How to Buy USDC

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Robert has reported for a variety of international publications including the Associated Press, The Guardian, Vice, and Decrypt. Current areas of interest include the political economy of technology, cryptocurrencies, and privacy. Robert has a Bachelor of Science from UCL, and a Master's degree from the University of Oxford's Internet Institute.

USDC, or USD Coin, is a stablecoin pegged to the US dollar. Its primary purpose is to let crypto investors hold cryptocurrencies in a comparatively stable currency: the US dollar, which is the world’s de facto reserve currency. But how can you get your hands on it? In this guide, we’ll teach you all you need to know about buying USDC.

What the USDC coin is and how it works

USDC is a stablecoin—a cryptocurrency that maintains a peg to another asset. In this case, that asset is the US dollar. The USDC stablecoin is the result of a joint venture from Coinbase, the crypto exchange giant, and Circle, a crypto payments company. They created USDC through a consortium called Centre in 2018.

The coin maintains its peg by accepting vast reserves of US dollars, which the company either holds or sells for high-quality American debt—strong guarantees that can easily be redeemed for money. As of March 2022, there are about $50 billion USDC coins in circulation, up from about $500 million at the start of January 2020. These tokens soared in popularity because of the rise of decentralized finance, a volatile space. Its high, unpredictable yields created demand from traders for a stable asset.

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How to buy USDC in Canada

In the rest of this guide, we’ll explain how you can get your hands on USDC, and teach you the basic ways to spend it.

Method 1: Centralized crypto exchanges

A lot of crypto purists believe that centralized cryptocurrency exchanges undermine the point of cryptocurrencies, since these exchanges custody any funds deposited to them. Nevertheless, crypto exchanges remain the most popular venue for trading cryptocurrencies because of the speed and cheapness of their proprietary matching engines. If you check the most popular markets for USDC, centralized exchanges dominate the top trading pairs—Uniswap, a decentralized exchange, is the third most popular trading venue by volume after centralized rivals, according to data from CoinMarketCap.

When you buy crypto from an exchange, you don’t have to bother with slow or expensive transaction speeds of the blockchains on which coins or tokens are based, and you can neatly sidestep issues of compatibility—it’s generally difficult to trade assets from one blockchain on another. This is highly relevant for USDC, which operates on several blockchains at once. After starting life on Ethereum, Centre ported USDC to Solana, Avalanche, Algorand, and others. However, it remains difficult to swap USDC coins on blockchains without using a centralized exchange.

So, how do you buy USDC crypto from a centralized exchange? To buy USDC on an exchange, you’ll either buy it directly for fiat currencies (like the Canadian or US dollar, the British pound and so on) or with another cryptocurrency. One of the most popular trading pairs for USDC is USDT, also known as Tether. This is because Tether operates on different blockchains than USDC, has a different risk profile (it’s backed by different assets and enforces different know-your-customer rules) and because USDC is more popular in decentralized protocols.

Other popular cryptocurrency pairings include Ethereum and Bitcoin. f you want to buy USDC with another cryptocurrency, like Bitcoin, you will need to buy that cryptocurrency first. The easiest way to do this on a regular crypto exchange is to deposit a fiat currency, then use that fiat currency to buy a coin that is paired with USDC. Using the “pro” version on an exchange will cut down on fees, usually by converting your trade from a high flat fee (expensive for small trades) to a percentage of your trade (cheap for small trades).

To sign up for an exchange, you’ll have to pass know-your-customer (KYC) checks, which require you to submit identification documents, like a passport, driving license, and/or a selfie.

Method 2: Decentralized exchanges

Although centralized exchanges are fast and cheap, one disadvantage is that they are custodial, meaning that you do not control any funds you have deposited within the exchange—if the exchange gets hacked, there might not be an awful lot you can do to retrieve your funds. Second, they are not permissionless or composable—a decentralized finance protocol cannot interact with a centralized exchange to, say, take out a loan and automatically invest funds in another DeFi protocol.

Decentralized, crypto-native exchanges solve these two problems by offering users permissionless access to decentralized markets. Unlike quick matching engines, trades take place on the blockchain. And unlike the peer-to-peer structure popular with centralized crypto exchanges, decentralized exchanges function as automatic market makers—huge pools of cryptocurrency pairings that traders can swap in and out of.

USDC is very popular in the world of decentralized finance, far more so than its main rival, USDT. As a result, there is a lot of liquidity for USDC on top decentralized exchanges (or DEXes for short). The most popular trading venue for USDC is called Uniswap, but USDC is on many blockchains and can be bought from the DEXes native to that network.

Here’s how to buy USDC on Uniswap, Ethereum’s most popular decentralized exchange. First, you need to connect a Web3 wallet (like MetaMask) to the exchange by hitting the “connect wallet” on the site. You don’t need to sign up for an account on Uniswap—MetaMask replaces that.

Ensure that your MetaMask wallet is filled with ETH—to pay for the transaction itself—and another Ethereum-based token (like the ERC-20 variant of Ethereum, Wrapped Ethereum (WETH)) with which you propose to buy USDC. You can buy these tokens from Uniswap for other cryptocurrencies, or from a centralized exchange for fiat (regular money).

To provide an example, we’ll convert 0.2 ETH, or $591 at the time of writing, to the USDC token. The first thing we’ll notice is that there is some “slippage”—the chance that the price will change in the time it takes to process the trade.

Ethereum wants us to pay a network fee of $19.34, payable in ETH, to process the transaction. This fee depends on how congested the network is—at times of peak activity, it could cost several hundred dollars to process a trade, even one worth a fraction of a penny. Then hit “swap,” “confirm swap,” and then confirm the transaction within MetaMask. This cost is far higher than on a centralized exchange.

Each DEX is different. Some protocols, like Curve Finance, are designed for swapping stablecoins with minimal slippage. 1Inch is designed to reroute your trade across different DeFi protocols to try and reduce the transaction cost.

The process of trading is the same: Connect an in-browser USDC wallet to the site and confirm transactions from your wallet. Within DeFi, you never have to create an account or provide identification.

Uniswap is not the only decentralized venue where you can buy USDC, and other blockchains that support USDC, like Avalanche and Solana, are usually far cheaper and quicker. Trading on those blockchains works exactly the same: You connect MetaMask or another in-browser wallet to the decentralized exchange (like Trader Joe on Avalanche or within the Solflare wallet on Solana) and swap tokens.

Note that if you buy USDC on Solana, you’re buying the Solana variant of the token. To convert it to another variant of USDC, like the Ethereum or Algorand variant, you can either send it to a DeFi bridge or, easier, send it to a crypto exchange from your Solana wallet and then send the USDC to the Ethereum address from the exchange. This way the exchange will handle the conversion on your behalf, but you’ll still have to pay a withdrawal fee set by the exchange.

How to spend your USDC

Now you’ve bought your USDC, what to do with it?

The most obvious solution is to sell it for volatile cryptocurrencies—indeed, many traders buy USDC to escape a crashing market and to protect the value of their cryptocurrency holdings. Once the market swells up again, they sell their stable USDC to profit from rising prices. USDC should always be worth $1, so USD coin price predictions aren’t useful here.

Alternatively, there’s always the option of staking USDC within a DeFi protocol, like Yearn Finance’s vaults, or within a centralized lending platform, like BlockFi or Celsius, to earn interest or yields on your holdings (although regulatory restrictions have prevented BlockFi from accepting new customers in the US).

Frequently Asked Questions

USDC is a cryptocurrency pegged to the value of the US dollar. This is what is known as a stablecoin—other examples of stablecoins include Tether, DAI and UST. USDC is the second most popular US dollar stablecoin after Tether. Some people think that stablecoins are essentially crypto versions of money markets: like a money market fund, USDC’s peg to the US dollar is maintained by vast reserves of cash and US debt.

USDC’s peg to the US dollar is propped up by huge reserves of cash and high-quality, short-term US debt. This means that if the US debt market collapses, USDC’s peg to the US dollar could falter. USDC’s reserves are attested by accounting firm Grant Thornton. Separate to financial and control risks, USDC could be regulated out of existence by governments who prefer US dollars to be under the control of central banks. Note that although the USDC smart contracts are robust, the DeFi protocol where you’ve staked your USDC might not be stable.

You can buy USDC from a decentralized or centralized crypto exchange using either cryptocurrency or cash. Note that decentralized crypto exchanges do not accept cash, however, and usually only accept cryptocurrencies native to that particular blockchains—Uniswap for Ethereum (or sidechains like Arbitrum and Optimism), Orca for Solana, and so on. USDC operates on several blockchains, so if you’re buying from a DEX, be sure to buy USDC with the relevant cryptocurrency. On centralized exchanges, the greater challenge is finding one that operates in your province.

Last Updated May 9, 2022

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