USDC (United States Dollar Coin) Investment (January, 2023)
USD Coin Investment Strategy in 2023
We would get to that in a while but, let’s just start with the basics.
What Is USD Coin (USDC)?
USDC or USD Coin is a digital Coin which has a value of $1 US Dollar. USDC is a kind of stablecoin.Stablecoins are basically cryptocurrencies whose values are directly related to some other, usually physical asset. United States Dollar Coin is designed to maintain a value of $1.
Stablecoins aren’t actually investments though, but they do have many other uses, and generous interest rates can often be earned on them. Since the launch of the USDC, it has become one of the largest stablecoins in the world and has even become the first cryptocurrency selected for settling Visa transactions.
USDC (United States Dollar Coin) basically offers the same functionality as any other stable coin in the market. It aims to maintain a value of 1 USD, and works like any other digital currency making it easily transferable between crypto wallets.
Transparency and trustworthiness are the two factors that separates United States Dollar Coin from most of its competitors.
USDC (USD Coin): Brief Origin
United States Dollar Coin was issued bya peer-to-peer payments company named Circle, and Coinbase Global, a cryptocurrency exchange.
Working methods of USDC (USD Coin)
The tokenization method of USD Coins Is a three-step process.
- An amount of money is paid to the Crypto Exchange in USD.
- The Crypto Exchange then calculates the equivalent amount of USDC token to the paid amount on the basis of it’s current value. The same as any other product like a book is bought over it’s estimated value, variable, depending upon the market’s state.
- The equivalent no. of tokens or call it, USDC are transferred to the Crypto wallet of the buyer
Pros of investing in USD Coin
- USDC or USD Coin enables people to buy and sell other cryptocurrencies without having to move fiat currency in and out of exchanges.
- USDC can be transferred 24/7 which is relatively faster than other stablecoins and cryptocurrencies
- The founder and CEO of Circle Jeremy Allaire, once said, “What makes USDC such a great product is that it’s easy to create and redeem, with seamless integration with the existing global banking system. As a result of which, the customers are able to use it as a very efficient pipe between legacy electronic dollars and digital currency dollars.”
Cons of investing in USD Coin
- Depending upon the state of the Ethereum network currently, transaction fees can be high
- Withdrawing charges of USDC from exchanges can also be high.
Is USDC ( USD Coin) a Good Investment in 2023?
Purchasing USDC does not generate any returns for investors, as it is intended to be a stablecoin. So, the advantage of the USDC token is more about its usage, as there isn’t an expected appreciation in the valueof this coin.
Investing in USDC is the same as saving your money behind the living room picture frame as there exist no such interest rate to its value. Only actively investing, lending the Coins can get you to make something out of those Coin tokens.
That said, there are some methods to ear profits off of USDC tokens. You can build a passive revenue with USDC by lending it to other crypto investors. A few lending programs pay you interest for lending your USDC. Again, the universal objective of USDC is to help businesses and individuals transfer currency in a faster, efficient and more economical way by eliminating the requirement for traditional intermediaries like banks and providing a stable crypto.
Also, taking a look at USDC’s past performance as recorded on December 30th, 2022.
USDC lost 0.12% of its value today, 0.19% of its value in the past week, but has grown in value in the past month by 1.34% and by 10.40% in the past year.
However, these rates won’t make sense until and unless your tokens are lent to avail profitable amounts from.
We believe that you should only invest in USDC if you have good patience and are well equipped with diverse methods of tracking. This would help you understand the lending procedures and keep a track of your investments reducing the risk of facing a loss.
Can Investing in USDC make you a secondary Income?
One can make a passive income with USDC by lending it, and that’s one of the reasons most investors buy it. There are many crypto lending programs available that pay interest for lending crypto.
Since these are lending programs, they’re not risk-free. There exists a possibility of losing funds if borrowers back out on their loans or if the lending platform goes through financial difficulties.
Another popular alternative is USDC staking on decentralized crypto exchanges. Almost all of these platforms would allow you to deposit an equal amount of USDC and another cryptocurrency into liquidity pools that are used to facilitate crypto trading. However, this passive income method carries a risk that is much greater, enabling the chance to earn a larger return