What is a stablecoin in crypto? A stablecoin is a type of cryptocurrency where the value of the digital asset is supposed to be pegged to a reference asset, which is either fiat money, exchange-traded commodities, or another cryptocurrency.
Stablecoins have a number of purported purposes. They can theoretically be used for payments and are in theory more likely to retain their value than cryptocurrencies, which are highly volatile.
Stablecoin reduces price volatility by backing its value against a conventional asset. The backing asset could be a combination of currencies, a single fiat currency, or other valuable assets. Stablecoins aims to create a stable and reliable environment to increase cryptocurrency adoption and negate digital assets’ speculative nature.
What is Stablecoin in Crypto?
A stablecoin is a digital currency that is pegged to a “stable” reserve asset like the U.S. dollar or gold. Stablecoins are designed to reduce volatility relative to unpegged cryptocurrencies like Bitcoin.
Stablecoins bridge the worlds of cryptocurrency and everyday fiat currency because their prices are pegged to a reserve asset like the U.S. dollar or gold. This dramatically reduces volatility compared to something like Bitcoin and results in a form of digital money that is better suited to everything from day-to-day commerce to making transfers between exchanges.
Best Stablecoins
Cryptocurrency is notoriously volatile, which reduces mainstream participation and generally limits its use as a usable platform for exchanging goods and services. Stablecoins are useful for investors who want to keep their assets in the crypto space. Switching from crypto to fiat currency can be expensive and time-consuming. Stablecoins give investors the best of both worlds: a stable asset within the crypto space with an advantageous transaction speed.
Looking for a top stablecoin list? You’re in the right place. Here are some of the best stablecoins that you can buy now.
USD Coin
USDC is a digital dollar, also known as a stablecoin, that’s available 24/7 and moves at internet speed. USD Coin is managed by a consortium called Center, which was founded by Circle and includes members from the cryptocurrency exchange coin base and bitcoin mining company Bitmain, an investor in Circle. USDC is issued by a private entity and should not be confused with a central bank digital currency (CBDC).
The coin launched in 2018 and became one of the top stablecoins because it offered an alternative to USDT. For stablecoin investors looking to earn a safe return, they can visit staking and lending platforms to earn between 6% and 14% interest for loaning out their USDC.
Tether
The Tether stablecoin was officially released in 2014 and was one of the earliest stablecoins to be created. It is a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner. Tether tokens (USDT) pioneered the stablecoin model and are the most widely traded. Tether tokens offer the stability and simplicity of fiat currencies coupled with the innovative nature of blockchain technology, representing a perfect combination of both worlds.
Magic Internet Money
Magic Internet Money is a stablecoin that is soft-pegged to the US dollar and minted by the Abracadabra. Money lending platform that is decentralized. Abracadabra uses interest-bearing crypto assets as collateral to mint MIM, which can be swapped for other stablecoins.
MIM tokens can be traded on decentralized exchanges. The most popular exchange to buy and trade Magic Internet Money is Platypus Finance, where the most active trading pair MIM/USDC has a trading volume of $27,944.49 in the last 24 hours.
Binance USD
Binance USD is a fiat-backed stablecoin issued by Binance and Paxos. Each BUSD token is backed 1:1 with US dollars held in reserve. BUSD is one of the best stablecoins on this list because of its interest-earning potential.
According to Binance, investors can earn up to 15% interest by lending out BUSD. This huge yield allows the stablecoin to pose a sizable threat to the likes of stablecoin giants like USDT and USDC. If you are looking for virtual currencies with a good return, BUSD can be a profitable investment option.
Neutrino USD
Neutrino USD is the first synthetic asset issued through the Neutrino Protocol, an algorithmic lending protocol built on the Waves blockchain that allows for the creation of crypto-collateralized stablecoins tied to a specific real-world asset.
As an algorithmic stablecoin, USDN is backed by WAVES and the U.S. dollar, and you can exchange $1 worth of USDN for $1 worth of WAVES. Investors are then encouraged to stake their USDN stablecoins to provide liquidity and are handsomely rewarded with up to 15% APY yields.
FAQ
Is Bitcoin a Stablecoin?
A stablecoin is a token that has a non-volatile price, and Bitcoin is a cryptocurrency whose price is volatile in nature. Stablecoins are used to minimize the price volatility of cryptocurrencies like Bitcoin.
What is Considered Stablecoin?
Stablecoins are cryptocurrencies that attempt to peg their market value to some external reference. Stablecoins are more useful than more volatile cryptocurrencies as a medium of exchange. It may be pegged to a currency like the U.S. dollar or to the price of a commodity such as gold.
Why Would you Buy a Stablecoin?
“Stablecoins are used to bridge the gap between fiat currency and cryptocurrencies without the volatility,” says Richard Gardner, CEO of Modulus Global. “Stablecoins also allow people from high inflation economies to store the value of their savings in an asset pegged to a more stable currency, like the U.S. dollar.
Is Dogecoin a Stablecoin?
This is primarily because Dogecoin does not have a supply cap like other cryptocurrencies such as Bitcoin, which has a capped supply of 21 million coins. Dogecoin has instead a deliberately stable, “deterministic inflation” rate of 10,000 per block with a block time of one minute.
How Many Stablecoins Exist?
How many stablecoins are there? There are approximately 200 stablecoins today. Some of the most popular examples include: Tether (USDT) is considered the world’s first stablecoin and has the highest market cap of all its peers, sitting at just under $72.5 billion as of June 2022.
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