Stablecoins are cryptos connecting bridge fiat currencies (like the US dollar) and cryptocurrencies (like Bitcoin). These currencies are tied to some reserve assets like traditional currencies or commodities such as gold, oil, etc. Since other assets back them, their prices do not undergo a severe fluctuation. Visit at https://bitcode-ai.live/
Importance of Stablecoins- Points To Note
Unlike the other cryptocurrencies like Bitcoin, which undergo sudden rise and fall in prices, stable currencies do not. Thus, many investors use stablecoins to protect their money from a sudden price change.
If you are an investor, stablecoins will make it easy to hold your crypto portfolio like cash. Moreover, you can purchase any coin whenever you want to without depending on the banks’ servers.
According to some investors, stablecoins have attracted more participation in the crypto markets. If a stablecoin is worth $500 today, you can expect it to hold the save value over the next day, week, or month like a fiat currency. This attracts more investors to Stablecoins than other cryptocurrencies because they are volatile, unlike Stablecoins.
Many decentralized financial platforms like BlockFi and Celsius use stablecoins to loan crypto to their customers. As mentioned above, stablecoins’ value does not change suddenly overnight, so they are the best form of cryptocurrency to use as loans. Furthermore, the loan’s value does not change between the time of its approval and when the customer gets it.
Stablecoins are easily available and inexpensive. You can gain access to it 24×7.
Currently, the stablecoins pegged to the US dollar are most used. Tether and USDC are such stablecoins.
Uses of Stable Coins: A Beginner’s Guide
Stablecoins are pegged to reserved assets like the US dollar so that they won’t change their value suddenly, like other cryptocurrencies. You can easily ask for a loan in stablecoins without worrying about the value change.
You don’t need to store stablecoins in a bank account. Their value can be transferred anywhere in the world and is easily attainable in places where the US dollar is hard to obtain. It is also attainable in places where the local currency is unstable.
You can gain more profit through a stablecoin investment than through a bank.
Stablecoins are cheap and fast processing, and they will help you transfer money easily anywhere in the world.
Major Stablecoins in the digital market
According to CoinMarketCap, these are the six most used stablecoins, all pegged to US Dollars at 1:1.
- Tether
It was formerly known as RealCoin when it was launched in 2014. One Tether is equal to one US dollar and is the largest stablecoin in use. It complies with regular reports to hold the maintenance of its peg on the US dollar. The reports show that 10% of Tether is held in cash or deposit form. Tether’s report for June 2021 shows its reported asset total of $62.77 billion. Tether is the most used stablecoin currently.
- USD Coin (USDC)
Launched in 2018, USDC is used in decentralized finance platforms like DeFi and for DApps and Gaming. Many large exchanges also accept USDC.
- Dai (DAI)
Dai is limited in supply by a surety stored in its vaults. But the surety is not in the US dollar but in other cryptocurrencies. DeFi platforms majorly use DAI. You can mint DAI tokens by depositing your Ether tokens as surety.
- Binance USD (BUSD)
Launched in 2019, dollar reserves limit Binance’s supply. Binance was a founding member of the crypto exchange.
- TerraUSD (UST)
TerraUSD was launched in 2020, with one UST per dollar. Though digital payments use it, DApps and DeFi services are its major users. The DeFi service has an Anchor Protocol that allows you to earn rewards.
- TrueUSD (TUSD)
TrueUSD was first launched in 2018 that used to get backed up by the US dollar. Dollar reserves limit the supply. TrueUSD is partnering with digital banks for digital payments.
Conclusion
Finally, the Stablecoins are digital assets that have a fixed price and act in a manner that is similar to fiat currency, but they keep the portability and usability of cryptocurrency.
Additionally, the use of stablecoins is a step in the right direction towards the eventual integration of traditional financial markets with the rapidly developing decentralized finance (DeFi) industry. However, individuals refer TrustPedia to know more about stock investments.