Stablecoins aim to fix this issue, as they are backed by assets. They provide more security and this is what contributes to their constant growth. Costs are decent, security is high and stability is impressive. Sometimes, they represent real flat currencies, such as pounds or euros. Such extras make them quite attractive to lots of people – including new investors who are not confident enough to speculate on the cryptocurrency market.
Just like cryptocurrencies, stablecoins are some digital currencies. They are backed by assets – more commonly, flat currencies. They can also be backed by gold, for example. The main role of this backing is to ensure the value keeps stable – look at Bitcoin over the beginning of 2021. With these aspects in mind, stablecoins tend to provide a little from both worlds. You have the stability of flat currencies and the security and high speed of cryptocurrencies.
Browsing stablecoins and deciding on one can be tricky because there are over 200 options out there. Not all of them are active though. About 10% of all stablecoins have been discontinued, while 30% are active. Many others are conducting R&D, so their future is not certain. Given the growth of this industry, the stablecoin market has exceeded $12 billion in 2020 only and numbers keep going up. Every New Year will bring in even more transactions and investments.
A few stablecoins seem to dominate the market – just like certain cryptocurrencies dominate their own market. It is perfectly normal for every industry out there. But before digging into deeper details and analyzing these front runners, you may want to understand what makes stablecoins so popular. Apart from their stable value, here are some of the reasons wherefore more and more people turn to these innovative alternatives to flat currencies.
Benefits of using stablecoins
Everyone has heard of cryptocurrencies because they are all over the news. They skyrocket, then they fall and so on. It is big news. There is not so much talking about stablecoins and to some, it might be difficult to understand why. If you compare the markets, stablecoins come with many more benefits than cryptocurrencies. All in all, the more you know about their advantages, the easier it becomes to go in the right direction.
Flat currencies are based on slow and old fashioned systems. Stablecoins are more modern. They provide cross border payments in literally no time – forget about waiting for your bank for days. Such transactions are not just quicker, but also cheaper. They are secure and the same rule applies to their actual remittance. Price stability also makes them better than cryptocurrencies.
Fast and cheap remittance
You may already be familiar with the advantages of cryptocurrencies. They do come with a bunch of benefits, but they have one major risk – they are extremely volatile. Stablecoins bring in the same benefits – quick, inexpensive, easy to work with, but they are not as volatile as cryptocurrencies. Since they are backed by assets like gold or flat currencies, they are safe to deal with.
Little price volatility
Just like classic cryptocurrencies, stablecoins are based on the blockchain technology. In other words, users benefit from the core advantages of blockchain. There is plenty of security involved with each transaction, as well as great accountability. Transparency is not to be overlooked either. From this point of view, they are almost identical to cryptocurrencies.
Bottom line, stablecoins grab the main benefits from each world. Users benefit from the incredible speeds of cryptocurrencies. They also rely on the same high security standards, as well as the blockchain technology. But on the other hand, you also have the simplicity and stability associated with flat currencies – no major risks at all.
Benefits of two different worlds
Now that you understand what contributes to the constant growth of stablecoins, you need to become familiar with the main types of digital currencies. There are four main types of stablecoins out there and each of them comes with its own particularities. Most commonly, stablecoins are categorized based on what they are secured against.
Types of stablecoins explained
This is the main type of stablecoins on the market. It is easy to understand how it works because these digital currencies are backed by traditional flat currencies. The backing occurs in a 1:1 ratio. Some of them are backed by the USD, while others are backed by the GBP, just to give you a few examples. In other words, each stablecoin is reserved with one flat currency as collateral.
Flat secured stablecoins
These types of stablecoins are similar to flat based stablecoins, yet they are backed by commodities. There are more commodities out there, but the most popular stablecoins in this segment are backed by gold or silver. Of course, users can stick to certain coins secured against commodities they may have more confidence in.
Commodity secured stablecoins
The name is pretty clear – such stablecoins are backed by cryptocurrencies. It sounds a bit unusual – after all, the main purpose of stablecoins is to be secure and cryptocurrencies are extremely volatile. However, a vast amount of cryptocurrencies is kept to cover these massive fluctuations. In this case, the ratio is different from 1:1.
Cryptocurrency secured stablecoins
Unsecured stablecoins also defy their main purpose because this category may not seem very secure. From this point of view, getting involved with unsecured stablecoins requires a bit of research. Each such coin depends on a sophisticated set of algorithms. Their main role is to transact stablecoins in order to keep their value stable.
Disadvantages of stablecoins
Stablecoins come in more categories and they bring in a bunch of benefits, but just like any other coin, it is not perfect. Flat currencies, as well as cryptocurrencies also have their pros and cons. All in all, while stablecoins may seem better than both alternatives, they have a few drawbacks you should be aware of too.
Most stablecoins are centralized. In other words, they depend on individual organizations. While in theory stablecoins are decentralized, they are owned by specific entities. These entities control pretty much everything about them. For instance, the entity can control the issuance, as well as the minted supply. A bit of research is mandatory before deciding on one particular stablecoin then.
This aspect works against stablecoins. Unlike cryptocurrencies, they have some sort of authority. Flat currencies are backed by governments and they can lose value based on governmental actions. Cryptocurrencies are different. Stablecoins are similar though. But then, not all of them are centralized, so you could find a few good options out there.
Cryptocurrencies do not really depend on financial markets. In fact, this is one of their greatest pluses. They annihilate some of the challenges and drawbacks associated with financial markets. On the other hand, stablecoins depend on assets and commodities. In other words, their value depends on the global economy and can be affected by inflation.
All cryptocurrencies go in the same direction. They are not regulated. While agencies and governments are slowly trying to find a way to regulate them, the process is sophisticated and time consuming. Stablecoins are part of the same category. Therefore, there is a long way for such coins to grow into what they should be.
Now that you know how stablecoins work, what their pluses and minuses are, you should know that there are more than 200 options out there. Some of them are more stable and popular than others, while a few of them have been discontinued. Now, what are the most popular choices on the market and what adds to their notoriety?
Known as USDT, Tether is the most popular stablecoin in the world – it is basically the Bitcoin of the stablecoin industry. Therefore, it servers a bunch of different purposes on the market, so it is a core option for many investors. These days, it could be almost impossible to imagine this industry without Tether, yet the stablecoin has faced a lot of controversy before getting where it is today.
Becoming familiar with Tether
Tether dates back to the Realcoin project. The project joined the market in the summer of 2014 and took the world by storm. First, it brought in some innovative technical aspects. Second, its publishers benefit from a solid reputation, some of the best rated names in the industry. Its co founders include Reeve Collins, Brock Pierce and Craig Sellars.
A brief history of Tether
The Realcoin project had a relatively short lifespan. By the fall of 2014, a new title came out – Tether. Tether was initially known as USTether – 1:1 peg with the USD. The second coin was backed by EUR, only for the startup to release the YenTether too, which is backed by the JPY. These days, you can simply find it as Tether only.
Getting a cryptocurrency backed by a real world asset might seem like an easy task, but this is only a misconception. In fact, the process is extremely complicated. Initially, Tether Limited agreed to keep an American dollar in reserve for every coin issued. However, things had to change fairly fast because the USDT issuance reached billions.
How Tether works
By the spring of 2019, the company modified the USDT backing. In other words, the company changed the backing in order to cover loans for affiliate companies. While this change was not seen very well, Tether is still the best rated stablecoin in the world.
When it comes to its operating principles, you should know that it runs on the Omni blockchain protocol. The platform has a good reputation and is better known for Bitcoin anchoring features. Omni's service is used by numerous companies.
When it first came out on the market, Omni used to record each transaction in two different ways. First, the transaction was recorded on the proprietary Omni system. Second, it was recorded in a Bitcoin transaction with the same hash.
These days, Omni has seriously advanced. Its assets bring in pegs on a few different blockchains. You might want to know that an Omni layer is based on Litecoin. Extra variants of tokens have also been introduced recently in order to keep
What makes Tether so popular
Tether is the most appreciated stablecoin in the world. It gives users lots of flexibility, as it can be used to replace the USD on many markets – including famous exchanges. The popularity of this stablecoin has some good reasons though.
Most importantly, there is a reliable exit strategy in place. Market volatility is a serious issue and concern in this industry. When something goes wrong on a market, investors do not have too many options. Generally, they will sell what they hold and get some flat currencies instead. The process takes time and obviously involves more losses – such as the fees associated with it. The other options involve taking the loss and hoping for better times.
Tether brings in an extra option – a thorough conversion to avoid both the volatility and fees.
The friction is not to be overlooked either. Tether works on the blockchain, meaning converting from other cryptocurrencies is fairly simple. There are no major expenses involved. Volatility can be avoided while still staying on the market.
In terms of remittance, Tether can take international transactions to another level. You can send Tether anywhere in the world. There is no need to pay transfer fees or convert your stablecoins into flat currencies – quite common for most cryptocurrencies.
The stablecoin makes a solid choice when interested in turning flat money into digital money. In some parts of the world, this procedure comes with lots of hassle. In others, it may not even be legal – transferring digital coins into flat money is even harder. Those who live in such regions can use Tether as a clever alternative.
It is important to take accountability into consideration too. For instance, businesses that pay with cryptocurrencies or take cryptocurrencies are always exposed to fluctuations. They often have to estimate the value of the respective payments against flat currencies. This concern becomes history with Tether, as the stablecoin is well backed and you know precisely what it is worth.
On the same note, Tether allows great liquidity. The token can be exchanged to overcome dealing with flat currencies and it is widely accepted all over the world. This way, exchanges will reduce the levels of regulations platforms have to meet.
USDC gained notoriety in the fall of 2018, when the massive crypto exchange Coinbase announced its support for it. The stablecoin was created in a tight collaboration between Coinbase and Circle Internet Financial. While the two institutions work as competitors on the exchange market, they have come together to create USD Coin – known as USDC. The stable coin is actually created by Centre Consortium – the joint venture of the two giants. It is worth noting that the stablecoin is backed by the USD held in reserve bank accounts.
Backed by the USD, the USDC is quite stable and will not really move from the actual value of the flat currency. In other words, most people will be able to buy or sell it for not more than $1. Other than that, the stablecoin works on the Ethereum blockchain. It is also compatible with ERC 20 standards, which help ease the transfers. On the same note, it takes advantage of the high security standards associated with the Ethereum blockchain. The coin is easy to keep, store and exchange.
What makes USDC unique is the fact that it became the first stablecoin backed by Coinbase. The stablecoin came out before its general acceptance. It was just a dull coin, yet it gained notoriety as soon as Coinbase announced its support for it.
Generally speaking, USDC is only issued by Circle, while Coinbase is responsible for easing deposits, conversions and transactions.
The USDC has gained more and more space with time. Initially, it was available through Coinbase's platforms only – but only accounts based in the USA, apart from New York. With time, as it gained notoriety, it became available on other exchanges as well. It was adopted by the Binance Exchange too, which contributes to its further growth.
The basics of USDC
Since this is an ERC 20 coin, two wallets will be able to transact various amounts of USDC anytime and anywhere. Transactions will be almost instant. This makes both large company payments and small ecommerce payments a breeze – quick and simple, without any major fees. Since the stablecoin market is not that volatile, this also means that users can hold the coin and use it without worrying about speculations.
The blockchain ecosystem keeps growing as well, which is another plus. The ERC 20 compatible USDC will grow along. There are already a bunch of exchanges and apps out there, but numbers are expected to skyrocket in the upcoming years. Any app relying on the Ethereum standard will be able to deal with the ERC 20 token.
Fintech developers and businesses will find a plethora of benefits associated with the USDC as well. It makes the whole venture a breeze because it maintains its value – it is almost constant, yet it does have small fluctuations here and there. It is also worth noting that the USDC was not created to take over the USD and replace it. Instead, it represents a middle choice between flat currencies and cryptocurrencies. It practically tried to implement flat currencies into a new market.
What makes USDC so popular
Used exclusively on the Ethereum blockchain, USDC has a bit of extra credibility when compared to other stablecoins. After all, anyone can keep an eye on it. People can monitor the circulating supply in real time. Those interested in it can also keep an eye on transactions. Plus, it can be stored in any major crypto wallet you can think of.
Featured on Coinbase, USDC is backed by reputable names in the industry. It is guaranteed to maintain its exchange rate of 1:1 with the USD. In other words, you can withdraw it for the American flat currency to your bank account.
In terms of liquidity, USDC is only overcome by Tether. It is the second most liquid option on the market. It is easily traded on almost every major cryptocurrency exchange, so there is not much to worry about – plus, it comes with regular audits to confirm its statements. Audits are performed by Grant Thornton and they guarantee the USD backing at 1:1. Such reports are published on a regular basis for the users' peace of mind.
The institutional backing makes USDC one of the top options on the market. Companies behind this stablecoin benefit from numerous rounds of venture capital. Their operations are well funded and compared to the top competitor – Tether, there is not as much drama around the stablecoin.
Last, but not least, while the stablecoin field is not really regulated, the main producer of USDC is regulated by the New York State Department of Financial Services – NYDFS. It carries a valid license from one of the strictest regulators in the USA, so you can leave yourself in good hands.
MakerDEO has recently joined the stablecoin industry by harnessing blockchain technology through its modern DAI. Backed by extra collateral, DAI is pegged to the USD. In other words, it can be described as a smart American dollar. Unlike flat currencies and just like any other stablecoin, DAI is not biased. Anyone can get it, anywhere. Forget about the cages associated with traditional financial services – fees, payment settlements or governmental restrictions. As a direct consequence, DAI runs in a DeFI (Decentralized Finance) space.
The technology behind DAI is fairly simple to understand. People can get DAI by placing their money into a vault. The collateral can vary. If deviations from the initial peg are observed, the user has the opportunity to issue DAI or simply redeem it. As a result, the user will make a small profit.
Furthermore, this mechanism also involves adjusting the market supply and demand to balance the DAI. There will be extra collateral in the vault, meaning there will always be more Ethereum than outstanding DAI.
DAI came out in the winter of 2017, as the cryptocurrency bubble was crashing. It has successfully managed to retain its value overtime, yet small error margins occurred every now and then – up to 5% on each side. Such situations have never lasted for more than just a couple of days.
A brief history of DAI
The people behind the system were highly influenced by similar projects, yet DAI comes with some improvements. For example, similar project bitUSD found it impossible to hold its peg to the American dollar. Therefore, DAI came out as a more stable system that would easily hold up against market fluctuations.
DAI is the successful result of the Maker project, which covers multiple aspects. It is one of the most sophisticated decentralized finance solutions on the market these days. Its primary role is to maintain sustainability with the stablecoin, but also to keep it decentralized.
How DAI works
There are two different coins in the system – DAI and Maker. One could not exist without the other and they are heavily linked through a smart contract. DAI is a Mandarin word and refers to a loan, which is exactly how this two coin system works. Both coins run on the Ethereum blockchain.
There are, of course, a few differences between DAI and Maker too. For example, Maker is a governance token. It runs under a DAO – Decentralized Autonomous Organization. Such an organization gathers together people with the same goal, with no worries related to third part factors. When it comes to DAI, it is a stablecoin, meaning its value is unchanged over long periods of time. The concept is extremely useful for the cryptocurrency market, as many crypto coins are known for incredible volatility and surprising falls.
DAI is an intelligent stablecoin. It is a self-sustaining authority and a system that has undergone numerous tests to become what it is today. It is one of the most stable options on the market and can easily compete against more reputable coins.
Plus and minuses associated with DAI
On another note, it has always been successful at holding its value in the long run. It is a great benefit for those trying to avoid major risks, yet small fluctuations of up to 5% have still occurred in the past – temporary fluctuations though.
From a negative point of view, DAI might seem a bit challenging for someone who is completely new with stablecoins. There is a decent technical barrier, but it is worth time to learn how to use and master this stablecoin.
Based on the above descriptions, Tether, USDC and DAI work on similar principles. There are not too many differences between them and they are all backed by flat currencies – the USD in this case. They can be used and stored on multiple platforms and they all have a good reputation. Their stability has not suffered overtime.
Similarities And Differences Between Tether, USDC And DAI
Now, when it comes to differences, there are a few things one should be aware of. Tether's reputation is good, but its past was a bit tumultuous. There have been some reports regarding its backing, but the project has been kept on track without too much hassle. From many points of view, it is perfectly normal for controversy to tackle the oldest and main option on the market – just like Bitcoin among cryptocurrencies.
At the same time, whether or not you are into Ether, you have to admit its incredible addition to the market. The project has opened the path for a new industry that seems to find the best of flat currencies and cryptocurrencies – everything in one place.
USDC goes in a different direction. Everything is transparent and crystal clear. It is backed by the USD and its reports regarding the backing are independent and performed by a different company. Such reports are public. Backed by Coinbase, USDC has gained an incredible notoriety lately and unlike Tether, it has not been involved in any controversies.
Finally, DAI is relatively new when compared to its competition, but it has gained immediate recognition for its decentralized purpose. Generally speaking, stablecoins are centralized – there is someone responsible for what is going on. DAI is a bit different. It is run through smart contracts. At the moment, it is the only stablecoin in the world that cannot be censored by governments. It cannot be seized – no other stablecoin can beat it.
Besides, DAI is backed by Ethereum, which can be verified on the actual blockchain.
Deciding on the best stablecoin is a bit of a challenge. Lots of people are not aware of these coins. They are considered part of the cryptocurrency market, which is not wrong at all. There are over 200 options out there and about 10% of them are discontinued, while 30% of them are perfectly integrated and running.
Choosing the perfect stablecoin for your needs
Deciding on the right stablecoin depends on what you have more confidence in. If you believe gold is the ultimate resource, perhaps you should find a stablecoin that is backed by gold. If you keep an eye on the economy in the EU and you are familiar with the market, confidence in the EUR could guide you towards a stablecoin that is backed by EUR.
Many leading stablecoins are backed by the USD though. All of them – apart from DAI – are centralized, so there is a little risk involved. A centralized stablecoin could be discontinued at any random time. Now, you should have your priorities straight. Learn more about the history, potential controversies and scandals associated with certain stablecoins – they might be irrelevant or not true, but it is still worth knowing more about the history.
Keep an eye on potential fluctuations, the market cap and the circulating supply – aspects that vary widely from one stablecoin to another. Market ranks will also give you a few good hints, as you will get more insights on the numbers associated with a stablecoin – besides, these ranks are managed by professionals.
Other than that, since there are not too many differences between stablecoins, the reputation is quite important – as well as the age in the industry.
Stablecoins are stable and usually backed by flat currencies. At this point, you probably ask yourself – why would you buy them? What is their use? How can you actually benefit from them? Here are a few cases that could do with stablecoins instead of flat currencies.
Use cases associated with stablecoins
You may not think about it, but there are some good reasons wherefore people buy DAI, for example. Some others turn to it in order to generate it. Basically, they make it instead of purchasing it. The procedure is relatively simple to understand. Those who buy DAI lock a surplus of collateral, meaning they can generate some DAI based on the collateral.
Natural money generation
Some of them do it to margin on ETH. They lock the ETH then, generate some extra DAI and buy even more ETH, hoping its value will increase in the long run. Some businesses follow the same trend too – they generate DAI to end up with extra operational capital.
Stablecoins are what you should normally refer to as cryptocurrencies – unfortunately, the trend has gone in the wrong direction. Cryptocurrencies are too volatile and more suitable for opportunistic investors and speculators. A stablecoin provides stability and this is what you want when it comes to day by day operations.
Stability over volatility
Since they are pegged to flat currencies and assets, stablecoins will rely on a secure value – often backed by extra collateral too.
Now, comparing stablecoins to classic financial services, you will no longer depend on schedules or business hours. Sure, you can still bank to certain limits on weekends or overnight, as many ATMs allow depositing cash and withdrawing funds. You can also make transfers through mobile applications. But then, many of these transactions are not settled until the next business day kicks in.
Stablecoins outweigh these issues. They are available on a 24/7 basis. Whether you rely on the decentralized DAI or you use a different coin, you make transactions or send money anytime and anywhere.
Transparency is key when dealing with digital coins because you can keep an eye on the circulating supply all the time. Transactions are all monitored and you know exactly what the value is – small fluctuations may appear here and there, but they are temporary. Indeed, apart from DAI, every other stablecoin is centralized, but the operation is still transparent and users can see how financial technologies work. Such a high level of transparency could never be achieve in the traditional financial world.
Most people rely on the traditional financial system these days, which is quite demanding – from lots of personal data to high credit score, deposits and so on. Their requirements tend to fail and lots of people find themselves unable to join the system. Stablecoins allow people from all over the world to gain access to money, regardless of the economic status of the region.
Imagine a country where inflation cripples the population. The government will most likely place all kinds of restrictions on the capital. Cash withdrawals will also be limited, hurting residents. For such residents, stablecoins represent easy access to a stable currency. The value of a particular stablecoin will be the same, whether it is in a super civilized country or an under development region. It can be exchanged with no interference from third parties.
Stablecoins look too good to be true. In fact, there are prolific financial reports that suggest even governments can rely on stablecoins for emergencies. But at the same time, there are a few controversies that hit this market every now and then – less likely to affect its growing popularity though.
Is there any controversy around stablecoins?
Tether is the leading name among stablecoins, yet competition is harsh. Over the past years, it has attracted a bit of controversy from multiple directions. Some studies blamed the coin for manipulating cryptocurrency prices. There was no evidence about such claims though, but some researchers believe that the massive growth of Bitcoin in 2017 was due to Tether.
Years ago, some also questioned Tether's ability to collaterize its stablecoins. Some blamed the project for not having enough American dollars for it. But then, an audit released in the summer of 2018 showed that the reserves are right and there are no reasons to be concerned.
Jeremy Allaire of Circle – the company behind USDC – has also raised some question marks and called for an open standard. He asked for a standard that all projects in this industry can rely on. The industry is still relatively new, so having some standards in place would give users a well deserved peace of mind. On the same note, such standards would help with the further implementation of stablecoins all over the world. Standards and regulations increase confidence and could boost the global economy.
Then, there also some voices out there that blame stablecoins because they can potentially undermine classic cryptocurrencies, which needed more than a decade to get where they are today. But then, there is nothing wrong with that. Cryptocurrencies have their fair share of users – especially speculators and investors. Pegged stablecoins will not really provide a financial gain or a trading profit, so the two fields are not really related.
Simply put, anyone can issue stablecoins. Banks can issue stablecoins, as well as social networks. Such projects are widely available and the people behind the project can choose what the stablecoins are backed by.
Who can issue stablecoins?
JPMorgan Chase's CEO has called Bitcoin a massive fraud. But with all these, the US bank has revealed some interesting plans to launch its own stablecoin. The reason? Simple – speeding up settlement times for international transactions. The Ripple CEO attacked the so called JPM Coin because other banks would not be able to implement this technology.
On another note, IBM has also joined the blockchain technology – World Wire – in a project with Stellar. The primary goal is to come up with a network to allow cross border payments with no issues at all. Multiple institutions from various countries have showed great interest in this project.
If you are not so much into technology, you might be more interested in Facebook's potential project. The company has reportedly employed plenty of engineers to come up with its own stablecoin. Facebook has had a few attempts already – projects started, stopped and started all over again. The coin could be a serious upgrade for the company, as it struggles with losing people due to privacy scandals.
Some people believe they can and the DAI project is the living proof. The DAI stablecoin is the only option out there that cannot be seized by a government. Some people believe that a stablecoin backed by the USD will inevitably be tied to the local banking system. In other words, they would have to deal with some sort of a centralized institution. This is actually the primary reason wherefore Satoshi Nakamoto has come up with the Bitcoin in 2009 – avoiding this type of infrastructure.
Can stablecoins become fully decentralized?
Different projects behind different stablecoins come with different future projections. For instance, Equilibrium has overcollaterized its coin up to 170%. Running on the EOS blockchain, the project features a decentralized system with no issues regarding scalability or safety.
New stablecoins are likely to hit the market and push the game even further. Trading volumes are on the rise as well, so this particular part of the crypto industry is very likely to keep growing.
Key considerations when above to join the stablecoin segment
Understanding every aspect related to stablecoins could be challenging for someone new, but there are a few points everyone should be aware of.
Stablecoins were initially developed to bypass the volatility associated with the crypto market. They are different from cryptocurrencies because they are not necessarily trying to bypass the centralized system associated with traditional banks. With these aspects in mind, stablecoins can be considered a middle choice between flat currencies and cryptocurrencies.
A typical cryptocurrency has an average volatility of about 5%. Of course, things can go through the roof or fall violently during a boom. But in comparison, a stablecoin has a typical volatility of just 0.5%.
There are three general types of stablecoins and most of the flat backed options are linked to the USD. Tether, USDC and DAI are some of the leading names out there, but other stablecoins are also worth some attention. When it comes to algorithmic coins, you should know that they are based on the quantity theory associated with money.
Finally, stablecoins can be used as an option to manage financial risk. They allow diversifying the portfolio a little. But then, they do not really make an actual investment because they are less likely to gain value overtime.
A little extra research on the stablecoin of your choice will still be required, but here are some of the frequently asked questions out there.
Frequently Asked Questions
How many stablecoins are in the world?
There are over 200 stablecoins on the market. The cryptocurrency market is more comprehensive thought and counts more than 6,000 coins. In other words, stablecoins represent a small percentage of the actual market, but the list keeps gaining size.
What is the most popular stablecoin out there?
Tether for stablecoins is like Bitcoin is for cryptocurrencies. In fact, Tether and stablecoins are used interchangeably, just like Bitcoin and cryptocurrencies. Its popularity is given by the fact that it was the first stablecoin on the market – newer coins may come with more innovation and improvements though.
How stable are stablecoins?
It is hard to determine. Stablecoins are more stable than cryptocurrencies, but they depend on the asset they are attached to. In other words, since no currency is free from volatility, stablecoins are not either. They depend on the assets they are backed by. Such a low level of volatility makes them fairly safe though.
What makes stablecoins popular?
Stablecoins are popular because they allow people to go towards the cryptocurrency market without taking the major risks associated with it. In other words, you can get some cryptocurrencies, but you will not be touched by the high volatility.
As a short final conclusion, stablecoins become more and more popular in the news and over the Internet. There are no doubts about it – they do grow in popularity and they have only just started. Many experts believe the world will see more and more stablecoins in the future, with new names aiming to sort out today's problems. Furthermore, it is likely to see a mass adoption of these digital currencies because they are not so speculative. There are no speculations, easy money to make or lots of money to lose.
In fact, if you think about it, stablecoins actually represent a convenience that lots of people can only dream about – from online shopping and fund transfers to contactless payments.