USDC as its name suggests is a stablecoin backed and pegged against the U.S Dollar. In detail, it is a stablecoin that can be exchanged for one dollar and is backed by one dollar or a dollar-denominated asset held at a regulated U.S financial institution with an equivalent value. It was developed by Centre, a technology project backed by cryptocurrency exchange Coinbase and Fintech company Circle.
It is important to note that USDC is not issued or backed by the U.S. government. The USD Coin project is open-source, which means anyone can view the code or contribute to it.
Unlike some other cryptocurrencies, USDC is not mined, it is rather issued. New coins are minted every time someone buys or converts currency and acquires USDC. If that happens, a new dollar is added to the bank account behind USDC. In simple terms, Circle the project behind USDC assures its users that every USD Coin is backed by 1 US Dollar, meaning that they tokenize actual US Dollars into a digital currency.
Here, tokenizing refers to the process of taking a real-world asset and converting it to a digital form, so that it can be used on the blockchain.
Unlike the most popular stablecoin Tether (USDT), creators of the USD Coin are obligated to provide full transparency and work with a range of financial institutions to maintain full reserves of the equivalent fiat currency.