In simple terms, stablecoins are digital currencies tied to the value of
fiat funds or any other asset.
Ideally, the price of a stablecoin is equal to the cost of the corresponding fiat (for example, one dollar.)
Stablecoins are considered one of the best alternatives that allow you to save profits when trading cryptocurrencies during periods of extreme volatility.
However, recently the stablecoin market has become quite saturated. Let’s move on to find out what the top stablecoins are.
The best stablecoins:
The Utopia USD Stablecoin is the first anonymous and the safest stablecoin that ensures an anonymous and secure payment method. It maintains a 1:1 parity with the U.S. dollar.
The coin is built on the serverless Utopia peer-to-peer blockchain. The value of the stablecoin is supported by the pledge of DAI (it is verifiable and equal to the total volume of USD.)
The coin’s liquidity is supported by the internal crypto exchange of the ecosystem, where everyone can quickly convert coins into any currency. USD maintains price stability within the Utopia ecosystem.
It saves users from the risk of volatility or the instability of the market as a whole. The Utopia USD Stablecoin provides anonymous and secure financial transactions, tax-free savings, and the lowest commissions on the market.
The Tether advantage is its own platform for working with fiat funds using the blockchain system. Before the appearance of new coins in 2018, it occupied a leading position among the best stablecoins. The cost of a coin is equal to $1, but sometimes it can vary from 91 cents to above a dollar.
The guarantor is the Bank of Hong Kong, whose accounts hold user funds. The blockchain system is used in its operation.
The management of output, liquidation, and demand tracking is implemented through the Omni Layer protocol. The company regularly provides reports on the status of accounts. The data is compared with blockchain registries.
USD Coin (USDC)
Recently, the USD Coin currency has appeared on the market due to the joint work of two exchanges.
It is based on the CENTRE technology, which is built on the Ethereum blockchain.
The creators cooperate with financial organizations that regularly provide reports on the state of the monetary fund.
The creators themselves provide all control over the functioning of the system. Users can register on the official website. The identification procedure is simple and quick. However, the ability to return funds is available only for customers of U.S. banks.
True USD (TUSD)
True USD coins appeared on the market in 2018. The stablecoin is provided by the dollar in a ratio of 1:1.
The creators characterize the cryptocurrency as the most manageable and independent. Collateral funds are stored in third-party storage.
All the money goes to the trust institution, and the developers do not have access to it and do not participate in the transfer. The creators cooperate with several financial companies at once. The release takes place using smart contracts at the request of customers.
Digix Gold (DGX)
Digix Gold is a stablecoin backed by physical gold.
Individual tokens are responsible for creating a DGX token to preserve the identity of the gold bullion linked to it. The Proof of Asset (POA) technology is used for security.
It is managed through a smart contract involved in the creation of the DGX token. Any DGX owner can cash out their DGX in real physical gold bars according to the specified value. Almost 200 million DGX tokens are currently available, and the stablecoin plans to expand beyond a single repository in Singapore.
What is a Stablecoin?
A stablecoin is a cryptocurrency that has value which is tied to valuable material. Paper money, oil, silver, gold, and other things can act as an asset.
Due to this attachment, the cryptocurrency is less susceptible to exchange rate fluctuations. Unlike conventional, decentralized virtual currencies, stablecoins guarantee more accurate price values and expand business opportunities.
Photo by Zlaťáky.cz on Unsplash
Usually, they are "tied" to the price of an asset, for example, to a 1:1 fiat currency. In most cases, this is the U.S. dollar, where 1 unit of the coin is equal to $1. However, there are stablecoins tied to other currencies, such as the euro, yuan, or even to precious metals or other goods.
The advantage of a coin tied to a fiat currency is that it will retain its value regardless of the situation in the crypto market. The mechanism of operation is the same as that of paper money.
At the same time, fiduciary (fiat) money functions based on laws thatoblige people to accept them according to face value. The state is the
guarantor and sets the price of paper money, regardless of how much money was spent on their production.