"A price-stable currency, such as a token pegged to the United States dollar, is critical for enabling mainstream adoption of blockchain technology for payments as well as for supporting maturation in financial contracts built on smart contract platforms, such as tokenized securities, loans, and property".
"Today we announced the pending availability of tokenized United States dollar coins supported by developments in the CENTRE open source framework and by a new partnership with Bitmain, which is also leading a $110 million Series E equity investment in Circle".
Along with this new investment round, Circle has also announced that it will be launching a new stable cryptocurrency, Circle USD (USDC) which would be pegged to the US Dollar enabling businesses and consumers to transfer values more efficiently. The investment round also included other notable names like Accel and Blockchain Capital.
The new cryptocurrency to be launched by Circle, a company owned by Goldman Sachs (NYSE:GS), represents the first virtual coin released by a major financial institution.
The ultimate goal for circle is to use this technology elsewhere, with the company now reportedly looking towards Europe and the Euro to analyse the possibilities of producing a FIAT/Crypto hybrid across a number of countries on the continent. Circle said each token, called the (USDC) Circle USD Coin, will be backed by the reserves of US dollars.
So for now, the USD Coin doesn't seem to have any practical goal beyond introducing a stable and maybe accessible cryptocurrency.
Itself based on the Ethereum ERC-20 token standard, USDC will be available to anyone who has completed a KYC process. While this sort of goes against the whole point of decentralized and distributed cryptocurrencies like bitcoin, Goldman Sachs and Circle hope to bring some stability to the cryptocurrency market, which has crashed and rebounded an exhausting number of times this year alone.
The idea is for exchanges to redeem USDC directly for USA dollars (although they may charge a fee to do so), and for other creators to issue tokens based on the world's other fiat currencies.
USD-C will mostly be a replacement for Tether which is now still unaudited and pretty shady.
"Transacting in currencies which fluctuate with extreme volatility creates complexity and fragile settlement contracts, especially when compared to transacting in "tokenized fiat money" or fiat-pegged crypto assets", Circle's blog notes. Yes, technically this new digital coin made by Circle and Tether essentially do the same thing, but what makes them stand apart is their platforms. Circle has raised a total of $250 million in venture capital since Sean Neville and Jeremy Allaire (pictured above) founded the company in 2013.
Is Circle making the right moves? This protocol could let you send money to an Alipay user with your Square Cash balance.