USD Coin USDC White Paper

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Hello and welcome to this blog post about USD Coin USDC White Paper. I am very excited to know that you are interested in this amazing technology, you will be going to amazed by the incredible potential of the blockchain.

There is a lot to learn about this futuristic tech, lets get started to dive into the USD Coin USDC white paper and start to leverage it to build a more secure and trusted ecosystem for Industry 4.0 applications.

The aim of this blog post is to help you quickly understand about the philosophy behind the USD Coin (USDC).

I can ensue you that, you will be able to understand every bits and pieces related to USD Coin (USDC) after going through the USD Coin USDC white paper.

Without wasting any further time lets get started to dive right in and lets understand white paper first.

What is white paper?

A white paper is an informational, influential, well-structured document, usually published by an organization, to provide in-depth information about a specific solution.

A white paper is used to provide a good insight into the challenges for a specific problem and a proposed solution for the same.

USD Coin USDC White Paper

USD Coin USDC white paper will be going to provide you, all the information that is needed to get started with USD Coin (USDC), including the inspiration for creating, the problem it is trying to solve and the solution proposed by USD Coin USDC white paper.

Introduction

True financial interoperability requires a price stable means of value exchange. Centre’s technology for fiat-backed stablecoins brings stability to crypto. The initial implementation is USD Coin (USDC), an ERC-20 token creating possibilities in payments, lending, investing, trading and trade finance — and the ecosystem will grow as other fiat currency tokens are added.

CENTRE contracts manage the minting and the redemption/burning of stablecoins, which can be used for both the exchange and wallet interoperability use cases. Customers who on-board through a stablecoin on-ramp, such as a web application created and maintained by a licensed CENTRE token-issuing member, can transfer fiat funds into that CENTRE issuer’s account.

The issuer then executes a series of commands with the CENTRE network to verify, mint, and validate fiat tokens pegged to the value of those deposited funds. The customer can then transfer those tokens elsewhere in order to use them. Redemption follows the reverse sequence: fiat tokens are burned when a customer visits an off-ramp such as a web application maintained by a licensed CENTRE issuing member.

Upon successful verification and validation, funds from underlying fiat reserves would be transferred to the customer’s external bank. Consider this example: David is a trader on crypto exchanges, and he would like to purchase crypto assets on exchanges that do not provide direct fiat connectivity to his US bank account, and he would also like to hedge his risk exposure to the volatility of crypto assets on those exchanges by maintaining some of his holdings in the form of US dollar tokens that do not fluctuate in value.

David visits a web application created and maintained by Circle (David could also visit a web application of any other token-issuing member of CENTRE, but in this example he chooses Circle). David signs up for a customer account, which requires satisfaction of KYC requirements, and then begins the deposit process in order to turn his fiat dollars into tokenized US dollars.

The deposit process requires David to transfer US dollars from his bank account into the Circle account. David has a limit on the amount of funds he may transfer (and thus the number of US dollar tokens he may acquire) in a given time period. Once David’s transfer settles, Circle interacts with the CENTRE network to execute the process required to transmit US dollar tokens to David.

These tokens may be taken from existing reserves from Circle’s buffer of pre-funded fiat assets to increase the speed of the process; if no such reserves are available, then Circle uses the CENTRE protocols to mint new tokens. David then receives the tokens, and the value of those tokens directly corresponds to the value of the funds he deposited into the system.

David may transfer the US dollar tokens to an address in a wallet or on an exchange so that he may use them to support his trading activity. CENTRE maintains a blacklist of forbidden addresses in order to protect David and other network participants from known bad actors and to support regulatory compliance.

When David — or one of David’s counterparties who may have acquired some of the US dollar tokens — wishes to redeem the tokens and withdraw the underlying fiat dollars, then the process is executed in reverse: David returns to the issuing web application (Circle in this example), deposits the tokens into a wallet address made available to his account on that web application,and Circle executes a transfer of underlying dollar reserves into David’s registered bank account.

The tokens are withdrawn from circulation, and either placed in reserve to service future requests, or else burned/destroyed if the value of those tokens surpasses the prefunded fiat buffer maintained by Circle. This process is subject to authentication and authorization, verification, validation, and compliance similarly to the deposit sequence. Note that access to stablecoins need not be in a dedicated web application as in this example, but could also occur in a wallet, exchange, banking portal, or other product created by a licensed, compliant, token-issuing member of the CENTRE network.

White Paper Link: USD Coin USDC White Paper

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