What is USDC and how does it work?

USDC (USD Coin) is a stablecoin pegged 1:1 to the U.S. dollar. It was created to combine the stability of traditional money with the speed, openness, and programmability of blockchain technology.

Unlike volatile cryptocurrencies, USDC is designed to maintain a stable value. One USDC is always intended to equal one U.S. dollar.

In this article, we’ll explain what USDC is, how it works, who issues it, how it’s backed, and why it has become one of the most widely used digital dollars in the world.

What is USDC?

USDC is a digital dollar issued on blockchain networks. Each token is backed by real-world assets held in reserve, primarily:

• Cash held in regulated financial institutions
• Short-term U.S. Treasury bonds

This backing model is designed to ensure that USDC can be redeemed 1:1 for U.S. dollars at any time.

Who issues USDC?

USDC is issued by Circle, a regulated financial technology company based in the United States, in collaboration with Coinbase through the Centre Consortium (now managed by Circle alone).

Circle operates under U.S. financial regulations and publishes regular, third-party audited reports verifying that USDC reserves match the total supply in circulation.

• Learn the differences between USDC and USDT.

How does USDC work?

USDC operates on blockchain technology. Each time a user buys USDC, Circle issues the same amount of USDC tokens and holds an equivalent backing in U.S. dollars or U.S. Treasury bonds.

When those USDC are sold or redeemed, the tokens are removed from circulation, meaning they are “burned,” and the backing funds return to the banking system. This process ensures that there is always 1 U.S. dollar backing every USDC in circulation.

What supports its stability?

• Verified reserves: Backed by cash and U.S. Treasury bonds.
• Frequent reporting: Circle publishes regular audits and detailed analyses of its reserve composition.
• Multi-chain availability: USDC operates on several blockchain networks, including Base, Ethereum, Solana, and Polygon, among others.

What does USDC’s peg mean?

1 USDC is designed to be worth 1 U.S. dollar, allowing it to be used much like a traditional dollar in digital environments.

Why is it classified as a stablecoin?

Because its goal is not to fluctuate in value like traditional cryptocurrencies, but to maintain a stable price so it can be used reliably for payments, remittances, international transfers, trading, and savings.

Why was USDC created?

USDC was designed to solve key limitations of traditional money:

• Slow international transfers
• High banking fees
• Limited access to U.S. dollars in many countries
• Lack of transparency in legacy financial systems

By using blockchain rails, USDC enables faster, cheaper, and more accessible dollar-based transactions.

What is USDC used for?

USDC is used globally for:

• International transfers and remittances
• Digital payments and e-commerce
• Savings in digital dollars
• DeFi and on-chain finance
• Treasury management for businesses
• Payroll and contractor payments

Are USDCs safe?

USDC is considered one of the safest stablecoins due to:

• Full reserve backing
• Monthly transparency reports
• Regulation under U.S. law
• Clear redemption mechanisms

However, like all digital assets, it still carries risks related to regulation, custody, and smart contracts.

USDC vs. Other Stablecoins: Which One Should You Choose?

Choosing a stablecoin can be tricky, especially if you’re not familiar with the differences in how they’re backed, how transparent they are, and how stable they tend to be over time. While all stablecoins aim to maintain a value equivalent to 1 USD, they don’t all work the same way—or offer the same level of confidence to users.

Below, we break down the key differences between USDC, USDT, and DAI, along with the most common use cases for each.

• USDC: One of the most widely recommended options for payments, remittances, and saving. This is largely due to its clear reserve structure and the frequent, detailed reports that Circle publishes about its backing. As a result, USDC is often considered one of the most transparent stablecoins in the market.
• USDT (Tether):Thanks to its massive global trading volume, USDT is especially practical for trading, arbitrage, and fast transfers within crypto exchanges. Its liquidity makes it a go-to option for short-term movements and active trading strategies.
• DAI: Stands out for its fully decentralized approach. Instead of being backed by a company or centralized entity, DAI is collateralized by crypto assets locked into smart contracts within the MakerDAO protocol. For this reason, it’s a very popular choice within the DeFi ecosystem.

Below is a quick comparison table of the most commonly used stablecoins:

Using USDC in Everyday Life

USDC has become a practical, everyday financial tool across Latin America thanks to its stability and ease of access. These are its main real-world use cases:

1. Sending remittances without excessive fees

Traditional remittances often:

• take days to arrive,
• require multiple intermediaries,
• and apply unfavorable exchange rates.

With USDC, transfers can be completed in seconds, with a stable value and without the high fees typically associated with the traditional financial system.

2. Saving in a stable currency

In regions affected by inflation, avoiding devaluation is essential. Saving in USDC makes it possible to:

• protect purchasing power,
• keep savings in a stable asset,
• access financial products such as savings plans (like Kontigo’s Kochinitos).

3. Making international payments

USDC allows you to pay for services, freelancers, or suppliers smoothly and without relying on banks. This makes it especially attractive for global businesses that accept digital dollars as a way to simplify international payments.

4. Borderless money movement

USDC is not limited by borders or banking hours. It works independently of the traditional banking system, enabling global transfers even when banks are closed. This is especially valuable in regions with financial restrictions.

Advantages of USDC

Below is a clear, practical summary of the most relevant advantages of USDC and the key points every user should keep in mind when making informed decisions.

• Stability: Its 1:1 peg to the U.S. dollar enables everyday use similar to traditional fiat currency.
• Speed: Transactions can be completed in seconds, depending on the network used.
• Transparency: Circle regularly publishes reports detailing its reserves.
• Global reach: USDC allows you to move money across countries without the limitations of the traditional banking system.
• Compatibility: It works across hundreds of applications and digital wallets.

Who Regulates USDC and How It Is Audited

USDC is issued by Circle, a U.S.-regulated company that operates under established financial compliance frameworks, including AML, KYC, and applicable federal regulations.

Its reserves are audited by independent firms such as Deloitte. Circle publishes monthly reports detailing the composition of reserves, their liquidity, and where the funds are held.

USDC Digital Wallet Usage

If you want to use USDC without friction, apps like Kontigo allow you to open a global account in minutes, send money internationally, and save in digital dollars using MPC-grade security. Below is a step-by-step guide to using USDC:

1. Open a compatible wallet or app

It should allow you to:

• receive and send USDC,
• operate on blockchain networks such as Base or Ethereum,
• manage digital assets securely.

2. Buy USDC or fund your wallet

You can do this through:

• card payments,
• bank transfers,
• PayPal,
• crypto such as USDT or USDC,
• U.S. or European bank accounts,
• external providers like Coinbase.

3. Send or receive USDC

• All you need is a wallet address, email, or QR code, depending on the app.

4. Use or hold your USDC

You can:

• save,
• make payments,
• send it to other wallets,
• use it within decentralized applications.

USDC on Kontigo: A Simple and Secure Experience

Kontigo integrates USDC as the foundation of its financial ecosystem, making it easy for anyone to move, save, or receive money without friction. Here is how operating with Kontigo works:

1. Global account in digital dollars

Your account is based on USDC and can be used in more than 100 countries, with no barriers or complex onboarding processes.

2. MPC-based security

Your private key is split into multiple parts, and only you can reconstruct it when authorizing a transaction. This approach reduces risk and significantly enhances security. Learn more about what MPC is.

3. Multiple top-up and withdrawal methods

Pago Móvil, card payments, PSE, Bizum, PayPal, U.S. bank accounts, crypto, and many other options, so you can move your money the way you prefer.

4. Fast remittances without excessive fees

Send money to Venezuela, Mexico, Colombia, and other countries in seconds, without abusive fees or unnecessary delays.

USDC Is Redefining How Money Moves Across Latin America

USDC brings together the best of two worlds: the stability of the U.S. dollar and the speed of blockchain technology. Its transparency, ease of use, and multi-chain integration have made USDC the most widely adopted stablecoin among fintechs, businesses, and users worldwide.

If you want to send money, save, or receive international payments without friction, Kontigo makes it simple, clear, and secure, without relying on traditional banks.

Download Kontigo on iOS or Android, create your account in minutes, and discover a more modern and stable way to manage your digital dollars.

USDC Frequently Asked Questions

Where can I buy USDC?

You can buy USDC on regulated exchanges, digital wallets, and platforms that support USD Coin. You can also receive it from another wallet or convert local currency to USDC directly within compatible apps, such as Kontigo.

Is it safe to store money in USDC?

USDC is backed by cash reserves and U.S. Treasury bonds, and its reports are audited regularly. That said, your overall security depends on the wallet you use and the protection measures you apply when managing your digital assets.

How stable is USDC?

USDC is designed to maintain a 1:1 peg with the U.S. dollar, allowing it to preserve a stable value even during periods of high volatility in the crypto market. This stability is supported by Circle’s reserve model and the level of trust it maintains among users, businesses, and platforms across the ecosystem.

How much does it cost to send USDC between wallets?

The cost of sending USDC depends on the blockchain network you use. Networks like Base or Tron typically have very low fees, while others such as Ethereum can become more expensive during periods of network congestion.

Keep in mind that these fees are set by the network itself, not by the wallet.

Is USDC better than holding cash dollars?

USDC makes global transfers, digital payments, and secure storage easier without the need to carry physical cash. It does not replace cash, but it does offer advantages such as speed, lower costs, and access from any device. This makes it especially well suited for digital finance, remittances, and international transactions.