‘Cryptocurrencies’ have essentially changed how things work. A plethora of options are made available by different people when it comes to cryptocurrencies. Yet, we are still unconvinced of it being used to buy any goods or service. The reason behind it is highly volatile nature of cryptocurrencies.
Nobody can predict value of cryptocurrency as it can decrease or increase to any percent in a matter of hours. Therefore, if we want to use cryptocurrencies in our day to day life we need something stable, this is when Stablecoins come into being.
But the question is what are Stablecoins, what is their importance, what are different types of Stablecoins and what are the best popular Stablecoins in the cryptosphere.
What Are Stablecoins?
Stablecoins, a new genre in cryptocurrency world linked with real world assets like USD, EUR, JPY, sometimes with gold or oil. This means their price is stable as opposed to the price of BTC or ETH that keeps varying ever few hours. Stablecoins the best currency to invest.
But don’t get confused they aren’t linked to any central or nation state bank. Instead they are dependent on their cryptograph and rigorous audits to make sure the primary resource is present and is where it is needs to be.
Stablecoins aren’t controlled by any jurisdiction and they are accessible worldwide.
Importance Of Stablecoins
Stablecoins as the name suggests are stable and work like a fiat currency. They give you a freedom of spending or receiving money without thinking about price fluctuation.
Say for example, you paid in crypto to a merchant and the crypto price declined you’ll be happy, but if it is opposite i.e. the crypto price increases you’ll be sad.
But if you would have paid using any Stablecoin, things would be different as stable crypto acts like a fiat and give user mental peace to spend and receive cryptocurrency. This is the reason why Stablecoins are becoming important and popular.
Types of Stablecoins
Stablecoins are of three types and here we will discuss about all the three types of Stablecoins.
1. Fiat-Collateralized Stablecoin:
Stablecoins backed by fist reserves like USD, EUR etc. are Fiat-Collateralized Stablecoins and is the best currency to invest in.
2. Crypto-Collateralized Stablecoins
Stablecoins backed by other cryptocurrencies are called Crypto-Collateralized Stablecoins. These coins have a risk involved and they are yet to be tested fully.
3. Non-Collateralized Stablecoins
Stablecoins without any backing are Non-Collateralized Stablecoins. Their supply is governed algorithmically by its smart contracts that keep expanding or contracting to keep price stable.
What are the advantages and disadvantages of Stablecoins?
Each currency sometime or the other has its pros and cons, similarly Stablecoins the digital currency have negatives and positives. Those part of crypto world have been looking for a Stablecoins to deal with volatility and this can be achieved when they know about advantage or disadvantage of the Stablecoin.
Advantages of Stablecoins:
Like each currency Stablecoins too have their own advantages, that makes it acceptable. Here, we list advantages of Stablecoins and further you will read about best Stablecoins:
- Gives mental peace while trading.
- Easy liquidation for both traders and investors in situation of market fall.
- Fills instability.
Disadvantage of Stablecoins:
Stablecoins are no exception like other coins they too have disadvantages. Here, list some known disadvantages of Stablecoins:
- They supply manipulation and crypto market manipulation like USDT.
- Some of them are not backed by assets at all.
- More centralized as a company controls them.
- They rise or fall up to (+/-) 10%
- Runs into unsolvable Blockchain problem.
We hope by now you must have understood what Stablecoins are so now, let’s move to the digital currency list of best Stablecoins.
List of Best 8 Stablecoins
Stablecoins as already discussed are coins with stability and are backed with a stable asset. Here, we list the best Stablecoins:
1. Tether (USDT):
The first well-known Stablecoin that started in early 2015 is capable of transforming cash into digital currency. Like every other cryptocurrency, Tether is based on Blockchain technology.
- Unlike other altcoins, Tether works in Bitcoin blockchain.
- Tether can be used as an alternative to Bitcoin in different environments that are cryptographically secure.
- With Tether integration with dealers, crypto-wallets and exchanges is easy.
- Omni-layer protocol.
- 100% Backed.
- Not affected by any liquidity or price change.
- Easily issued and withdrawn.
The one thing that makes it different is, it is 100% backed by USD. This means it is a fiat collateralized stable cryptocurrency backed by fiat currency on a 1:1 ratio. Along with this, Tether also offers liquidity to the cryptocurrency exchanges this means with Tether once can easily deal with bank that don’t accept Fiat currencies.
Another cryptocurrency backed by USD, that works on the TrustToken platform. The platform bridges real-world assets and Blockchains enabling trustworthy asset tokenization.
- Legal protection.
- 1 to 1 parity.
- Financial services.
- Crypto traders.
- Liquidity premiums.
- Democratize financial opportunities.
- Securely and easily invest in global opportunities.
- Direct Banking.
- Bank Grade security.
TrueUSD is the first asset fully fiat-collateralized token, verified by third part attestations and legally protected Stablecoins by TustToken. Users can exchange into USD directly with an escrow account. Also, anyone who passes a standard KYC/AML check can redeem TrueUSD for USD.
MakerDAO, a decentralized autonomous organization started in 2017 proposed an innovative approach to make Stablecoin called DAI. This cryptocurrency works like the other two explained above and is valued against the USD. But not backed by USD instead backed by Ethereum Blockchain and so becomes crypto-collateralized Stablecoins.
Benefits of Dai:
- Collateralized debt position smart contracts.
- Price stability.
- Global Settlement.
- Risk Management.
- Addressable market.
The demand of DAI is created via smart contracts run on Ethereum Blockchain. Dai is created by the Dai Stablecoin system, a decentralized platform that runs on the Ethereum Blockchain. Dai gives anyone, anywhere the freedom to choose that maintains its purchasing power.
Three Princeton graduates founded Basecoin the cryptocurrency, that has made its mark in the cryptosphere. It is a non-collateralized Stablecoin, meaning it is has not backing.
Wondering, how it can be a Stablecoin?
Well, as Basis works with an algorithmic like central bank, this makes it a backing free Stablecoin. Basis is designed to maintain a stable value that serves as a medium of exchange accessible by anyone having an internet connection.
Benefits of Basis:
- Low-volatility cryptoassest for traders.
Basis’s aim to offer a cryptocurrency free of instability, and one in which people can invest with peace of mind. Basis makes use of up to three tokens including Basis, Bond tokens, and Share tokens. But only Basis tokens are pegged to the USD.
Another non-collateralized Stablecoin, not based upon standard Blockchain, instead powered by Hedera Hashgraph hosted on Hashgraph. A currency for next-generation payments.
Carbon a trustless cryptocurrency that closely correlates with the US Dollar, achieves its price stability from an algorithm that helps in consensus and allows to figure out the right price of each Carbon.
Benefits of Carbon:
- Lighting Fast.
- Compatible with smart contracts.
Carbon is the next in line piece stable cryptocurrency that is fully compatible with smart contracts and pegged to US Dollar.
Carbon system is built on a blockchain-like technology — Hedera Hashgraph. that provides extraordinary quantity and speed i.e. Carbon can process over 100,000 transactions per second.
6. Haven Protocol:
A crypto-collateralized unique Stablecoin, that uses maker/taker market philosophy to achieve stability. It is an untraceable cryptocurrency with a mix of standard market pricing and stable flat value storage.
This is achieved via dual coin Blockchain. The core concept of Haven protocol is Offshore Storage.
Benefits of Haven:
- Autonomous approach to solve volatility.
- Privacy focused
- Offshore Storage
To implement Haven Stablecoin, it uses, two token structures namely, Haven and Nomin.
- Nomin (eUSD) is the Stablecoin that has floating supply and derives its value from Haven.
- On the other hand, Haven is crypto collateral, has a fixed supply and gives value to Nomin. Haven holders collateralize Haven in a distributed way and receives transaction fee from Nomin users.
Brings Stablecoin to a next level, a virtual currency that merges best aspects of cryptocurrencies and fiat currencies. GlobCoin is a crypto platform that provides access to stable payment tokens.
GLX is it StableCoins, pegged to 15 global currencies and gold. User can access Globcoin using native coin GCP utility token.
Benefits of GLX:
- 100% pegged.
- Stable performance.
- Reflects world economy as it is a Global Coin based on the 15 largest economies, adjusted by Purchasing Power Parity (PPP).
GLX is a stable cryptoasset that functions as a store of value and a medium of exchange. On GlobCoin, investors will be able to enjoy the freedom to express their view on a country or group of currencies. TO summarize we can say, GlobCoin is one of the best options for those who wish to send or receive money in a cheap, safe, fast, and highly secure way.
Digix gold or DGX is an ERC-20 token pegged to physical gold. One DGX stands for 1 gram of gold on Ethereum.
DGX tokens can be transacted and transferred with full visibility and stability. They can easily be stored in and transferred between Ethereum compatible wallets.
Benefits of DGX:
- Stable Asset
- Cryptographically secure.
- Fully visible over ownership.
Besides, the Gold is stored in the Safehouse vault records of which can be publicly accesses and verified using Asset Explorer. Plus, physical redemption of DGX can be done in Singapore. Besides, Digix tokenizes gold on Ethereum Blockchain with Proof of Provenance (PoP) protocol, that brings together third-party verification to ensure that the process is secure.
Future Of StableCoinss?
In my opinion, Stablecoins have long way to go as they have proven their worth and usability. There is no denying to the fact that there are controversies when it comes to StableCoinss but TrueUSD, USDT, DAI are doing excellent job.
As cryptocurrencies are becoming popular we need a Stablecoin in market that works irrespective of what goes on in the crypto world. Besides, Stablecoins will prove to be more beneficial if they become more stable and are implemented with strict audits.
At the present, Stablecoins might be seen as highly ambitious and highly experimental, but can be deemed as the future of cryptocurrencies.
We hope you liked our article based on digital currency and best Stablecoins.