If you ask East Africans what they know about cryptocurrencies, most know Bitcoin. Cryptocurrencies, particularly Bitcoin, claim to mainstream fame is their high volatility. You know, the typical price fluctuations and unprecedented record highs.
Not all cryptocurrencies exhibit high volatility; others, like stablecoins, exhibit low volatility. The United States Dollar coin (USDc) is a Stable Coin. The USDc was created by fintech Circle and cryptocurrency exchange Coinbase through their joint organization CENTRE. Initially, USDc launched on the Ethereum blockchain as an ERC-20Token but has since expanded to other Blockchains such as Algorand, Solana, TRON, Stellar, etc.
Understanding USDc
USDc is fully backed by the US dollar 1:1. This means that there is a Dollar backing for every USDc coin in existence. This cryptocurrency mimics the price performance of the Dollar in the market. Every month Grant Thornton publishes a report containing the dollar reserve balance backing USDc. Technically, when you hold a USDc token, you inherit the Dollar’s relative stability. Even though crypto is highly volatile and most people hope to make a killing when prices go up, at the same time, they can keep their profits in stable coins like USDc.
How does USDc work?
To illustrate the working of the USDc, we will use the following example:
Suppose you use a fiat currency (Tanzanian Shilling, Kenyan Shilling, or Rwanda Franc) to buy USDc. In that case, the money is deposited into an account while you receive USDc. On the other hand, if you sell a USDc coin for, let’s say, Tanzanian Shillings, the USDc coins with similar value is deducted from your account and Tanzanian Shilling is deposited into your bank account or mobile money wallet.
USDc is not the only USD stablecoin; another popular stablecoin is USDT (Tether). USDT market value leads the stablecoin barrage while other such as Binance USD, DAI, TerraUSD, and TrueUSD follow closely.
Stablecoins maintain their stability (pegging) in several ways. One way is through backing with fiat currencies such as USDc. They can be issued by a centralized or decentralized institution and backed by fiat currency, cryptocurrency, algorithms such as TerraUSD(UST), or gold, such as the Paxos Gold (PAXG).
Again, stablecoins are interesting coins because they enjoy less volatility than the usual crypto, such as Bitcoin’s BTC and Ethereum’s ETH. For instance, Bitcoin’s price had skyrocketed to $61,734 in October 2021, then dipped to $37,803 in February 2022. Analysts predict a record high of between $100,000 and $200,000 by the end of 2022, however no one can predict the future and sometimes it is better to have more “stability”.
Which Blockchains Are Offering USDc in East Africa?
There are 8 blockchains offering USDc, find a summary below:
Ethereum
Since USDc was launched on the Ethereum blockchain using the ERC-20 protocol, it can be used on any app that supports this standard. The ERC 20 are smart contract tokens issued on the ethereum blockchain network.
USDc is issued as an ERC20 token on the Ethereum network as the Ethereum USDc token.
Advantages
- The ethereum blockchain is decentralized, meaning the network is protected against interferences from a few individuals or entities.
- The network is backed by a robust developer community that supports its development.
- Ethereum boasts of interoperability when an app is built on its network. In essence, it can connect with dozens of apps seamlessly.
Disadvantages
- Slow speeds; the Proof of stake(POS); approving transactions takes longer because of its consensus protocol.
- In 2016, a hacker exploited a bug on the markerDAO and stole $50 million worth of ETH coins. Therefore there’s concern this could retake place in the future.
Stellar
The GetPaid platform is built on the Stellar network, a blockchain network that intends to connect fiat currency and cryptocurrencies. USDc trades as the Stellar USDc token on the stellar network.
Advantages
- Stellar network transactions cost 0.00001 XLM, which is lower than most blockchains and traditional money transfer platforms.
- You can access cross-border payment with stellar.
- Fintech Apps can leverage this robust network.
Disadvantages
- Stellar’s consensus feels more centralized than most blockchains.
- It has a low market cap then other popular blockchains.
Algorand
The Algorand USDc launched in late 2020. It has seen tremendous growth, with about $200 million in circulation. Algorand is a resilient blockchain platform that supports transactions between traditional financial card networks and cryptocurrencies.
Advantages
- It is faster than most established blockchains such as Bitcoin and Ethereum
- It is regarded as an efficient blockchain because of its architecture
Disadvantages
- It has a low uptake, and even what they are offering isn’\t something new because there’s stiff competition.
Avalanche
Avalanche is a decentralized, smart contract-focused, environmentally friendly blockchain running many projects that support Decentralized Finance (DeFi) and NFTs. Avalanche supports Ethereum based Smart contracts making it an excellent for Avalanche USDc token.
Advantages
- The avalanche blockchain runs three chains that allow apps built on the platform to scale efficiently. Most Blockchain networks face the challenge of scalability.
- Avalanche offers interoperability when an app is built on this network.
- Transactions are super fast and efficient on the platform.
Disadvantages
- Malicious or fraudulent validators are not punished like in other blockchain networks
- It is expensive to purchase Avalanche (AVAX) or become a validator..
TRON
TRON was built with scalability in mind and trading high volumes. One of the founders, Justin Sun, was at Ripples and brought some of its ideas. The TRON USDc launched in June 2021.
Advantages
- Low transaction costs at $0.000005 per transaction.
- Great volume transactions
- High Speed
- Easy scalability
Disadvantages
- It is accused of being too decentralized because 50% of its coins are held in only ten accounts.
- So much infrastructure of the TRON network is undeveloped, meaning that’s it has a long way to go
- It is not an excellent platform for private investment because large entities and individuals hold 15%.
Solana
Solana USDc launched in January 2021 on the versatile blockchain network. One key aspect of this blockchain is the wormhole, a decentralized bridge connecting Solana to Ethereum. Solana has seen extensive adoptions by Crypto exchanges, NFTs marketplaces, Wallets, and DeFi, including FTX, Serum, Metaplex, Trust Wallet, etc.
Advantages
- Fast transactions about 50,000 per seconds
- Solana Promises scalability for apps built on the platform.
- They have maintained low fees leverage on many users on the forum.
Disadvantages
- It is criticized for not being decentralized enough
- A lot of infrastructures are not yet complete
- Supporting hardware is costlier to set up.
Hedera
Hedera design can easily support large transaction volumes. The institutional-grade network boasts an efficient and faster network. Plus, Hedera is an eco-friendly network. The Hedera USDc has a lot of potential on this platform and is easily tradable with a circle account.
Advantages
- Fast transactions coupled with low fees
- Energy-efficient and excellent for enterprise usage
Disadvantages
- Not so friendly for individual users.
- Supports smart contract transactions that is energy intensive.
- Does Not support Forks
Flow
Flow is an NFT-focused Web3 platform created by Dapper Labs. Dapper Labs was at the forefront of bringing forth and popularizing NFTs. Therefore, Flow USDc finds an NFT-friendly ecosystem that is open to stable coins as a means of payment digitally. The NFT market is blooming through entrants from various sectors such as sports, entertainment, music, marketplaces, etc.
Advantages
- High throughput that’s excellent for NFTs driven apps
- Supports smart contracts, which are the backbone of NFTs and digital currencies such as USDc
Disadvantages
- Too much focus on NFTs.
Use Cases OF USDc in East Africa
Besides its use as a trade enabler, USDc has other relevant usages.
- Protection against volatility; USDc will help crypto investors cushion themselves against volatility.
- USDc stability means they can be used to represent funds investment and equity ownership.
- Remittance when you wish to transact in cross-border transactions.
- Non-US investors can use it to gain exposure to the Dollar.
- Again, USDc can cushion investors against their poorly performing local currencies.
- Global crowdfunding; if organizations fundraise in digital currency, their donations do not fluctuate with the USDc.
- USDc is useful in payment integration since it is compatible with several independent blockchains.
How can you access USDc in East Africa?
The good news is that the GetPaid Platform supports USDc. The GetPaid platform runs on the Stellar open network (a blockchain such as Bitcoin or Ethereum) and the native coin is Stellar Lumens which trades as XLM. XLM and USDc are both supported on the GetPaid Platform. Sign up for an account here.