A Beginner's Guide to USDC and its Use Cases
USDC is one of the largest stablecoins in the cryptocurrency market, consistently ranking among the top digital assets by market capitalisation. With a strong market presence and substantial daily trading volume, USDC has become a preferred choice for many in the crypto community.
But what are USDC's use cases for regular users and crypto natives? Let’s find out.
What Is USDC?
Launched in September 2018, USDC is a digital dollar, that combines the power and stability of US Dollars with the speed of the internet. You can use USDC just like you would any dollar – to buy and trade assets, to send and receive payments, or to save your money.. USDC is issued by Circle, a financial technology company headquartered in the United States. In the United States, Circle is regulated as a money transmitter, and holds those licences in all U.S. jurisdictions where required. USDC is pegged to the USD, and it achieves price stability with reserves held in highly liquid cash and cash-equivalent assets.
Simply put, USDC is a digital dollar backed 100% by physical USD collateral that enables holders to avoid hyperinflation and the high volatility of cryptocurrencies, as well as take advantage of various other use cases (we will talk about these later). USDC can be redeemed 1:1 for USD and is available natively on 15 different blockchains, such as Ethereum, Solana, and Avalanche.
For most of its existence, USDC was managed by the Centre Consortium, whose founding members are Circle and Coinbase. However, Centre announced its shutdown in 2023 due to regulatory developments, transferring the stablecoin's sole governance and issuance to Circle.
As a stablecoin, USDC also resides on the blockchain - like other digital assets. You can store it in your wallet, send and receive it via peer-to-peer (P2P) transfers without intermediaries, and track transactions transparently on the public ledger. The only major difference between USDC and other (non-stable) cryptocurrencies is that it maintains a stable value by tracking the USD's price.
What Are USDC's Use Cases?
USDC's use cases include serving as a stable store of value, facilitating fast and low-cost cross-border transfers, and making it easier to use advanced crypto-based financial services.
Store of Value
USDC is fully backed by highly liquid cash and cash-equivalent assets, enabling holders to redeem it 1:1 for USD and use it as a store of value that maintains a stable price over time. This is one of the key utilities of the stablecoin, which allows holders to protect their wealth against hyperinflationary fiat currencies and the volatility of the crypto market.
Source: CoinMarketCap
In terms of price stability, the stablecoin has maintained a value very close to $1 throughout its nearly six years of history. It has deviated from its target value only in a few instances and for very brief periods.
As a global financial technology company, Circle is built to the highest US regulatory standards, promoting trust between the issuer and USDC users.
Cross-Border Transfers
USDC can be used to send value across borders in a few seconds and at a fraction of the costs of conventional cross-border transfers, enabling low-cost payments around the world that can settle in seconds
Unlike traditional finance (TradFi), no intermediaries or other third parties participate in USDC transactions. Instead, the stablecoin is transferred directly between users with P2P payments.
With crypto, there are no geographical restrictions for transactions. And the same goes for USDC. In fact, you can use the stablecoin to make purchases and send remittances to family and friends anywhere in the world with 24/7/365 accessibility.
New Financial Opportunities
Besides sending remittances and purchasing products and services, you can unlock new financial opportunities by leveraging USDC such as:
Save money
Borrow funds
Lend assets to others
Participate in decentralised autonomous organisations (DAOs)
Earn yield in decentralised finance (DeFi)
Trade non-fungible tokens (NFTs)
Access crypto decentralised applications (dApps)
From exchanges likeVALR and DeFi protocols to digital banking apps and eCommerce platforms, a wide range of financial products and services have integrated USDC into their ecosystems.
Crypto Market Access
Available natively in 15 blockchain networks, USDC is interoperable by apps powered by the Cross-Chain Transfer Protocol (CCTP). CCTP is a permissionless on-chain utility that fosters USDC transfers between chains via native minting and burning to unify liquidity and simplify user experience.
Due to the above, users can move liquidity between blockchains without bridge risks, and with the ability to quickly access new crypto market opportunities.
Moreover, crypto investors don't necessarily have to sell their cryptocurrency holdings for fiat and cash out their earnings to their bank accounts. Instead, they can remain in the digital asset ecosystem without worrying about market volatility by swapping their coins for USDC.
Decentralised Finance (DeFi)
DeFi is among the top use cases for USDC, where protocols have integrated the stablecoin to facilitate trading, borrowing, lending and other activities within their respective ecosystems. With deep liquidity and optimal price execution, it provides new ways for holders to earn yield via decentralised finance dApps.
At the same time, USDC enables DeFi protocols to remain decentralised, reduce regulatory risks, and eliminate counterparty risks by replacing fiat currencies with stablecoins on their platforms.
How to Buy and Use USDC on VALR?
From serving as a store of value and facilitating cross-border transfers to unlocking new financial opportunities, earning DeFi yield, and accessing the crypto market seamlessly, USDC fulfils a wide range of use cases in the cryptocurrency space and beyond.
At VALR, you can easily get started and take advantage of these use cases by depositing US dollars via wire transfer, which will be automatically converted to USDC.
VALR also supports USDC deposits and withdrawals on multiple networks, including Ethereum, Solana, and Avalanche. For more details, check out our guide on USDC Deposits and Withdrawals on VALR.
Once you have USDC in your VALR wallet, you can start trading a variety of USDC spot trading pairs and margin pairs, as well as trade USDC with various cryptocurrencies via VALR’s Simple Buy/Sell feature.
Looking to gain exposure to USDC? Head to VALR to get started!
Frequently Asked Questions (FAQ)
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Like other digital assets and stablecoins, USDC is stored in crypto wallets. With VALR, you have a secure and easy way to store your USDC, ensuring your assets are safe and accessible whenever you need them.
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USDC is a digital dollar. It combines the power and stability of US Dollars with the speed of the internet. You can use USDC just like you would any dollar – to buy and trade assets, to send and receive payments, or to save your money.
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Unlike dollars, USDC is a form of cryptocurrency. Because it’s blockchain-based, USDC moves at the speed of the internet, near-instantly and without the high fees associated with traditional finance. But unlike most forms of crypto, USDC is backed by highly liquid cash and cash-equivalent assets.
Risk Disclosure
Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate.
VALR (Pty) Ltd is a licensed financial services provider (FSP #53308).
Disclaimer: Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
