Two of the largest companies in the cryptocurrency space, Circle and Coinbase, have joined forces to establish their own stablecoin, the USDC, or USD Coin. The tech startup companies are calling their joint venture the ‘CENTRE Consortium,’ which has its own website already.
Circle and Coinbase: CENTRE
Both Circle and Coinbase released their own individual blog posts about the joint venture and the launching of the stablecoin yesterday. The CENTRE Consortium is said to be aimed at “establishing a standard for fiat on the internet and providing a governance framework and network for the global, mainstream adoption of fiat stablecoins.”
Both companies share a common vision of an open global financial system that is built on digital tokens, with a blockchain-based infrastructure.
In May, Circle launched the USD Coin, and yesterday, Coinbase announced the stablecoin would be made available on its platform on both Coinbase Pro and Coinbase.com. This is the first time the major US cryptocurrency exchange is supporting a stablecoin. USDC will be made live on Coinbase Pro in the coming weeks but is already supported on the Coinbase Wallet.
A stablecoin, such as USDC or Tether (USDT), is meant to represent a single US dollar. It is a 1:1 representation of the greenback, but it is built and held on the Ethereum blockchain. Each of these USD coins is collateralized by a corresponding US dollar, held in accounts subject to a regular public reporting of reserves, Coinbase said.
Are Stablecoins Actually Stable?
Other stablecoins in the past have proved to be less than stable. Earlier this month, Tether plummeted below 90 cents after reports spread that Bitfinex was involved in manipulation of the token’s price. Critics of the stablecoin have now called into question if USDT is truly backed by the equivalent amount of USD.
It remains unknown at this time if the same would occur with CENTRE’s USDC were Circle or Coinbase to run into bad news.
Featured Image: centre.io
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Author: Chelsea Roh