Are you new to the cryptocurrency market? Are you looking to start with safer options? Dive into Tonraffles’ article to learn what stablecoins are, their role, and explore the top most popular stablecoins today!
Table of Contents
What is a Stablecoin ?
A stablecoin is a type of cryptocurrency created to track the value of another asset or currency. Transactions with stablecoins can be conducted on international exchanges, often denominated in US dollars or Euros.
The goal of stablecoins is to minimize fluctuations in the value of assets in the market. They leverage the advantages of blockchain technology to efficiently transfer value peer-to-peer. Thanks to this mechanism, stablecoins help users avoid significant fluctuations in the crypto market.
What are the Characteristics of Stablecoin?
Stablecoin is simply understood as a stable currency, with “Stable” implying reliability, trustworthiness, and balance. By pegging the value of assets to fiat currency (FIAT) or gold, stablecoins can maintain the value of the cryptocurrency stable. They inherit the decentralized nature of Blockchain, ensuring security and tight control.
What is the role of Stablecoin?
After understanding what Stablecoin is and its characteristics, let’s explore the role of Stablecoin!
For new and small investors, they often use Stablecoin to avoid the strong market fluctuations, seeking a safe haven in the turbulent price waves. For businesses and large investors, Stablecoin is seen as an alternative payment method to traditional methods. They are very useful when investors want to avoid the large fluctuations of conventional cryptocurrencies.
List of Popular Stablecoins Today
Stablecoins not only help users avoid market volatility but also ensure stability and safety during transactions. The choice of which Stablecoin to use depends on the specific goals and strategies of each investor.
Here is a detailed list of some popular stablecoins today:
Tether (USDT)
Tether (USDT) is a stablecoin that emerged in 2014 and has become one of the most popular choices in the cryptocurrency market. Backed by fiat currency, Tether is capable of stable trading in US dollars, with a fixed exchange rate of 1:1.
Dai (DAI)
Initially introduced into the MakerDAO ecosystem, DAI is then used as collateral for users. With a value exceeding one US dollar, MakerDAO secures DAI by pegging it to the US dollar at a fixed rate of 1:1. In the cryptocurrency market, DAI often experiences more fluctuations compared to Tether.
Binance USD (BUSD)
Binance USD (BUSD) is widely used in the crypto space. Created by a global cryptocurrency exchange, Binance USD is licensed by the New York Department of Financial Services. This cryptocurrency is pegged to the US dollar at a fixed rate of 1:1.
USD Coin (USDC)
USD Coin (USDC) is a digital currency equivalent to 1 US dollar. The USD Coin serves various roles in the cryptocurrency field and is commonly used in decentralized financial processes. To date, USD Coin is the second-largest stablecoin by market capitalization, following only Tether (USDT).
Where Can You Buy Stablecoins ?
You can purchase Stablecoins through professional exchanges like CEX and DEX.
CEX Exchanges
Centralized exchanges (CEX) facilitate the buying and selling of Stablecoins using various crypto assets.
P2P (Peer-to-Peer) trading on CEX exchanges allows investors to trade directly with funds in their bank accounts. Cex exchanges such as: binance, Mexc, bybit, kucoin..
DEX Exchanges
Decentralized exchanges (DEX) are designed to support investors in exchanging Stablecoins with lower price slippage.
Trading on DEX exchanges ensures transparency and flexibility for users.
If you prefer not to buy directly, you can also opt to convert tokens within the blockchain into Stablecoins. This process can generate Stablecoins through the use of collateralized loans, expanding the investment and trading capabilities of investors in the crypto market.
Conclusion
Hopefully, this article has helped you understand what stablecoins are, their characteristics, and explore the most widely used stablecoins today.
