The extreme volatility of cryptocurrency is greatly affecting its mainstream participation. At the same time, it is limiting its use as a reliable exchange for goods and services. That is the reason for a low-volatility version of cryptocurrency – stablecoins.
Stablecoin is perfect for any investor looking to keep their assets in the crypto space. It gives a perfect feel of the stability fiat currency offers and the decentralization and fast transaction of cryptocurrency. In this post, we will be looking at what stablecoins are and what the biggest ones are.
What Are Stablecoins?
A stablecoin is a form of cryptocurrency but with a more stable value. Unlike cryptocurrency, stablecoins don’t fluctuate in price because they are backed by other currencies such as the U.S dollar or by other assets like gold and silver.
Why Are They Useful?
The most popular use of stablecoins is to quickly switch a volatile cryptocurrency and a more stable asset. For instance, a trader holding BTC but expects it to fall in price soon can instantly trade the BTC for a stablecoin to protect their holdings. Also, some crypto exchanges that don’t support fiat currency trading can easily list an asset with a relatively stable value.
The major benefit of stablecoins is that they allow you to enjoy all the benefits cryptocurrency offers without bringing price volatility into the picture. You can use it to send money anywhere across the globe at a relatively low cost. Presently, more projects are ongoing to see that stablecoins use goes beyond just trading.
Stablecoins Are of Different Types
Stablecoins are classified into different categories, based on the type of assets backing them. While there are some backed by fiat currencies such as the U.S dollar, Euro, or Chinese Yen, there are some backed by hard assets such as gold and precious metals.
There are also some stablecoins that are backed by crypto assets. Such stablescoins are often capable of maintaining an over-collateralized position. That means the stablecoin will circulate a much lower supply against the crypto reserve backing it.
What Are the Pros And Cons of Stablecoins?
Since it is also a version of cryptocurrency, stablecoin also comes with a range of benefits including:
- Borderless: It has the potential to be transferred anywhere across the globe. Yes, just like cryptos, stablecoins are also borderless.
- Amazing transaction speed: since it runs on blockchain technology, stablecoins enjoy objectively faster transactions processes.
- No middleman is required with transactions: there is no intermediary needed to complete stablecoin transactions. That way, you don’t have to pay for the service of any third party like the ban or any other financial institution. And that is one reason transaction fees with stablecoins are very low.
- Transparency: transactions using stablecoins are recorded on a public ledger where they can be seen accessed by virtually anyone.
Cons of stablecoins
It is centralized: unlike cryptocurrency that is decentralized and not controlled by any organization or body, stablecoins are owned by centralized organizations.
Less ROI: because they are pegged by other assets, they don’t usually provide high ROIs like cryptocurrency.
What Are the Biggest Stablecoins In Crypto?
All stablecoins are not created the same. While there are hundreds of them present in the market, it is good to know the most useful ones among them. Here are the biggest – and of course, the best stablecoins in crypto:
1: Tether (USDT)
Tether is arguably the most common stablecoin in the crypto world. The coin is pegged to the US dollar. That means 1 USDT is equivalent to $1. Tether is well known to be low-risk. It is the largest and the most secure. That is why most investors would prefer buying Tether to any other stablecoins. Check anycoindirect.eu and find more information.
2: True USD (TUSD)
True USD is the first-ever regulated USD-backed stablecoin. The coin is completely backed by the U.S dollar and it’s well known to be a reliable and transparent stablecoin. TUSD offers lower transaction fees compared to a wire transfer of fiat currency, and also offers higher interest rates on stored balances.
3: Paxos Standard (PAX)
The primary aim of Paxos Standard is to keep 1:1 parity with the U.S dollar. The coin was created shortly after the Tether printing controversy to serve as the solution to the whole controversy about Tether at the time.
4: USD Coin (USDC)
This is another popular stablecoin in the crypto world. The coin is backed by Coinbase, the world’s biggest Bitcoin broker.
5: Binance USD (BUSD)
In order to stay relevant, Binance, the popular cryptocurrency exchange also released its own stablecoin which is called Binance USD. BUSD is also pegged to the U.S dollar at the ratio 1:1. That means one BUSD is equivalent to $1. And for those who prefer to use Binance exchange for their crypto transactions, BUSD comes as a perfect stablecoin. added advantage.
6: DAI
DAI is one of the stablecoins that is decentralized – not controlled by any centralized issuing authority. That makes the stablecoin immune to censorship. More than just being used as a means of exchange, DAI also enables transactions in the form of smart contracts because it is an Ethereum-based ERC-20 token.
7: Gemini dollar (GUSD)
This has been one of the fastest-growing stablecoins in 2024. It is one of the first USD-pegged stablecoin to ever receive recognition from a US regulatory agency. It is also an ERC-20 token on the Ethereum network. That way, it can be stored in any wallet compatible with ETH tokens.
8: Digix Gold (DGX)
This is one of the leading stablecoins backed with a commodity – in this case, gold. It is an ERC-20 token pegged against physical gold. The company that created DGX, Digix Distributed Autonomous Organization, stores gold reserves, and each DGX is pegged against one ounce of gold.
