USD Coin (USDC-USD) is the fifth-largest cryptocurrency in terms of market capitalization at $48.77 billion. This also makes USD Coin the 2nd largest stablecoin after Tether, which has a market cap of $83.16 billion, according to Coinmarketcap.com.
The main point about being a stablecoin like USD Coin is that it must maintain its peg ratio to the US dollar on a 1:1 basis. To do this it has to invest its money in high-quality US assets. Moreover, the market has to believe that it is doing this.
But the main way USD Coin gains market share in the battle among stablecoins is by working with particular companies to get them to accept stablecoin. For example, recently Stripe began allowing merchants to pay their users in USDC.
In addition, Twitter (NASDAQ:TWTR) began working with Stripe to let certain creators receive payments in crypto wallets with USDC.
Stripe and Twitter made a major announcement on April 22 describing this arrangement. Stripe described how creators, freelancers, sellers, and “solopreneurs” often find it difficult to get paid. Its solution is to use USDC in its new Stripe Connect digital wallet platform.
Twitter has signed up to be the first partner in the program to send out payments in USDC to their creators who request payment in this manner.
Where This Leaves USD Coin Going Forward
This Stripe/Twitter deal is very significant going forward. It could become the tipping point for other companies in the content creation arena to use USDC.
Moreover, many companies cannot effectively pay out the hard currency that content creators want. By year-end, Twitter and Stripe hope to have enough customers in over 120 countries worldwide using this digital wallet service. That could bring in a large amount of money into USDC.
By the way, why would anyone invest in USD Coin? After all, it is not designed to rise in value. Effectively it acts as a store of value, not as an appreciating asset.
As such, it can eventually become a currency of exchange once more companies like Stripe and Twitter begin to use it as a payment mechanism. But for now, it needs to grow its value as a store of value with these kinds of deals.
On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.