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What Is The Purpose of Stable Coins?
Stable Coins are created with the aim of solving or mitigating the price volatility and at the same time, retain other formidable characteristics such as censorship assistance and free flow of capital. In other words, Stable coins exist with the purpose of benefiting the users with low cost and high-speed transactions while alleviating price volatility
Types of Stable Coin
There are 4 main categories of stable coins:
Stable Coins maintain a steady price and are not affected by market volatility. They are moreover used by market experts to trade other cryptocurrencies which are experiencing big price swings. The market enthusiasts believe that eventually the Stable coins can be used for loans and remittances, wire transfers, which can make the transactions faster and cheaper in the long run. Hence, Stable Coins are becoming so popular nowadays. You can stay updated with the stable coins price here. (Stable Coin price chart). The experts are working on Stable coins price prediction and have some positive forecasts.
#1 Tether (USDT)
Tether is the most renowned stable coin cryptocurrency as of now, which grabs the top 5 cryptocurrencies enlisted in coinmarketcap, whose CEO is JL Van Der Velde. This is a fiat enabled collateralized stable coin, that is backed by the most popular fiat currency, USD (US Dollar) in a 1:1 ratio, which means the value of Tether will be equivalent to the value of a USD.
It is the most widely used stable coin with a market capitalization of $1,884,587,370, which has a high adoption rate. But very recently, there have been controversies surrounding over Tether as its easy to manipulate fiat-collateralized currency and it’s being found that Bitfinex, a popular exchange is behind USDT, which is also an ERC20 token.
Pros: Easy setup and full infrastructure support and is the 5th largest cryptocurrency
Cons: Issuing Tether without audit, No transparency
Market Cap: $1,884,587,370
#2 TrueUSD (TUSD)
This is also a US Dollar backed stable coin which is totally fiat-collateralized, transparently verified and audited and legally protected. The best part about TUSD is their transparency as their attestations are made public and anyone can access the reports, making it one of the most stable coins in 2020.
This stable coin is being managed by people who have worked with big organizations like Google, UC Berkley, and PwC. They are planning to tokenize TrueEuro, TrueYen, TrueBond as their asset in the near future so that stability can be introduced in the volatile crypto world. TrueUSD is also one of the top 25 cryptocurrencies in the world pertaining to their market capitalization of $213,749,697. The supported assets include small businesses, currencies, real estate, and commodities and many more.
Pros: Guarantees ownership recognition with financial and legal institutions
Cons: Not as popular as USDT, adoption rates are lesser
Market Cap: $213,749,697
Click here to know the best alternatives of Tether and how they work
#3 MakerDAO (DAI)
MakerDAO(stable coin ICO) is an autonomous and decentralized institution that has introduced a new approach to making stable coins. DAI was created in 2017 and not pegged to US Dollar(USD) but backed by Ethereum. This is a classic example of a stable coin which is pegged by another cryptocurrency. So, this falls under the category of crypto-collateralized cryptocurrency.DAI is having a market capitalization of $56,801,526.
One disadvantage being pointed by the market players is that it is very complex and not easily understandable and their model has not been well tested. But it is likely to gain more adoption rate in 2020 as compared to 2018.
Pros: A resilient stable coin, can borrow on your own terms
Cons: Complex, have suffered some security issue in the past
Market Cap: $56,801,526
#4 Paxos Standard (PAX)
PAX has been known as the world’s first regulated stable coin crypto, launched by the Paxos Trust Company, which are similar to Tether as even PAX is backed by US Dollar in equivalent 1:1 ratio. PAX is unique as it’s been approved by the New York State Department of Financial Services. The CEO of PAX, Charles Cascarilla said that Paxos represents a huge advancement to the digital assets leveraging the conventional financial systems and enabling a global frictionless economy.
While PAX coins are circulated, the corresponding US Dollars are kept in reserve at FDIC-insured US banks and after redeeming, the PAX tokens are destroyed. PAX is an ERC20 token with a market capitalization of $167,241,364 and the Ethereum wallets support PAX tokens also and is one of the best crypto stable coins.
Pros: Because of it being an ERC20 token, human errors are minimized
Cons: Not many wallets are available, most of them are in beta stage.
Market Cap: $167,241,364
#5 Gemini Dollar (GUSD)
This is alike PAX in the way that both of them went on live on the same day and are regulated by the New York State Department of Financial Services. They declared themselves as the world’s first regulated stable coin. Gemini Dollar is an ERC20 token as well backed by USD with a market capitalization of $86,072,734, launched by Gemini Trust Company, run by the billionaire Winklevoss twins, known for someone repeatedly proposing for BTC ETF(exchange-traded funds).
For every 1 GUSD issued, there is 1 USD held at Trust company and State Street Bank. Every month the balance is being examined by the BPM Accounting to ensure accuracy and the reports are made available for review, ensuring the transparency.
Pros: a hybrid online-offline approval mechanism for token issuance that provides the desired level of security and flexibility
Cons: Its new crypto, which hasn’t got the proper recognition yet.
Market Cap: $86,072,734
#6 USD Coin (USDC)
The cryptocurrency finance firm circle Internet financial Ltd and the CENTRE open source consortium launched USDC, which is also backed by dollars. This is also an ERC20 token, available on many exchanges. The CEO of USDC said that USDC aims to solve fundamental problems and made this stable coin trustworthy, legitimate built on open standards. USDC is one of the best stable cryptocurrencies with a market capitalization of $191,727,658.
The circle would be using Grant Thornton, a professional services firm, to assist the management in verifying Circle’s US dollar reserves. It is creating multiple possibilities in lending, investing and trading finance and is one of the best amongst stable coins stock.
Pros: Can be used as a stable coin with the exact features of a crypto
Cons: Lack of Scalability and Merchant Adoption
Market Cap: $191,727,658
1. What is a stablecoin?
Stablecoins are the ones whose value remains stable, hence the name (which is one of the benefits of a stable coin), and that is pegged to the value of an underlying asset.
2. How do Stablecoins make money?
As per the CEO of London Block Exchange, Stable Coins bring added value to the company that issues them and helps awareness of more lucrative products, the company might be trying to sell. The vale is not in the coin, but the company.
3. Why do we need Stablecoins?
As the stablecoins' value doesn't affect even when the market fluctuates, it becomes desirable to own stablecoin.
4. Are Stablecoins cryptocurrencies?
Stablecoins are cryptocurrencies itself, but with a different feature- its value remains stable and even pegged to the underlying asset value.
Stable Coins are created with the aim of solving or mitigating the price volatility and at the same time, retain other formidable characteristics such as censorship assistance and free flow of capital. In other words, Stable coins exist with the purpose of benefiting the users with low cost and high-speed transactions while alleviating price volatility
Types of Stable Coin
There are 4 main categories of stable coins:
- Fiat collateralized Stable Coin- backed by fiat.
- Commodity Collateralized Stable coin- backed by interchangeable assets like precious metals.
- Crypto-collateralized Stable coin- backed by other cryptocurrencies.
- Non-Collateralized Stable Coin- not backed by anything.
Stable Coins maintain a steady price and are not affected by market volatility. They are moreover used by market experts to trade other cryptocurrencies which are experiencing big price swings. The market enthusiasts believe that eventually the Stable coins can be used for loans and remittances, wire transfers, which can make the transactions faster and cheaper in the long run. Hence, Stable Coins are becoming so popular nowadays. You can stay updated with the stable coins price here. (Stable Coin price chart). The experts are working on Stable coins price prediction and have some positive forecasts.
#1 Tether (USDT)
Tether is the most renowned stable coin cryptocurrency as of now, which grabs the top 5 cryptocurrencies enlisted in coinmarketcap, whose CEO is JL Van Der Velde. This is a fiat enabled collateralized stable coin, that is backed by the most popular fiat currency, USD (US Dollar) in a 1:1 ratio, which means the value of Tether will be equivalent to the value of a USD.
It is the most widely used stable coin with a market capitalization of $1,884,587,370, which has a high adoption rate. But very recently, there have been controversies surrounding over Tether as its easy to manipulate fiat-collateralized currency and it’s being found that Bitfinex, a popular exchange is behind USDT, which is also an ERC20 token.
Pros: Easy setup and full infrastructure support and is the 5th largest cryptocurrency
Cons: Issuing Tether without audit, No transparency
Market Cap: $1,884,587,370
#2 TrueUSD (TUSD)
This is also a US Dollar backed stable coin which is totally fiat-collateralized, transparently verified and audited and legally protected. The best part about TUSD is their transparency as their attestations are made public and anyone can access the reports, making it one of the most stable coins in 2020.
This stable coin is being managed by people who have worked with big organizations like Google, UC Berkley, and PwC. They are planning to tokenize TrueEuro, TrueYen, TrueBond as their asset in the near future so that stability can be introduced in the volatile crypto world. TrueUSD is also one of the top 25 cryptocurrencies in the world pertaining to their market capitalization of $213,749,697. The supported assets include small businesses, currencies, real estate, and commodities and many more.
Pros: Guarantees ownership recognition with financial and legal institutions
Cons: Not as popular as USDT, adoption rates are lesser
Market Cap: $213,749,697
Click here to know the best alternatives of Tether and how they work
#3 MakerDAO (DAI)
MakerDAO(stable coin ICO) is an autonomous and decentralized institution that has introduced a new approach to making stable coins. DAI was created in 2017 and not pegged to US Dollar(USD) but backed by Ethereum. This is a classic example of a stable coin which is pegged by another cryptocurrency. So, this falls under the category of crypto-collateralized cryptocurrency.DAI is having a market capitalization of $56,801,526.
One disadvantage being pointed by the market players is that it is very complex and not easily understandable and their model has not been well tested. But it is likely to gain more adoption rate in 2020 as compared to 2018.
Pros: A resilient stable coin, can borrow on your own terms
Cons: Complex, have suffered some security issue in the past
Market Cap: $56,801,526
#4 Paxos Standard (PAX)
PAX has been known as the world’s first regulated stable coin crypto, launched by the Paxos Trust Company, which are similar to Tether as even PAX is backed by US Dollar in equivalent 1:1 ratio. PAX is unique as it’s been approved by the New York State Department of Financial Services. The CEO of PAX, Charles Cascarilla said that Paxos represents a huge advancement to the digital assets leveraging the conventional financial systems and enabling a global frictionless economy.
While PAX coins are circulated, the corresponding US Dollars are kept in reserve at FDIC-insured US banks and after redeeming, the PAX tokens are destroyed. PAX is an ERC20 token with a market capitalization of $167,241,364 and the Ethereum wallets support PAX tokens also and is one of the best crypto stable coins.
Pros: Because of it being an ERC20 token, human errors are minimized
Cons: Not many wallets are available, most of them are in beta stage.
Market Cap: $167,241,364
#5 Gemini Dollar (GUSD)
This is alike PAX in the way that both of them went on live on the same day and are regulated by the New York State Department of Financial Services. They declared themselves as the world’s first regulated stable coin. Gemini Dollar is an ERC20 token as well backed by USD with a market capitalization of $86,072,734, launched by Gemini Trust Company, run by the billionaire Winklevoss twins, known for someone repeatedly proposing for BTC ETF(exchange-traded funds).
For every 1 GUSD issued, there is 1 USD held at Trust company and State Street Bank. Every month the balance is being examined by the BPM Accounting to ensure accuracy and the reports are made available for review, ensuring the transparency.
Pros: a hybrid online-offline approval mechanism for token issuance that provides the desired level of security and flexibility
Cons: Its new crypto, which hasn’t got the proper recognition yet.
Market Cap: $86,072,734
#6 USD Coin (USDC)
The cryptocurrency finance firm circle Internet financial Ltd and the CENTRE open source consortium launched USDC, which is also backed by dollars. This is also an ERC20 token, available on many exchanges. The CEO of USDC said that USDC aims to solve fundamental problems and made this stable coin trustworthy, legitimate built on open standards. USDC is one of the best stable cryptocurrencies with a market capitalization of $191,727,658.
The circle would be using Grant Thornton, a professional services firm, to assist the management in verifying Circle’s US dollar reserves. It is creating multiple possibilities in lending, investing and trading finance and is one of the best amongst stable coins stock.
Pros: Can be used as a stable coin with the exact features of a crypto
Cons: Lack of Scalability and Merchant Adoption
Market Cap: $191,727,658
1. What is a stablecoin?
Stablecoins are the ones whose value remains stable, hence the name (which is one of the benefits of a stable coin), and that is pegged to the value of an underlying asset.
2. How do Stablecoins make money?
As per the CEO of London Block Exchange, Stable Coins bring added value to the company that issues them and helps awareness of more lucrative products, the company might be trying to sell. The vale is not in the coin, but the company.
3. Why do we need Stablecoins?
As the stablecoins' value doesn't affect even when the market fluctuates, it becomes desirable to own stablecoin.
4. Are Stablecoins cryptocurrencies?
Stablecoins are cryptocurrencies itself, but with a different feature- its value remains stable and even pegged to the underlying asset value.
