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November 1st, 2021

What exactly is Tether?

Stablecoins are crypto currencies without volatility.

Tether is a "Stablecoin" and it is not the only one in the market. 

Stablecoins are cryptocurrencies without volatility. The price and value of stable coins keep changing frequently. But in the case of stable coins, the price remains constant. Unless something too dramatic happens to the assets tied to the stable coins, their value won’t change.

Stablecoins enable investors to enjoy the benefits of the blockchain without having to worry about the risk of market fluctuations. Stablecoins are often used as a substitute for normal crypto currencies since they are backed by assets from the real world. Know about a few things to find the best stable coins.

 

1.) Different Types of Collateral Backed Stablecoins

Stablecoins can be backed by the following:

Fiat currencies: Fiat currencies include traditional currency such as the dollar or pound. Some popular stable coins backed by fiat currencies are USD coin (USDC), Gemini Dollar (GUSD), and Tether (USDT).

Other crypto currencies: People who don’t want to do anything with traditional currencies can choose stable coins backed by other crypts. Smart contracts are often drawn out to reduce the volatility of the crypto currencies that back the stable coins. Some typical examples in this category are Haven (HAV) and Dai (DAI).

Commodities: Sometimes, the value of stable coins depends on commodities like oil, gold, or real estate. Palos Gold (PAXG) and Digit Gold (DGX) are two of the most common examples.

 

2.) Stablecoins Involve Risks

People often have the misconception that the absence of volatility in the case of stable coins ensures zero risks. If your wallet or exchange gets hacked, it becomes quite impossible to recover the assets even if they are stable coins. When a custodial exchange goes bankrupt, there’s no assurance regarding what will happen to your stable coins. Moreover, if the stable coins are properly backed by collaterals, it might cause trouble.

 

3.) Stablecoins Can Help You Earn Interest

One of the most appealing attributes of stable coins is that they can help you earn interest. It is possible to earn higher interest rates than a savings account. Many crypto currency exchanges pay you a high-interest rate of around 5 percent to 10 percent when you deposit stable coins.

Crypto exchanges can pay you high rates because it lends out money through the system of decentralized finance. People borrowing the money have to put collateral against the money they are taking. It helps in getting some protection. However, in case of an economic crisis, how much protection is in place needs to be detected.

 

4.) Search For An Audited And Transparent Stable coin

Some stable coins do not fully back their currency. As a result, if people sell their stable coins simultaneously, some people are bound to be left with no assets. Stablecoins need to be regularly audited to confirm the quantity of cash that’s kept in reverse. Before choosing a stable coin, find out if all the information regarding assets is released properly and checked by an external auditor.

 

Some of the best stablecoins you can invest in right now

By now, you know that stable coins are the best to receive protection from economic fluctuations in the market. Take a glance at some of the popular stable coin options that you can invest in.

 

Tether

This is a peer-to-peer network of block chain and an open-source crypto currency. But it is one of the safest stable coins to invest in. The value of Tether is tied to the US dollar. Therefore, it is a kind of stable coin backed by a fiat currency. Tether is an outcome of a combined effort from academia and science.

If you observe closely, you will figure out that Tether is not easily affected by fluctuations in market values. Therefore, the popularity of Tether is not surprising at all. Moreover, you will face very few difficulties while trying to exchange Tether into real currency. The risks associated with Tether are quite low as compared to other stable coins.

 

True USD

The first stable coin to be regulated and backed by the US Dollar is True USD. The simplicity and reliability of TUSD make it a popular choice for many. A lot of transparency is also associated with True USD. The stable coin does not use any special algorithm for its functionalities. This stable coin was introduced at the beginning of 2018.

There is no doubt regarding the fact that True USD is one of the best staking stable coins. It has the potential to connect with the next-gen and can be retained for quite a long time. The stable coin was initiated to offer protection against the volatility of the economic market. The intention behind launching this stable coin was to enable new opportunities for people to invest in other stable coins apart from the highly popular ones.

 

Utopia USD Stable coin

The primary anonymous stable coin that was backed by the American dollar is Utopia USD Stable coin. People have begun to trust it for the high amount of security that it offers. If you are looking for a method of liquid payment that has good speed, Utopia USD is your answer. The Utopia USD Stable coin maintains a parity of 1:1 with the American dollar. You will face no barriers in terms of geographical and political boundaries while making transactions with this stable coin. The platform does not involve any kind of interference from the state structures. Moreover, the platform allows tax-free savings and the fees on the platform are unexpectedly low.

 

USD Coin

You can also keep your trust in the USD coin if you are looking for a reliable stable coin. It is a collaborative effort between Coin base and Circle. The stable coin is backed by a number of real-world assets. Initially, it used to be operated on the ethereal network of block chain. But gradually, the stable coin expanded to Aground and Solana block chains. The reason behind the popularity of the USD coin is its transparency in terms of auditing and funding. Furthermore, the speed of transactions when using USD coins is also impressive. This stable coin increases the value of the block chain ecosystem as a whole.

 

Binance USD

One of the leading examples of a US regulated stable coin is Finance USD. This stable coin is completely backed by the US dollar. You can fund your transactions using faster ways with the help of Finance USD. It is also frequently used as a medium of exchange. The stable coin is accepted as a mode of payment in the global space of crypto currencies. The State Department of Financial Services in New York has also approved this stable coin. Binance USD aims to provide the highest level of security and protection to customers. You will not have to carry any charge while trying to redeem or create Finance USD.

 

Goldcoin

It is one of the leading examples of stable coins backed by commodities. You have probably figured out from the name that it is backed by gold. The stable coin is known to run on the block chain network of Ethereal. You can buy assets and keep them using this stable coin. Gold coin also enables users to get original bullion. But to receive genuine bullion, you will have to disclose your identity. This might not work in favor of a few investors. But you can use this stable coin for buying gold while staying anonymous.

  

Ending Note

Stablecoins are the safest way to enter the world of crypto currency. Remember the factors discussed above and find out the best stable coin available in the market.

 

 

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