Circle and the CENTRE open source consortium introduced recently a service to tokenize US dollars, called USD Coin (USDC), with support from more than 30 partners across the industry, including exchanges, protocols, platforms, applications and wallets. These partners will play an essential role in forming a broad and inclusive ecosystem around USDC, effectively pushing forward an open standards model for fiat money on the internet that has potential to bring about significant innovation in financial infrastructure. USDC is being launched by CENTRE while Circle is the first commercial issuer of USDC. There are Pros and Contras about the service, stated by crypto experts.
Nicholas Merten (Datadash, USA): That is really interesting!
– There’s been a whole gold rush, – claims the expert. – I think at this moment for a lot of companies not only just to keep and maintain people on their exchanges, but along with that as well to just kind of tap into this market of making a fiat backed cryptocurrency ever since the fears of Tether have raised we’ve seen true USD, we’ve seen the stable USD coin come as well as Circle diving into this space. So I think it’s just providing a plethora of entries for liquidity.
Datadash declares that this is very important not only to have fiat gateways, but to have something that’s going to again provide opportunities for people to easily trade between cryptocurrencies and something that could retain the dollar value. Investors and traders might want to keep their wealth in between trading cryptocurrencies. Expert claims:
– We want these markets to be liquid, we want it to be easy for people to exchange fiat for cryptocurrencies so I knew this is really good to see. There’s not too much details, but I think the important detail is where this is going to be trading. We can already know obviously that this is going to be trading at Poloniex (Polish crypto exchange – editor). Which I think politics is gonna get a big revamp over time if they keep on making really steady developments on. Right now politics is kind of dead and ones really trading on it it’s got a lot of older altcoins on it. But this is also gonna be on Huobi, OKCoin, KuCoin so on a variety of some of the Asian exchanges. And some exchanges that retail traders train on in the US – a KuCoin as well as potentially on a digital wallet in exchange for Coinbase. That is really interesting!
Chris Coney (The Cryptoverse, UK): An instant profit opportunity
Expert from UK Chris Coney suggest to think about stable coins trading against each other:
– Think about stable coins being traded against each other. This is something I thought about we’ve got this trend towards stable coins. Nowadays it seems to be the hot thing. Gemini dollar (GUSD) launched recently, now we’ve got the USDC. And they sort of fluctuate approximately dollar worth of value because they’re backed by a dollar held by some sort of institution. Gemini exchange in the case of the Gemini dollar and Circle in terms of Circles fiat backing. So they go to like a dollar in one cent yada-yada-yada. But check this out: because they are all supposed to be pegged a dollar and fluctuate if they deviate too far from a one-dollar valuation and they’re on the same Exchange – that’s an instant profit opportunity isn’t it? Say if the USDC was suddenly worth cents and the Gemini dollar was a dollar and one cent or you could just trade between the two and it flattens out – that gap immediately right the spread between the two would be flattened instantaneously. It could even be exploited by high-frequency trading bots. So I think that’s a good thing that actually helps the peg right even though they are backed by a real dollar. It still doesn’t stop them slightly going above or below one dollar, but the fact we’re having multiple stable coins that can be traded via arbitrage between each other. Gonna make them even more stable and keep that volatility down to almost nothing.
From the authors
At the CENTRE consortium level, there is a commitment to ensuring USDC is used in a safe manner. Therefore leading blockchain AML, forensics and risk management firms such as Chainalysis, Elliptic, Coinfirm and Coral are enthusiastic about working with CENTRE and its issuers to provide support for USDC. And as for store USDC, and share with others or use it to interact with the various services the authors claims:
– We are happy to see custodian, software and hardware wallet products such as BitGo, Cobo, Coinbase Wallet, CoolWallet S, Elph, imToken, Ledger, Status, Trust (and soon many others) providing native support for USDC.
And from the side of devs -Sid Coelho-Prabhu, Coinbase Wallet Product Lead, says:
– Stablecoins will form a cornerstone of the decentralized web and help bring cryptocurrencies to millions of users, moving us another step closer to an open financial system. Starting today, Coinbase Wallet will support the storage of USD Coin (USDC), as well as the use of USDC in decentralized apps.
As it is stated in Circle Blog , there are other use cases where USDC has the potential to be useful, from all sorts of payments and commerce (P2P payments, merchant payments, B2B payments, cross border payments, consuming virtual goods and other non-fungible tokens, Internet-of-Things payments), to further applications within financial contracts such as derivatives contracts, insurance contracts and security tokens.