{"id":13363,"date":"2023-06-04T09:48:46","date_gmt":"2023-06-04T09:48:46","guid":{"rendered":"https:\/\/www.bitnovo.com\/blog\/?p=13363"},"modified":"2025-09-10T15:19:57","modified_gmt":"2025-09-10T15:19:57","slug":"what-is-usdc-and-how-does-it-work","status":"publish","type":"post","link":"https:\/\/www.bitnovo.com\/blog\/en\/what-is-usdc-and-how-does-it-work","title":{"rendered":"What is USDC and how does it work?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Alternar tabla de contenidos\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-usdc-and-how-does-it-work\/#usdc_history\" >USDC History<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-usdc-and-how-does-it-work\/#is_usdc_a_stablecoin\" >Is USDC a stablecoin?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-usdc-and-how-does-it-work\/#how_does_usdc_work\" >How does USDC work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-usdc-and-how-does-it-work\/#relationship_between_usdc_and_ethereum\" >Relationship between USDC and Ethereum<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-usdc-and-how-does-it-work\/#advantages_and_disadvantages\" >Advantages and Disadvantages<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-usdc-and-how-does-it-work\/#advantages\" >Advantages<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-usdc-and-how-does-it-work\/#disadvantages\" >Disadvantages<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Tiempo de lectura:<\/span> <span class=\"rt-time\"> 4<\/span> <span class=\"rt-label rt-postfix\">minutos<\/span><\/span><p>In the world of cryptocurrencies we have thousands of projects. Each one offers unique features that differentiate them from the rest and make us choose one or the other. Among these projects stands out USDC, a\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/stablecoin-what-is\/\">stablecoin<\/a>\u00a0developed by\u00a0<strong>Centre and Coinbase<\/strong>. In this post we will tell you all about this coin.<\/p>\n<p>USDC was developed with the aim of competing with USDT, in order to integrate with the payment system of the companies that created it, Centre and Coinbase. Its development is based on the objective of presenting an\u00a0<strong>operating structure<\/strong>\u00a0that surpasses its counterparts in terms of transparency. Below we tell you how it works and what advantages it offers.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"usdc_history\"><\/span><strong>USDC History<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>As mentioned above, it was developed by\u00a0<strong>Circle Internet Financial and Coinbase<\/strong>, two companies regulated in the United States. The two companies joined forces to form the\u00a0<strong>Center Consortium<\/strong>.<\/p>\n<p>The first time the project became known was in May\u00a0<strong>2018<\/strong>\u00a0when Circle first announced its\u00a0<strong>launch<\/strong>. By\u00a0<strong>August<\/strong>\u00a02018,\u00a0<strong>USDC<\/strong>\u00a02.0 and new features that went along with it were introduced. The currency was finally released to the market in\u00a0<strong>September<\/strong>\u00a0of the same year when Circle started releasing\u00a0<strong>tokens<\/strong>.<\/p>\n<p>The decision to create USDC was based on the fact that\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-tether-usdt-the-complete-guide\/\">Tether<\/a>\u00a0had major operational problems, among them the currency was\u00a0<strong>slow, costly<\/strong>\u00a0to mobilize and was not prepared for the future of decentralized exchanges, since it only worked on OmniLayer and Bitcoin. This was compounded by other problems with\u00a0<strong>transparency policies<\/strong>, most notably in the lack of audits verifying that Tether (USDT) actually held backing with the dollar.<\/p>\n<p>Due to so many\u00a0<strong>problems<\/strong>, many companies decided to look for a solution that would take Tether out of the market. This is where Coinbase and its\u00a0<strong>alliance<\/strong>\u00a0with Circle came in to create Centre and make USDC the best choice of currency anchored\u00a0<strong>1:1 to the dollar<\/strong>.<\/p>\n<div id=\"image_1515169592\" class=\"img has-hover x md-x lg-x y md-y lg-y\">\n<div class=\"img-inner dark\"><img fetchpriority=\"high\" decoding=\"async\" class=\"attachment-large size-large lazyloaded\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/09\/Qu%C3%A9-es-USDC1.jpeg\" sizes=\"(max-width: 768px) 100vw, 768px\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/09\/Qu\u00e9-es-USDC1.jpeg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/09\/Qu\u00e9-es-USDC1-300x205.jpeg 300w\" alt=\"Qu\u00e9-es-USDC\" width=\"768\" height=\"526\" data-srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/09\/Qu\u00e9-es-USDC1.jpeg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/09\/Qu\u00e9-es-USDC1-300x205.jpeg 300w\" data-src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/09\/Qu\u00e9-es-USDC1.jpeg\" data-sizes=\"(max-width: 768px) 100vw, 768px\" \/><\/div>\n<\/div>\n<h2><span class=\"ez-toc-section\" id=\"is_usdc_a_stablecoin\"><\/span><strong>Is USDC a stablecoin?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>According to the\u00a0<strong>European Central Bank<\/strong>\u00a0<strong>(ECB)<\/strong>, stablecoins are digital units of value that differ from existing currencies. Each stablecoin has stabilization tools with the aim of\u00a0<strong>minimizing fluctuation<\/strong>\u00a0in its price against other currencies or groups of currencies.<\/p>\n<p>Stablecoin\u2019s main function is to be an instrument that\u00a0<strong>traders<\/strong>\u00a0use in cryptocurrencies to get out of\u00a0<strong>volatile markets<\/strong>. In addition, Stablecoins also perform a function in\u00a0<strong>cross-border<\/strong>\u00a0trading, for example, following Bitcoin as the<strong>\u00a0first use case<\/strong>.<\/p>\n<p>The USDC tokens issued are fully\u00a0<strong>backed<\/strong>\u00a0by a pool of\u00a0<strong>US dollars<\/strong>. The independent accounting firm,\u00a0<strong>Grant Thornton LLP Circle<\/strong>\u00a0is responsible for creating\u00a0<strong>reports<\/strong>\u00a0to corroborate that this is indeed the case and Circle is audited on a regular basis.<\/p>\n<div id=\"image_1395793329\" class=\"img has-hover x md-x lg-x y md-y lg-y\">\n<div class=\"img-inner dark\"><img decoding=\"async\" class=\"attachment-large size-large lazyloaded\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/09\/Qu%C3%A9-es-USDC.jpeg\" sizes=\"(max-width: 768px) 100vw, 768px\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/09\/Qu\u00e9-es-USDC.jpeg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/09\/Qu\u00e9-es-USDC-300x205.jpeg 300w\" alt=\"Qu\u00e9-es-USDC\" width=\"768\" height=\"526\" data-srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/09\/Qu\u00e9-es-USDC.jpeg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/09\/Qu\u00e9-es-USDC-300x205.jpeg 300w\" data-src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/09\/Qu\u00e9-es-USDC.jpeg\" data-sizes=\"(max-width: 768px) 100vw, 768px\" \/><\/div>\n<\/div>\n<h2><span class=\"ez-toc-section\" id=\"how_does_usdc_work\"><\/span><strong>How does USDC work?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The first thing to know is that, being a currency pegged<strong>\u00a01:1 to the dollar<\/strong>,\u00a0<strong>it has no issuance limit<\/strong>. Issuance depends on dollar\u00a0<strong>deposits<\/strong>\u00a0in accounts protected by Centre.<\/p>\n<p>Subsequently smart contracts are enabled to create the same amount of USDC deposited in dollars. Once the\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-a-smart-contract\/\">smart contract<\/a>\u00a0is created the USDCs are deposited in the ETH\u00a0<strong>address<\/strong>\u00a0where the buyer\u2019s USDCs will be\u00a0<strong>stored<\/strong>.<\/p>\n<p>When a<strong>\u00a0final withdrawal<\/strong>\u00a0of USDC funds from the token\u2019s smart contract is intended, a process called\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-token-burning\/\">token burning<\/a>\u00a0is used. This means that when a user decides to\u00a0<strong>make a withdrawal<\/strong>\u00a0for example 100 USDC to take them to a bank, the 100 USDC will be withdrawn from Centre\u2019s accounts to\u00a0<strong>make actual withdrawal<\/strong>.<\/p>\n<p>The 100 USDC is then\u00a0<strong>burned<\/strong>, with the goal of balancing what is on the blockchain with what is in the bank accounts. This ensures that, at all times, there is a\u00a0<strong>1:1 backing<\/strong>\u00a0with dollars for each currency within USDC.<\/p>\n<p>The platform allows its users to perform four\u00a0<strong>basic operations<\/strong>. These are to\u00a0<strong>tokenizing<\/strong>\u00a0the US dollar, employing USDC to\u00a0<strong>withdraw<\/strong>\u00a0cash, making\u00a0<strong>transfers<\/strong>\u00a0to an ERC-20 compliant\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-ethereum-eth-and-how-does-it-work\/\">Ethereum<\/a>\u00a0address, and making\u00a0<strong>deposits<\/strong>\u00a0from an external Ethereum wallet address.<\/p>\n<p>On the other hand, the\u00a0<strong>purchase<\/strong>\u00a0process is\u00a0<strong>very simple<\/strong>. USDC can be purchased at any\u00a0<strong>regulated exchange house<\/strong>. Moreover, as USDC is an\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-an-erc-20-token\/\">ERC-20<\/a>\u00a0standard token, we can use it in any application that supports this standard. Circle does not charge any kind of\u00a0<strong>commission<\/strong>\u00a0to USDC users for the use of the currency or for its\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-tokenization-or-tokenization-process-quick-guide\/\">tokenization<\/a>. However, it should be noted that we do have to pay a\u00a0<strong>$50<\/strong>\u00a0fee for both fake bank transfers and rejected transfers.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"relationship_between_usdc_and_ethereum\"><\/span><strong>Relationship between USDC and Ethereum<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>As we already know, USDC is both a\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/stablecoin-what-is\/\">stablecoin<\/a>\u00a0and a token created on the Ethereum network. Even if the value of\u00a0<strong>Ether<\/strong>\u00a0varies, USDC will retain its value regardless. Having been created on the Ethereum\u00a0<strong>blockchain<\/strong>\u00a0it is\u00a0<strong>compatible<\/strong>\u00a0with ERC-20 tokens. This operation is intended to support\u00a0<strong>fast USDC transfers<\/strong>\u00a0on the Ethereum network.<\/p>\n<p>USDC uses the<strong>\u00a0security of the Ethereum blockchain<\/strong>\u00a0and uses its technology in smart contracts and its high\u00a0<strong>support among developers<\/strong>. For these reasons its developers decided to create it on the Ethereum network. This means that two Ethereum\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-bitcoin-wallet-is\/\">wallets<\/a>\u00a0can\u00a0<strong>send and receive<\/strong>\u00a0any amount of USDC at any time and from anywhere in the world.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"advantages_and_disadvantages\"><\/span><strong>Advantages and Disadvantages<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Like everything else, USDC has advantages and disadvantages that characterize it. Here are some of the most important ones:<\/p>\n<h3><span class=\"ez-toc-section\" id=\"advantages\"><\/span>Advantages<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li aria-level=\"1\"><b>Instant transfers.\u00a0<\/b>USDC allows you to issue instant, secure, global transfers at a low cost.<\/li>\n<li aria-level=\"1\"><b>Stable.\u00a0<\/b>The price never varies due to its 1:1 parity with the USD.<\/li>\n<li aria-level=\"1\"><b><a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-are-altcoins\/\">Altcoin<\/a>\u00a0trading operations.\u00a0<\/b>We can carry out relatively stable altcoins trading operations and cryptocurrency management.<\/li>\n<li aria-level=\"1\"><b>Haven\u00a0<\/b>for investment in cryptocurrencies.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"disadvantages\"><\/span>Disadvantages<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li aria-level=\"1\"><b>Stable price.\u00a0<\/b>Just as its stability represents an advantage, it may represent a disadvantage by not increasing or decreasing its price. Therefore, large increases cannot be expected in the future.<\/li>\n<li aria-level=\"1\">Rather than functioning as an investment, its operation is focused solely on improving the\u00a0<strong>convenience of transactions<\/strong>.<\/li>\n<li aria-level=\"1\">Unlike other stablecoins such as\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-dai-the-complete-guide\/\">DAI<\/a>\u00a0or Dollar On Chain (DoC), USDC has a higher degree of\u00a0<strong>centralization<\/strong>.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p><span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Tiempo de lectura:<\/span> <span class=\"rt-time\"> 4<\/span> <span class=\"rt-label rt-postfix\">minutos<\/span><\/span>In the world of cryptocurrencies we have thousands of projects. Each one offers unique features that differentiate them from the rest and make us choose one or the other. Among these projects stands out USDC, a\u00a0stablecoin\u00a0developed by\u00a0Centre and Coinbase. In this post we will tell you all about this coin. USDC was developed with the [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":13372,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[165],"tags":[],"class_list":["post-13363","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrencies"],"_links":{"self":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts\/13363","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/comments?post=13363"}],"version-history":[{"count":2,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts\/13363\/revisions"}],"predecessor-version":[{"id":24546,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts\/13363\/revisions\/24546"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/media\/13372"}],"wp:attachment":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/media?parent=13363"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/categories?post=13363"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/tags?post=13363"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}