Why the USDC Stablecoin Will Become The Backbone of Digital Currency

Last year was all the rage with the huge run-up in the price of Bitcoin.  But like a house of cards it quickly came crashing down after it’s December 16 peak.  I’ve actually been watching it over the past 6 months and was surprised how apparently stable it had become and started to believe that maybe, just maybe, it could become a viable currency.

But this week pulled the rug out from under that line of thinking as Bitcoin fell off a cliff losing about 15 percent of it’s value.

Back to the concept of talking my barber into accepting cryptocurrency in his shop, there is NO WAY customers or merchants are going to tolerate the possibility of losing money JUST for the convenience of transacting with crypto.  Think about it – why would anyone purchase $100 worth of Bitcoin to pay for haircuts if the value of those coins could drop and you may only get $80 worth of haircuts?  The risk isn’t as great for merchants because those Bitcoins can be converted into dollars rather quickly.  But the customer’s currency will likely remain in his or her digital wallet for a while because – let’s face it – there aren’t a lot of places that accept Bitcoin!

 Enter the new USDC “stablecoin.”  This product was recently launched by a new industry consortium called CENTER  with industry heavyweights Circle and Coinbase being it’s founding members.  The idea behind the USDC (US Dollar Coin) is that it is a fully collateralized US dollar stablecoin.  That means that for each USDC you carry around in your digital wallet it is backed by a real US dollar set aside as collateral.  You can convert your fiat USD to USDC and USDC back to USD on Coinbase at any time without any fees.  In plain English – a dollar is a dollar is a dollar.  You don’t have to worry about losing value.

The USDC digital currency is not the first stablecoin on the market, but it is perhaps the safest as best explained by CENTER:

Existing approaches have lacked financial and operational transparency, have operated in unregulated offshore jurisdictions with unknown banking and audit partners, and have been built as closed-loop ecosystems and closed source technologies.

USDC solves these problems by offering a solution with detailed financial and operational transparency, operating within the regulated framework of US money transmission laws, with established banking partners and auditors, and is built on an open source framework with an open membership scheme that eligible financial institutions can participate in.

These past few years have seen the proliferation of hundreds of new cryptocurrencies,  most of which come in with a bang and go out with a bust.  Besides all of the hype surrounding these “initial coin offerings,” most of these products have very little practical use except in places like Venezuela where the fiat currency is a losing store of value.  I have to agree with CENTER’s philosophy that perhaps we don’t really need a new currency at this point in time – just one that is stable and people can trust:

We believe that during this phase of the market, most market participants don’t desire a new currency, but instead want to be able to use their existing major national or global reserve currencies on top of open public chains. Customers want price-stability and the trust and regulatory framework of existing central bank money but with the openness, speed, security and global reach of crypto powered networks.

You can purchase USDC today and use it to pay for goods and services, however for merchants there is not yet a POS system available to accept it.  We hope to see one soon.  You can read more about the USDC consortium here.

Welcome to a New Age of Freedom

Credit card companies have been skimming profits from millions of merchants like me and you for too long.  Recently my barber declared that he had had enough.  He posted notices all over his shop stating “Starting November 1st credit cards will no longer be accepted.”  This was back in September so everybody had ample notice that they would have to bring cash for their next cut.  He proceeded to explain to me how he pays over $1,000 per month in credit card fees.  He also understood that a lot of folks, particularly the younger crowd, don’t carry cash.  But to that problem he had an answer – he was installing an ATM machine.

I’m no fan of ATM machines – particularly ones that aren’t owned by my own bank – Wells Fargo.  This past summer I drove through the central plains on the way up to Oshkosh, Wisconsin.  I had always thought of Wells as one of the big national banks – but there were no ATMs to be found!  Eventually I succumbed to the fact that my wallet was getting awfully thin (thanks to all of the tolls around Chicago) and I’d have to pay the dreaded FEES!  Not only did the Murphy gas station ATM skim a couple of bucks off of my transaction, when I returned home I learned that Wells Fargo had also charged me $3 for using an “out of network” ATM.  Talk about adding insult to injury!

After my cut was complete I left that barber shop determined to find a new way.  I knew there was a lot of buzz about Bitcoin and other cryptocurrencies but I didn’t know a lot about it.  What I have learned since them – and continue to learn – is that we are about to see a major shift in many sectors of commerce thanks to a new disruptive technology called blockchain.

I’m not going to go into details here about how the blockchain works, but the important thing to understand is that it can enable safe, low-cost peer to peer transactions such as in making payments, renting vacation housing, ridesharing and even purchasing goods – all without expensive middlemen such as Visa/Mastercard, HomeAway/VRBO/AirBnB, Uber and Amazon.

Yes, I said it – even Amazon, the behemoth of retail – will be disrupted as unhappy sellers tired of paying huge fees will move off-platform to new free and open decentralized platforms such as OpenBazaar  and Origin Protocol (they’re not quite ready for the big-time).

The common denominator is that the blockchain enables safe peer-to-peer commerce which eliminates the need for the centralized services such as those mentioned above.  Not only can the blockchain enable payments, but also “smart contracts” such as agreements required for renting a car or a vacation home or anything else.

However the focus of this website will be to assist and enable you, the merchant, to accept safe, stable digital currencies from your customers, transfer those funds to fiat currency (US Dollars here in the USA) and deposit it in the bank – all at the lowest possible cost.  As of this writing almost all of the parts are in place to make that happen.  We expect that to happen soon.