Stablecoins are cryptocurrencies tethered to an external reference point, such as the USD, to decrease price swings. Most stablecoins are backed by gold or cash to maintain the peg.
Why is USD Stablecoins popular?
USD stablecoins constant value allows traders to enter and exit volatile cryptocurrencies. Most stablecoins are backed by the U.S. Dollar (USD), the world’s reserve currency and utilized in 90% of FX trade.
Before the advent of stablecoins, traders had to convert their crypto assets into fiat currency and pay a fee. Later, such cool services appeared as Trastra, with which you can send and receive euros to/from anyone in the Single European Payment Area (SEPA)
Some exchanges provide USD wallets, but only in particular states or countries. If a trader’s area isn’t accessible, cashing out USD to a US bank account may take up to five business days, while a SEPA transfer to an EU bank account still takes at least one. Fiat withdrawals and deposits need time and costs.
Stablecoins have consistent pricing, thus a trader might invest their winnings in USDT and USDC while waiting for the next opportunity. Stablecoins are a good method to create passive income since traders demand them.
Stablecoins are trendy. Since January 2021, both demand and supply for stablecoins have skyrocketed. All stablecoins will be worth over $151 billion by January 2022. Which USD-backed stablecoin you acquire depends on the blockchain and applications you’ll use. Binance USD (BUSD) may be utilized outside the Binance ecosystem, but much of its value derives from its many Binance users and 90 trading pairings.
At the moment, USDT (Tether) and USDC (USD Coin) are the most popular stablecoins on the market. Together, they have more than 80% of all stablecoins in circulation. Even though USDT still has more than half of all stablecoins, USDC is catching up and now makes up nearly 30% of all stablecoins.
What’s the USDC?
Now that we’ve talked about USDT, it’s time to learn more about USDC (USD Coin) in the cryptocurrency world. Circle and Coinbase created USDC in 2018, and it has the same value as the U.S. dollar. Unlike USDT, which can only be issued by Tether, USDC can be issued and redeemed by other Center Network members.
Commercial companies that issue USDC must meet requirements for licensing, compliance, accounting, technology, and operations. To ensure that USDC is always backed by one dollar, issuers have to back all tokens with fiat reserves and show proof of reserves every month.
Based on Circle’s most recent reserve account report from December 2021, the total number of USDC stablecoins in circulation is $42.416 billion, and the same amount of USD (and USD-denominated assets) is held in reserve. At first, USDC said that it was backed by dollars in a bank account, but they recently changed their claim to include assets with the same fair value. Their website says that there are now more than 50 billion USDC in circulation. This is another sign that the USDC stablecoin is becoming more and more popular.
As seen in the breakdown of their reserve account from October 2021, Circle now holds 100% cash and cash equivalents. This includes US dollar deposits at banks and short-term, highly liquid investments that can be turned into set amounts of cash and have maturity of less than or equal to 90 days from the date of purchase. This is in line with the US generally accepted accounting principles (GAAP).
If you are looking for one card to convert usdc to euro and for all your purchases, please visit the Trustra website and find out how to get one.
