Visa, which has one of the largest payment platforms in the world, has started trading cryptocurrencies. Americans will have the option to pay and collect in USDC.
It’s a first step towards Bitcoin, the American company Visa now accepts USDC as currency of payment in the United States. You will have noticed the subtlety, we are not talking here about the USD (the US dollar) but the USDC.
Until now, if you wanted to pay in USDC, you had to convert that amount to US Dollar or Euro first, so there were additional fees associated with the exchange. With the change of Visa, customers and sellers can now pay and collect directly in USDC for their transactions. Visa has partnered with 35 cryptocurrency platforms to enable the linking of USDC wallets. Among them, Coinbase, BlockFi or Crypto.com.
Visa is therefore a little ahead of Mastercard which has also announced similar changes, while there is also PayPal which is preparing the arrival of crypto-currencies on its platform. Visa wants to integrate Bitcoin into its means of payment, the USDC is only an important first step.
What is USDC?
Launched in 2018, USD Coin is a stable crypto jointly managed by the Circle and Coinbase platforms through the Center consortium. The USD Coin is pegged to the US dollar. Which means that 1 USDC is worth 1 US dollar. It is the second largest stablecoin in terms of market capitalization.
To talk about the USDC, you need to talk more specifically about the stablecoins. As you are no doubt aware, the fluctuation of cryptocurrencies, like Bitcoin or Ethereum, contrasts with the generally stable values of fiat currency, like the US dollar, the euro or other assets, like the gold. The values of currencies like the dollar change gradually over time, but daily changes are often larger for cryptocurrencies, where the value steadily rises and falls.
The stablecoins attempt to combat price fluctuations by tying the value of cryptocurrencies to other more stable assets – usually currencies fiat and quite often the US dollar.
How it works ? There are many stablecoins with different operations. Usually, this is the case for the USDC, the entity behind this cryptocurrency sets up a reserve of assets (US dollars for example). This is how a digital stablecoin and a real world asset are linked. The money in the reserve serves as a “collateral” for the stablecoin.