Circle has been working hard to make their peer-to-peer money transfer service secure and easy to use. Recently, they announced the launch of a new investment service that allows users to purchase crypto assets directly with USD.
Circle is a peer-to-peer payment system that facilitates instant transactions between cryptocurrencies. Its main objective is to enable businesses to accept payments from anywhere in the world. A year ago, Bitcoin was king. Now, Circle is stepping in to fill the vacuum. [Please note that this article is not about Circle or the cryptocurrency Bitcoin, but about Circle’s news website DashTreasury.com which recently published an article titled “How to Invest in Circle Stock” by me.]
Do you want to invest in Circle? Or maybe you’re interested in investing in other Cryptocurrencies, but this is your first time investing in a Cryptocurrency? We’re here to help. First thing’s first, what’s Circle? Circle is a Cryptocurrency that has the potential to dominate the Cryptocurrency market. At the moment, it is trading around 0.5x its value from a year ago, but the price range for the stock seems to be declining.. Read more about circle usdc stock and let us know what you think.
Circle, one of the most well-known and respected blockchain businesses, is going public on the New York Stock Exchange.
It’ll be done via a SPAC rather than an IPO: in layman’s terms, this means Circle will combine with Concord Acquisition Corp., another publicly traded business. This is a popular method for internet firms to “go public” without the hassle of an IPO. (Savvy investors may also get in early.)
For blockchain investors, this means that Circle stock may now be purchased under the ticker CND. You are not officially purchasing Circle shares until the merger takes place (which is estimated for Q4 2021). If the merger goes through, your CND will convert to CRCL at that time, and you will be re-priced appropriately.
In this quick overview, I’ll explain what Circle does, why you should invest now, and why you should wait. I’ll also talk about Circle’s home-run investing situation, which makes it especially appealing to blockchain investors. (Full disclosure: Circle is a customer of our parent business, Media Shower.)
The Value Internet
Jeremy Allaire, Circle’s CEO, compared the digital flow of money to the digital movement of knowledge during our interview for our case study in Blockchain Success Stories. The next version of the Internet, much as the Internet made it simpler than ever to exchange digital information, would make it easier to transfer digital value.
This made sense to me. When you think of money as a product, it seems quite clear. More people would use your product if you could invest money into making it better – quicker, cheaper, and simpler to deliver. (Of course, the “product” is controlled by the government, which complicates matters.) (More on this later.)
Circle’s main product now is USDC, a “digital currency” backed by U.S. dollars. If you’re unfamiliar with the concept, USDC is a stablecoin, which means it maintains its value over time (as opposed to digital currencies like bitcoin, which are wildly volatile).
You receive one USDC for every $1 you put in. Simple, quick, and completely free.
You may now engage in the emerging digital economy of cryptocurrencies with your USDC. USDC may now be exchanged for BTC or ETH. You may earn “yield” by storing USDC on DeFi platforms (like interest). Consider USDC to be a “on-ramp” or “bridge” between the conventional and digital economies. And it works: over $850 billion USDC has been moved between the two countries.
USDC is intended to maintain its value against the dollar at all times, and it has done so admirably, particularly as the quantity of USDC has grown. And it has: at the start of 2021, there were approximately $4 billion USDC; now, there are over $25 billion. (You may get the most recent statistics here.)
In the digital economy, stablecoins play an essential role. Traders who are transferring money between cryptocurrencies, for example, need a location to keep their funds in between transactions. Returning bitcoin to dollars is time-consuming and costly; USDC, on the other hand, offers a steady store of value inside the digital economy: a haven of calm amid a turbulent sea. This is one of the reasons why USDC has expanded so rapidly.
USDC statistics courtesy of Circle.com
One USDC is backed by one US dollar, unlike some other stablecoins. This is how Circle generates money: they may earn interest on deposits, making the business resemble a bank in certain ways.
Circle, on the other hand, is more akin to a tech firm than a bank in other respects. Circle also generates money by charging transaction fees for a set of tools and APIs that businesses may use to integrate USDC capabilities into their own financial systems. Consider the following scenario:
- You can utilize Circle’s capabilities to “flip” back and forth between conventional and digital dollars if you wish to pay merchants in crypto.
- Circle’s products may be used as a “on-ramp” and “off-ramp” between conventional and digital investments if you wish to invest a portion of your corporate treasury in crypto (like Tesla purchasing bitcoin).
- You may utilize Circle’s tools – powered by USDC – to build white-label versions of Compound, for example, if you wish to sell DeFi goods to clients.
If you’re an investor who thinks the world is leaning toward digital money, Circle is worth investigating more.
Why Might You Want to Invest?
Management staff with years of experience. Jeremy Allaire, the founder of Circle, is a serial entrepreneur with a track record of success, first with the software firm Allaire Corporation (which went public in 1999), and then with the online video platform Brightcove (which went public in 2012). Apart from Allaire, Circle has made significant investments in its management team, which was aided by a $440 million private financing round in May (!).
Long-distance travel experience Circle was established in 2013, which is equivalent to the Paleozoic Era in crypto years. Circle has an unequivocal hit on their hands with USDC, after years of wandering the desert (at one point they had a Venmo-like consumer payments app; at another time they controlled the crypto exchange Poloniex).
Work on regulations. Circle made the decision to operate inside the system rather than outside of it from the start (evolution, not revolution). For example, the business filed for money transmitter permits in each state. It was the first business to obtain the notoriously tough BitLicense from New York. This is exhausting, unpleasant labor, but Circle now has the most licenses in the business.
The business has a market capitalization of $4.5 billion. The present transaction values the business at $4.5 billion, indicating that it will have enough of capital (both conventional and digital) to help it grow. According to the firm’s investor presentation, the company is aiming for enormous expansion (and corresponding expenditure). If you believe Circle has a leg up on the competition, this war chest will make it much more difficult for them to catch up.
The business strategy. You deposit US money into your Circle account, and Circle makes use of them. Unlike many other crypto ventures that rely on virtual currency (i.e., joke money), Circle uses actual U.S. dollars, much like a bank. Again, it’s much more than a bank, making it difficult to see how conventional banks can ever catch up.
Investor Presentation courtesy of Circle.com
Why Should You Wait and See?
Financials. Financial information is sparse in the Investor Presentation. Unlike Coinbase’s recent IPO filing, which included historical growth figures for previous years, Circle is just providing estimates for 2021-2023, which are essentially predictions. While the figures for 2021 are likely based on half a year’s worth of actual performance, investors should treat future financial forecasts with caution. (No one is aware.)
Pricing. Currently, you may purchase shares under the ticker CND. But resist the want to say something like, “Coinbase is over $200, CND is about $10… to the moon, baby!” That is not how SPAC works. Instead, they usually trade around $10, and if the transaction goes through, they are changed into the equal amount of CRCL (see how SPACs work). You may wish to hold off until you get more accurate pricing information.
Regulation. Stablecoins – and their lack of regulation – are a worry for the Fed, according to Federal Reserve Chairman Jerome Powell, who spoke to the House Financial Services Committee this week. “The real question is stablecoins,” he said. “They’re expanding at a breakneck pace, but without the necessary oversight.” If the Fed intervenes with draconian regulation, Circle may be in serious danger.
On the other hand, it might be a chance.
Stablecoins are discussed by Jerome Powell in this video.
Scenario of a Home-Run Investment
“You wouldn’t need cryptocurrencies if you had a digital US currency,” Powell said. Let it settle in for a moment.
This is perhaps the clearest signal yet that the U.S. is (finally) thinking seriously about its own Central Bank Digital Currency (CBDC), which could severely limit Circle’s ambitions. (If you have the choice between a government-issued stablecoin and a privately-issued stablecoin, you’ll probably go with the government’s.)
On the other hand, the United States is so far behind China in terms of establishing a CBDC that it’s difficult to see how it can ever catch up. China began creating digital currency in 2014, which is equivalent to the Mesozoic period in crypto years. Given one of its main competitors’ massive head start, the United States is unlikely to create its own CBDC technology. (Plus, remember the disastrous launch of Healthcare.gov?) The government isn’t renowned for its technological prowess.
As the “digital currency wars” flare up, the United States’ best bet will be to team up with a private firm that has already created the technology. (Consider spectrum auctions, in which the government sells telecommunications frequencies to private firms.) The government does not construct the telecoms; it just oversees the framework.)
Guess which firm is most positioned to dominate if the US government creates a framework (i.e., rules) for stablecoins and then allows public enterprises to develop the digital dollar “product”?
Circle.
Tether is the most valuable stablecoin by market capitalization, yet the first sentence of its Wikipedia article says it all: “Tether is a contentious cryptocurrency.” Along with the other serious issues mentioned above, some have questioned if Tether really has the currency reserves it says. Anything is conceivable, but the US government tying itself to Tether seems unlikely.
To recap:
- Scenario 1: The United States creates its own CBDC. It’s probably terrible for Circle since competing with government money is difficult. (Though Circle’s capabilities may be made accessible to the new government-sponsored digital currency.)
- Scenario #2: The United States collaborates with private businesses to create a CBDC. Circle is the most probable contender to make it happen at scale, therefore that’s probably a good thing. (Though he isn’t the only one.)
Other possibilities are conceivable, but I believe Scenario #2 is the most probable. “Likely” does not imply “done deal”: there is still a long road to hoe. However, if Scenario #2 occurs, Circle will be a home run investment for the ages. Consider having a government contract not just to manage the government’s money, but also to run the government’s money. If you can obtain it, do great job.
Circle is a promising investment in my opinion in any case: I think that blockchain is the future of money, that stablecoins are the infrastructure of blockchain, and that Circle is the most trustworthy stablecoin. If the US government were to use USDC to create a CBDC, it would be a home run investment, and I would bet big on the business.
So, my personal choice is to purchase a little amount now and keep an eye on how things develop on the CBDC front in order to possibly buy a lot more later. It’s possible that everything will come full circle at some point.
Following in the footsteps of the recent Bitfury and Bitmain IPO’s, Circle has announced its intention to sell its shares in the forthcoming initial public offering. Circle is an interesting company, as its main focus is to enable the development of global digital currency exchange platforms. The company is based in the US, but operates internationally under the regulations of the UK and Japan. While many of the other digital currency startups around today attempt to make a name for themselves by selling their coins to raise a lot of money for their team, Circle is looking to use an IPO to raise capital for its digital currency exchange business, while generating significant revenue over the next few years.. Read more about circle share price and let us know what you think.
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