USD Coin, on the other hand, was quick to make its own assets known to the public. Centre, the organisation responsible for USD Coin, has declared that the currency is backed by fiat cash and short-duration U.S Treasuries.
What’s more is that the reserves are audited monthly by highly respected accounting firm Grant Thornton. The firm publishes reports on the reserves on a monthly basis, a step that adds an immense amount of credibility to the currency.
These transparency measures not only makes USD Coin amongst the most transparent cryptos, they theoretically also make the value of USDC reliable. To buy USD Coin is to be backed be officially verified reserves; a benefit that speaks for itself.
Let’s now take a look at how to buy USD Coin in a few simple steps. The steps include signing up for a wallet, choosing an exchange and activating an account, depositing funds, making a purchase, and withdrawing the acquired crypto.
It is best to think of crypto as a physical commodity. It is entirely digital, of course, but seeing it as physical helps understand how it should be treated. For example, anyone looking to buy USD Coin needs to store it in a safe location. Blockchain technology works on a carefully thought out, extremely secure network system. This means that crypto can move from digital location to digital location, or may even be withdrawn from the system to an exterior storage device.
Hence, before making a purchase a trader needs to decide on a storage method. Online wallets are the most commonly used method, with a number of great options available. Signing up for an electronic wallet takes just a few moments.
Alternatively external storage is also available. Electronic devices, similar in design to USB sticks, allow for crypto to be withdrawn entirely. With the crypto on an external device the currency is completely safe from any sort of cybercrime. Best of all, these electronic wallets are fairly cheap and affordable, providing the ultimate storage solution for long term investors.
To buy USD Coin an exchange or broker will have to be selected, each with their own pros and cons. Some platforms may come with specific features and services, including competitive fees or other special promotions. The biggest factor to keep in mind, however, is that some exchanges are centralised and others are not.
A big draw of cryptocurrency is the decentralised aspect, but there more to consider than just being separate from traditional banks. Centralised exchanges put security first, requiring that all traders complete the Know Your Customer (KYC) process. KYC is designed to keep out criminal elements, including those that would try to scam others, or even those looking to use crypto for money laundering. That is why, essentially, most consider centralised exchanges to be safer. If wanting to use a centralised exchange a trader will have to produce a verified identification document.
Decentralised exchanges do not require the KYC process to be completed, meaning that anonymous trading is possible. Anonymous trading does have benefits, and if a trader desires this privacy they may choose a decentralised exchange. Choosing an exchange is, of course, a matter of preference.
Every exchange will need an active account, whether centralised or decentralised. As just said, anyone signing up at a centralised exchange should have their verified identification ready.
A decentralised exchange will need only email verification before an account may be opened.
With an active account open a trader is now ready to buy USD Coin.
USD Coin can be bought with fiat currency, or it can be traded for with other crypto. Either way the funds will be needed in the exchange account. If buying with fiat currency a standard deposit will have to be made. The deposit option can be selected at the chosen exchange, after which the desired amount can be deposited. All exchanges will allow for deposits with credit card, debit card, and bank transfer. Certain exchanges will also allow deposits to be made with Apple Pay, Google Pay, and PayPal.
If wanting to trade for USD Coin with another crypto, the desired crypto will have to be transferred to this account. Assumptions are that the crypto is in a secure wallet. The option to transfer should be selected at the exchange, after which the desired kind of crypto can be indicated. The exchange will generate an address that can be used for transfer purposes.
If buying with fiat currency the process is simple. The desired amount of USD Coin is indicated and the appropriate amount of fiat currency is applied. The crypto will then be sent to the active account where it can be used as the trader prefers. The trader may wish to withdraw the amount immediately, or they may wish to trade USD Coin for other cryptos.
To trade for USD Coin with another crypto the process is still relatively simple. It must first be indicated which the desired crypto is, in this case USD Coin, then the crypto being traded. Once the parameters are set the exchange services should handle the transaction quickly and easily.
Cybercrime is a challenge, of that there is no question. But exchanges do put a great deal of time and energy into security. All exchanges use advanced encryption technology, ensuring that every transaction, trade and withdrawal is secure. Even still, cybercrime does happen, meaning that traders must exercise due caution.
Additional security measures include Two Form Authentication (2FA,) as well careful management of funds. 2FA is a security method that requires an additional, short term security codes in order for an account to be accessed. A trader will be sent the code to their phone, which in turn must be entered in order for login to be successful. Enabling 2FA is essential, regardless if the intention is buy or trade USD Coin.
It is also a good idea to do research on an exchange before engaging with it. Although the vast majority of exchanges are reputable, it doesn’t hurt to check in advance.
It has already been mentioned that most crypto investors trade USD Coin, given that its stability makes it perfect for the purpose. However, it is also possible to earn passive income with the crypto. Purchased USD Coin can be lent out at a premium. Circle, the organisation responsible for the crypto, allows traders to legally lend out their USD Coin. Lending can also be done via certain wallets, such as Ledger.
It is also possible to put USD Coin into an online savings account. Cryptos, like fiat currency, earn value over time due to interest. Interestingly, USD Coin tends to earn interest even faster than traditional banks.
As to whether USD Coin is a good investment really is up to the individual. USDC is a stablecoin, and as such it does hold its value. This makes it excellent for certain specific purposes, but not for speculation trading.
Bitcoin, for example, may dramatically gain value over time, making it perfect for investment. If Bitcoin is bought low, and sold high, immediate profits can be made. The same isn’t possible with a stablecoin, given that the currency always maintains value.
But then USD Coin was never designed for speculative trading. It was, instead, designed to offer a stable anchor for broader trading. Hence, it is certainly a good buy for those that properly understand its value.
So USD Coin is a good investment in certain regards, making it well worth a spot in every diversified portfolio.
USD Coin is rapidly gaining in popularity, and certainly isn’t showing signs of slowing down. Smart traders have flocked to the crypto, and more will likely be joining the community in the future. With its commitment to transparency, its dedication to stability, and its usefulness as a trading commodity, USD Coin is taking the crypto-sphere by storm.
There is, of course, no telling what will happen to the value of other cryptos. But as far as USD Coin is concerned, it will always be a haven safe from the fluctuations. As the crypto landscape grows this is one of the currencies that will help keep it all together.
A stablecoin is a crypto that ties its value to that of a fiat currency. USD Coin is pegged to the value of the United States dollar, meaning that it will keep a close equivalent value. This means that 1 USDC, within a small margin, will always be worth a United States dollar. Stablecoins do not suffer the same price fluctuations seen with other cryptos.
Yes, USD Coin was specifically designed to work within the United States financial regulatory system.
Yes, the reserves used to back USD Coin are transparent and regularly audited. The accountancy firm Grant Thornton audits the reserves monthly, with reports posted on the public internet. This means that anyone can check for themselves that the reserves are completely above board.
USDC is specifically designed with trade in mind. Given the stable value of the currency, it is convenient to use to trade for other cryptos. With the equivalent dollar value traders can easily understand the transactions they are making, and how that value translates to fiat currency.