Ever since the creation of Bitcoin, one of Cryptocurrencies’ main aims has been to act as a way to transfer wealth easily and without restriction. While in many ways Bitcoin and the slew of altcoins that followed it has fulfilled this aim, there has always been one major flaw preventing its use as an equivalent currency to fiat currencies, its volatility. Stablecoins aimed to prevent this by pegging their value to a real-world currency such as USD or EUR, thereby avoiding the often unpredictable price fluctuations that affect other Cryptocurrencies.
In this short introduction to Stablecoins, we will be looking at a few of the major players, including their histories, a brief overview of how the coin functions as well as any other pros and cons. If you are interested in buying or selling Stablecoins, or another Cryptocurrency, then ChicksX.com is the place to be! Should you have any questions our excellent staff will be on hand 24/7 to assist you.
While not the first stablecoin, Tether, founded in 2014, is by far the most popular. It can be found on almost all crypto exchanges and payment processors worldwide. At the time of writing it has a 66 Billion USD market cap, which is the third highest out of all cryptocurrencies, just behind Bitcoin and Ethereum. Tether claims it has USD reserves to back each coin in existence, which keeps the price at 1 USD to 1 USDT. Although there has been debate as to whether Tether is truly backed by a full USD reserve, it has never been disproved and continues to be one of the most trusted stablecoins.
USD Coin (USDC)
Just behind Tether, USD Coin, is the second most popular stablecoin and the fourth highest-ranked Cryptocurrency by market cap. It was created in 2018 by a group known as Centre, which comprises various members, including the popular Bitcoin mining company Bitmain and the Cryptocurrency exchange Coinbase. The coin itself functions as an ERC-20 Ethereum token and can be used on various blockchains including TRON and Stellar. The company behind the coin claims it is backed by assets of equivalent value to USD, rather than to USD itself. This is a slightly different claim than Tether makes, but despite this, it is hard to deny its trustworthiness when you consider who its creators are.
Dai is a very unique stablecoin and is the fourth most popular based on market cap, just below Binance USD and the previous two mentioned coins. It currently has a market cap of almost $200 million USD. The mechanics of how Dai works is based on a collateral and repayment model, but is very complicated and requires more than the scope of this article to fully explain. Simply put, it is not backed by a reserve, whether USD or asset-based. Instead, the coin operates using an ingenious smart contract system on the Ethereum blockchain. It also works with a token called the MakerDAO token (MKR), which allows investors the ability to vote on proposed modifications, alongside other uses.
Summary and Advice
Alongside these three major stablecoins, there are many others, of varying credibility. In the stablecoin world, there are many new and interesting ideas for solving problems that ordinary fiat currencies are unable to. Whilst the fact these coins are pegged to a more stable fiat currency means there isn’t the same “get rich quick” appeal as the more traditional and turbulent cryptocurrencies have provided, they do provide a way to utilize the incredible benefits crypto offers in general without so many of the risks.
As with everything in the Crypto world things change quickly, new ideas come to fruition or others are proved to be unviable, and as such, many coins have come and gone. For this reason, we ask you to take care and do your research when getting involved in anything to do with Cryptocurrency and finance in general. At ChicksX we greatly care about our customers and will always be on the lookout for any changes, improvements, or warning signs, and make sure to always maintain the best and safest platform for you, to buy and sell cryptocurrency. If you would like to know more about stablecoins, and how to use, buy or sell them, you can contact our staff who will be more than happy to help you. Thank you for reading this beginner’s guide to stablecoins and we look forward to bringing you more great articles in the future.