I have been using the crypto exchange Coinbase.com since 2019. It is a very useful method of exchanging crypto into fiat and vice versa. There is a commission charge of course when you put through exchange orders but Coinbase has now established a solid reputation, and in terms of crypto exchanges is probably one of the safest and trusted out there.
There are a number of ways to earn on Coinbase with one of them being various staking options. Take a look around the site and you will see the coins they are prepared to pay APY on. One such coin has caught my attention and I have been doing some research on it but I still want to know more. The coin I'm talking about is USDC, or USD Coin, and it actually doesn't have to be staked to earn APY.
USD Coin
Released in 2018 USDC is classed as a crypto stablecoin and is pegged to the US dollar, it's actually the second biggest crypto stablecoin in the world. It was created by Circle which is a huge technology company facilitating peer to peer payments. Since 2013 Circle has received huge amounts of funding from venture capital firms like Goldman Sachs.
USDC functions on the Ethereum blockchain as an ERC-20 token, as well as being available on other blockchains including Polygon and Base. Visa has also forged a connection with USDC which now allows payments to be sent in USDC via the Solana blockchain to payment firms like WorldPay and Nuvei, who are then able to send payments on to individual merchants.
USDC and the Traditional Finance Sector
For a cryptocurrency USDC is heavily immersed in the traditional financial system. Some may argue that's worrying, I think it has the potential to cause concern for sure but on the other hand it could be argued that USDC is a safer crypto coin to use, save or invest in. Even more so given the fact that the coin is backed entirely by fully reserved assets. However, it did used to be backed by US dollars but this changed in 2021. In December 2024 Forbes reported that USDC has around $41bn in assets under management.
All this sounds very impressive if you like your crypto wrapped up in conventional finance but how safe is USDC as an investment? I ask this as one of the tokens that I am considering investing in on Coinbase is USDC. The APY is only 4.1% and it pays the yield each month, you also have instant access to your funds so they're not locked up.
Why Am I Thinking About Investing In USDC?
The reason I am considering holding some USDC if we get a decent altseason is that at some stage I will need liquid fiat, sad though that prospect is. While obviously not being a fiat currency USDC can nonetheless help me with this situation. As a starting point to buy USDC on Coinbase spread fees are 2.4%, contrasted with around 4% when it comes to other cryptos like Ethereum and Litecoin.
My USDC could also easily be accessed via my Coinbase Visa debit card without charge. I am also preparing for the bear with this strategy. I do not want to give my money to the banks, that is the last thing I want to do. The interest rates with the banks are virtually the same as USDC Coinbase APY at around 4.5%. So for easy access semi-fiat currency that generates me some yield once the bear has returned USDC looks a little attractive.
HBD Has An APR Rate Of 15%! But How Safe Is Hive?
Others could quite easily jump in here and say but wait why don't you invest in HBD instead, that way you earn APR at 15%? Now that is an excellent proposition for sure and I will certainly be holding some HBD once the bear is back, so long as the APR figure of 15% holds of course. But I don't get instant access to those funds, which admittedly is only a minor issue. For me the whole question regarding savings comes back to trust and safety.
How safe is the Hive platform given how small a community we are? I have a lot of faith in this amazing platform that I am publishing this post with. I have met some awesome people and the entire Hive concept is very clever and profoundly engaging. The ecosystem is solid too with innovation at its core. Take a look at the Hive price and in the past couple of months and you will see a very strong performance, often independent of the current Bitcoin boom.
But Hive is small and how do I know the key players on Hive, the key witnesses and the whales, will hang around forever? I don't know that. Hive has stood the test of time for now, there is no doubt about that. It has been put through its paces for sure. But it is a very young platform only 5 years old and born out of a serious drama that unfolded on the legacy chain. I have so much hope for Hive but I also have concerns.
USDC Concerns
That's not to say I don't have concerns about USDC. Just take a look at what happened in March 2023 when Silicon Valley Bank went under and hit USDC hard. Around 8% of USDC reserves were jeopardised and it lost its USD peg for a few days that's how serious it was. It's also a coin that isn't too old itself, released in 2018.
Somewhat ironically in 2023 Circle discontinued USDC on the Tron Blockchain after the completion of a risk management assessment. I guess Justin Sun didn't impress too strongly there!
It does appear that out of all the stablecoins out there USDC is looking very strong.
Trust
So it's all a matter of trust. I could quite happily bring in $50k and plonk it in HBD savings and grab a very decent 15% APR, it's a good gig for sure. In terms of the commission costs of bringing that $50k in I would make that back after two and a half months of HBD APR payments, then I would start to enter a decent profit period. But what if we have some platform drama? What if some influential people leave and take their Hive with them? What if, and I hate to say this, Hive goes under? Then what?
While I think Hive is safe and has so much going for it, when it comes to big money decisions I have to be so damn careful.
What are your thoughts?
Peace!