Algorand, the company behind the homonymous blockchain, has announced the integration of the USDC stablecoin.
Excited to see the fastest-growing stablecoin leveraging Algorand technology to enable real-world use cases across the financial industry! https://t.co/pD6Dsx5DCg
— Algorand (@Algorand) June 24, 2020
It is worth mentioning that the USDC stablecoin was launched on the Ethereum (ETH) blockchain and was born from the collaboration between Circle and Coinbase. As can be deduced from the name, it has the US dollar as its underlying, so 1 USDC is equivalent to 1 USD.
A crypto or stablecoin, in this case, is usually based on a protocol and this makes it a bit difficult to move because it is not possible to make cross-chain transactions. Alternatively, it is possible to create the same asset but on the new blockchain, an example of this case is Tether, the most famous and used stablecoin, which is based on different protocols and on as many blockchains.
Therefore the choice of USDC is precisely to create a new asset on Algorand and take advantage of this blockchain to reduce both the costs for fees, which are much lower and the speed that even in this case is really impressive when compared to the reference blockchain: Ethereum.
In addition, this will allow moving funds and converting the deposits of users who have a Circle Business Account and who take advantage of the APIs, so they are able to move funds directly on the blockchain and thus take advantage from that point of view.
Please note that the USDC stablecoin has more than 2.5 billion capitalization and a volume of over $50 billion of transactions, showing that it is still used and this is also evident from the data. In recent months and before Covid-19, 940 million dollars have been deposited, a growth that the CEO of Circle, Jeremy Allaire, remarked:
“Growth in mainstream financial use cases is driving more demand for high-throughput payments and finance-optimized blockchain infrastructure,” said Jeremy Allaire, co-founder and CEO of Circle. “The combination of USDC and Circle Platform Services with the Algorand blockchain will create a foundation for developing a wide range of scalable, secure and compliant financial applications.
Algorand’s COO has also been enthusiastic about the collaboration that will also lead to payments between the two blockchains in the future, expected in Q3 2020:
“As more financial institutions and enterprises look to build decentralized financial applications, they need a well-suited infrastructure and a compliant, regulated, and widely accepted stablecoin,” said Fangfang Chen, COO of the Algorand Foundation. “We are excited to partner with Circle to provide financial institutions with the tools they need to leverage the unique benefits of USDC and offer enterprise-grade solutions to build real-world use cases”.
Note that this is not the first stablecoin that we find on Algorand, as a couple of months ago Tether launched its stablecoin and it should be mentioned that this asset has all the functions of asset management, including the ability to freeze the funds of any address at any time and withdraw them, so although these can be useful functions in case of errors, as has already happened in the past, it could be a potential problem if the management ended up in the wrong hands or by mistake all the funds were drained.
At this point, we can see how once again this blockchain is always going further and is making important partnerships, such as the one in insurance, the one with Chainalysis, as well as the gaming world with the first game AlgoNim and chess.