We may soon be able to use cryptocurrency to pay for everything—from your daily dose of morning coffee from the café nearby to groceries and other basic necessities. And you could do it just as easily as using your credit card or Venmo.
Circle, a Goldman-Sachs owned payment startup announced that it would be launching a new cryptocurrency called the Circle USD Coin. This new currency is basically a digitized version of the dollar, which you’ll be able to purchase by trading in real money.
The USD Coin is touted as the first cryptocurrency launched by a major financial institution. Although this might against the whole point of decentralized and distributed cryptocurrencies such as Bitcoin and Ether, Goldman Sachs and Circle hopes to be able to bring some stability to the cryptocurrency market with the USD Coin.
Circle does not want USD Coin to have the same instability and inflation common to unregulated cryptocurrencies, so it will tie the value of a coin to the US dollar. This again contradicts the whole point of cryptocurrencies, which were created to provide a transparent financial market devoid of regulation from federal governments and big banks. And while it seems highly likely for regulation and corporate influence to play a bigger role in the industry, some believe that any USD-based cryptocurrency has to remain under distributed control.
Unlike ordinary cryptocurrencies that can be mined by solving complicated math problems, the only way to acquire new USD Coins—which operate on the Ethereum blockchain network—is to purchase them. Your state-of-the-art mining rig won’t help you get more USD Coin—you’ll have to purchase it. With real money.
In the meantime, the USD Coin doesn’t appear to have any practical purpose other than introducing a stable and accessible cryptocurrency. In the future, a dollar in your hand may be worth the same as a dollar on the USD Coin blockchain.