Investing in in cryptocurrency can be a real rollercoaster, and stablecoins have gotten increasingly popular over the last several years.
There are different stablecoins based startup entering in the market during past years. But does stability mean security? Let’s find an answer!
What are stablecoins?
Stablecoins are cryptocurrencies that were designed specifically to prevent big changes in their value, by tying themselves to another asset, like the U.S dollar or gold. This makes them much more stable and predictable than, for example, Bitcoin or altcoins.
Backed by fiat, gold or other crypto
Some stablecoins like Tether or TrueUSD or Libra are “fiat-backed,” which means that for every unit of cryptocurrency issued on these blockchains, some amount of any currency (dollar, euro, pound, yen, etc.) is being stored somewhere. Being fiat-backed means that they are highly-centralized, and you really need to trust the company controlling these tokens. Without independent audits, there’s no guarantee that they’re not just printing themselves free money and using it to buy other assets that have actual value.
Here are some of the best stablecoin projects that I have found for you
- Tether (USTD) which is currently the 9th largest cryptocurrency by market capitalization and has the highest daily trading volumes of any cryptocurrency, just after Bitcoin.
- TrueUSD (TUSD) the second most popular stablecoin currently, also backed 1:1 to USD.
- MakerDAO (MKR)
- LBXPeg, the first cryptocurrency to be tied to the value of GBP, London
- Basis, non-collatorialized stablecoin is Basis, which algorithmically adjusts supply in order to keep its prices stable.
- Havven (HVN)
- The Paxos Standard (PAX) and the Gemini Dollar (GUSD), Two USD-backed stablecoins have been approved and regulated by the New York State Department of Financial Services
Why to use?
1. Lock gains
While other cryptocurrency is highly volatile whose value can depreciate or appreciate 20-30% in a matter of hours, stablecoins are useful for crypto day traders looking to lock in their gains overnight.
2. Low fees when sending overseas
Stablecoins have a potential to help migrant workers who send money overseas to their families in developing countries. Cryptocurrency offers a solution to this problem, with fast transactions and low fees, but there’s still the problem that a cryptocurrency like bitcoin could drop in value by 20% in just one day, so stablecoins are better alternative to it.
When fiat currency crashing in value, people can exchange it for USD-backed, EUR-backed, or even gold-backed stablecoins quickly before they lose even more of their savings, thus protecting themselves.
What do you think of stablecoins? Have you used any of these stablecoins before? If you have your question, please write it below, I would be glad to answer your questions or to introduce your project to my team at Astorts Group to be evaluated.
Alessandro Rocco Pietrocola is an entrepreneur and investor based in London and operating mainly in Europe, Asia and Oceania with main focus on UK, Baltic Countries, Russia, China, Hong Kong, Malaysia, Singapore, Middle East and New Zealand as area of interest! At the moment is the CEO of Astorts Group. He is an UK FCA (Financial Conduct Authority) Approved Person and is has great experience as director of regulated companies. He uses to dedicate part of his life to inspire others and help them achieve the most out of their life. Since he was 20, he had successfully founded and managed several companies operating in the field of management consulting, wealth management and fintech. He loves travelling, he is a cigars lover, an amateur golfer and a dapper man.