How To Invest in USDC

by Sandip Das from
How To Invest in USDC

Read this detailed guide ‘How to Invest in USDC’ before investing in USDC. The crypto market is hot and happening again in 2024 after a bear market in 2022 and a consolidation in 2023. However, despite the euphoria, conducting thorough research on a cryptocurrency before investing is advisable. This USDC investing guide sheds light on all aspects of USDC including how USDC works and how to invest in USDC.

USDC belongs to a group of cryptocurrencies called stablecoins. The value of a typical stablecoin is pegged to real-world assets to keep their value stable. USDC and USDT are two leading stablecoins both pegged to the US dollar. Currently, USDC is the 7th most-valued cryptocurrency with a market capitalization of more than $28 billion (as of 1st March 2024). A stablecoin like USDC or USDT provides secure and cost-effective ways for users to participate in the world of cryptocurrencies. Before delving deeper into USDC, let’s first learn a bit more about stablecoins.

1. What is a stablecoin?

Cryptocurrencies are highly volatile compared to other assets like stock or gold. It’s pretty common for a crypto’s price to go up or down by 10 to 20% within a couple of hours. Because of high volatility, it’s very difficult to use crypto for day-to-day transactions like making payments. Stablecoins address this problem.

Stablecoins are designed to have a stable value through several mechanisms. Most commonly stablecoins have their value pegged to other assets like the US dollar, gold, government securities, or even another cryptocurrency. Then there are algorithmic stablecoins, the values of which are kept stable using algorithmic adjustments and smart contracts.

The idea behind stablecoins is to eliminate crypto’s volatility while leveraging blockchain’s security, speed, and anonymity. Stablecoins make crypto more reliable as a medium of exchange. USDC and USDT are two of the most common and most highly valued stablecoins. Now, let’s look at what is USD Coin (USDC) and how USDC works.

2. What is USDC?

USDC, initially called USD Coin, is a stablecoin introduced by Centre Consortium, a collaboration between crypto exchange Coinbase and financial technology (FinTech) firm Circle. USDC is pegged to the US dollar (this is why USDC is named so) on a one-to-one basis to maintain a constant value of $1/USDC.

According to the Circle website, "USDC is a digital dollar backed 100% by highly liquid cash and cash-equivalent assets and is always redeemable 1:1 for US dollars.” This stability of value is the key factor that separates stablecoins like USDC from other cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH).

When introduced, USDC was based on the Ethereum blockchain following its ERC-20 standard. Note that ERC-20 is one of the most common protocols for many crypto tokens. USDC is now interoperable across several blockchains including Algorand, Arbitrum, Avalanche, Base, Ethereum, Flow, Hedera, NEAR, Noble, OP Mainnet, Polkadot, Polygon PoS, Solana, Stellar, and TRON.

Learn more about blockchains by reading our "Blockchains Explained" guide. You are sure to discover some new information and tips which will be useful for your crypto trading journey.

Furthermore, an interesting aspect of USDC is that it’s not created through mining but through smart contracts. New USDC tokens are created through smart contracts when users deposit US dollars. Next, when you want to redeem US dollars, USDC coins are permanently destroyed. This process ensures that USDC coins maintain their fixed value of $1.

3. What is USDC used for?

Being a stablecoin in the volatile crypto landscape, USDC has several solid use cases. You can use USDC to make payments, lend or borrow, invest, or trade. Since USDC is backed by US dollar reserves, it gives a safe and secure way for many investors to use crypto for day-to-day financial transactions. Note that traditional crypto assets such as Bitcoin or Ethereum are not backed by any real asset.

You can seamlessly convert other cryptos into USDC and USDC to other cryptos depending on the broader market moves. For instance, when there is a downturn in the broader market, you can convert other cryptos into USDC to protect your capital. This can safeguard your capital against potential losses.

So, what can you buy with USDC? USDC provides a stable digital currency to buy goods and services from merchants accepting it. You can also buy other crypto assets from crypto exchanges using USDC.

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A stable value and swift transactions make USDC a cost-effective and reliable mechanism of international remittances and payments. Moreover, USDC can be a great medium of exchange within blockchain economies such as Decentralized Finance (DeFi) applications. USDC also promotes transparency in the crypto universe as the reserves backing USDC are held by regulated financial institutions and are subject to regular audits.

Before continuing, we would like to remind you to visit the JohnnyBitcoin homepage after reading this article. Why? Because if you wish to get the latest crypto exchange referral codes and reviews, there is no better place! Plus, our expert team provide lots of useful tips throughout our articles to help your crypto trading journey. Now, let’s look at what is better USDC or USDT?

4. USDC vs. USDT

When we talk about stablecoins, the two most common names that ring bells are USDC and USDT. Even though they have similar-sounding names and both are stablecoins pegged to the US dollar, there are certain distinctions between these two. So, what is the difference between USDC and USDT, and which one is better? Let’s explore.

Launched in 2014, USDT is the first-ever stablecoin. By market capitalization, USDC is the largest stablecoin and the 3rd largest cryptocurrency (just after BTC and ETH) with a market value of about $98.7 billion (as of 1st March 2024). In comparison, USDC is the second most-valued stablecoin and the 7th most-valued cryptocurrency with a market capitalization of $28.7 billion (as of 1st March 2024). USDT was launched by a company named Tether. The terms ‘USDT’ and ‘Tether’ are often used interchangeably. To know more about how USDT works, here is our detailed USDT guide.

USDC’s reserves mainly consist of Cash and US government treasuries whereas that of USDT consists of more diverse elements like cash, US government treasuries, secured loans, precious metals, Bitcoins, and corporate bonds.

So, which is better, USDC or USDT?. The answer depends on how we are going to use these coins. While used as a medium of exchange, both coins provide almost the same utility as their value remains fixed at $1 or very close to it. However, while using it as a store of value, USDC may be a better choice for many compared to USDT.

USDT had some controversies regarding its reserve and pegging mechanism. USDC has been relatively less controversial (but not completely free from controversies). Note that even though USDC and USDT promise to maintain a stable value at $1, the stability has not been always perfect as the values of these stablecoins have fluctuated around the target value of $1. Also, remember that there are some other stablecoins like TrueUSD (TUSD) and Binance USD (BUSD). Now, let’s answer an important question - Should You invest in USDC in 2024?

5. Should you buy USDC in 2024?

Since the value of USDC is supposed to remain fixed, the question is why should you buy USDC in 2024? Despite price stability, there are several reasons for investing in USDC.

For instance, USDC provides an important hedge against high volatility in crypto. You can convert your other cryptos into USDC during market downturns or extremely high volatility. Non-US investors can get exposure to the US dollar by holding USDC as the value of USDC is pegged to the US dollar. USDC also provides a fiat alternative to buying cryptocurrencies and protecting the value of their capital. Now, let’s look at how to invest in USDC in 2024.

6. How to buy USDC

Investing in USDC in 2024 is convenient and easy. The most suitable way of buying USDC is to register with a crypto exchange offering USDC. Since USDC is a major stablecoin and one of the most valued cryptocurrencies, most reputed crypto exchanges offer USDC. You can buy USDC in 2024 with fiat currencies like the US dollar as well as through other cryptocurrencies.

So, where can you buy USDC?. Based on factors like security, ease of use, technical superiority, and trading fees, the top crypto exchanges for USDC are:

  1. Tapbit (use our Tapbit Referral Code for exclusive bonuses)
  2. KuCoin
  3. Bybit
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Note that once you buy USDC from any of these exchanges, you need a reliable crypto wallet to store USDC. Read our Hot vs. Cold wallet guide to help you choose the best way to store your crypto safely. Moreover, our guide provides you with some top reviewed exchanges and promotions for storing your crypto securely.

7. How to invest in USDC - FAQs

7.1 🛒 How to buy USDC assets in 2024?

USDC is one of the most valued cryptocurrencies. You can buy USDC from leading crypto exchanges like Bybit, KyCoin, and BTSE.

7.2 🍁 How to buy USD Coin in Canada?

You can buy USDC in Canada using any reputed crypto exchange offering USDC. Some of the most suitable crypto exchanges for USDC are BTSE, Bybit, and KuCoin.

7.3 💲 What is the USDC price prediction?

USDC is a stablecoin. Therefore, its price is supposed to remain fixed at $1.

7.4 🔐 How to store USDC?

You need a safe and secure crypto wallet (hot or cold wallet) to store USDC. This ‘How To Invest in USDC’ guide explains everything you need to know about USDC.

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