Circle, a payment startup company belonging to Goldman Sachs yesterday declared the launch of a new cryptocurrency named the Circle USD Coin. The USD coin is essentially the digital version of the dollar and the first cryptocurrency in the market to be launched by a major financial institution. Consumers can acquire the USD Coin by trading in with real money and with its possession, one will be able to use it for payment of a wide variety of services that accept this particular means of payment(From breakfast, snacks, to happy hour drinks among others).
The relevance of the new coin
In the current market economy, a price-stable currency (especially one that is pegged to the dollar) is necessary to allow for the adoption of modern technology such as blockchain for support and payment of financial contracts which are developed on smart contract platforms such as loans, property, and tokenized securities. The USD coin is the perfect solution to this development as it provides a full-reserve US dollar backed stable coin which allows customers to conveniently buy and use the USD Coin fiat tokens for payments as well as other transactions in the crypto market. The entire process is monitored and regulated by an open source flat stable coin framework which runs an independent oversight of the Circle’s offering.
Circle USD Coin addresses the problems of lack of operational as well as financial transparency in the existing fiat-backed approaches which have since operated in unregulated prerogatives with unestablished auditors and banking partners. The new coin offers comprehensive operational and financial transparency and operates within a controlled framework of US money jurisdictions which are enforced by well-known auditors and bank partners. It has an open membership structure where qualified Financial Institutions can participate. The Circle USD Coin is built on an open source framework, will be ERC-20 tokens minted and will only be issued and redeemed according to the network rules set by the CENTRE.
Circle is keen not to allow its new cryptocurrency to be subject to the inflation and instability that has dominated other free cryptocurrencies. It has hence gone ahead and tied the new Coin to the US dollar. “It unlocks an incredible amount of power for the dollar,” added Jeremy Allaire, the CEO of Circle. Therefore, circle customers will be required to hold $1 for every USD Coin they acquired thus keeping the price stable. This, however, goes against the decentralized and distributed cryptocurrencies ideas and hopes to finally bring a closure to instability in the crypto market which has otherwise continuously been crushing and rebounding a countless number of times.