Fintech firm Circle, which enjoys the support of the multinational investment titan, says the move is a step towards a new free space era ushered in by the innovative distributed ledger tech project.
Payment company Circle has announced that it is launching so-called Circle USDC (USD Coin), a cryptocurrency pegged to the US dollar, CNBC reported. The financial technology firm went on to say that with the advent of the very promising blockchain-based technology, as well as surge in the popularity of cryptographic assets the “open Internet” system is ahead of a major breakthrough.
It stressed the importance of introducing a price-stable medium of exchange to allow for consistent and reliable work the global financial system.
“A price-stable currency, such as a token pegged to the US 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,” the company stated in its blog.
The USD Coin, which is notably the first ever cryptocurrency to be released by an authoritative financial institution, is supposed to be immune to the instability and inflation that conventional money is prone to alongside the incredibly volatile existing digital coins. Interestingly enough, it will be bought and sold with real greenbacks, prompting Circle’s CEO to remark that the US dollar will assume the role of the main blockchain player:
“It unlocks an incredible amount of power for the dollar,” said Jeremy Allaire, CEO of Circle. “It’s basically a dollar that operates on blockchain.”
“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.
Critics, however added a fly into the ointment saying a dollar-backed cryptocurrency, expected to operate on the Ethereum platform, will essentially contradict the whole idea of crypto money, originally devised to be free of state banks’ and federal government control. With this in mind, US programmer and Silicon Valley investor Sam Altman believes USD Coin must enjoy limited oversight, or otherwise it makes little sense, if any, to introduce it.
As of today, Circle has attracted $110 million in funds in cooperation with cryptocurrency mining company Bitman and others.
The announcement comes amid tense debate on the fate of Bitcoin, the flagship of the crypto-realm. While some have ascertained it to be in a “coma” following its tremendous spike in market cap value in mid-December, others predict it will grow slowly and surely throughout 2018 given the specific character of its mining. Fundstrat notably pointed to the fact that Bitcoin stands a chance to soar in price as the difficulty of mining increases amid a drop-off in the total amount of bitcoins left to be obtained.