What Are Stablecoins And Are They Better Than Bitcoin
Stablecoins: Are digital money that has a connection with gold or other precious metal. Stable coins get their name from being at a fixed value.
Are you looking for a way to invest your money? Have you considered stablecoins? This article will explore the many benefits of stablecoins and the difference between stable coins and bitcoin.
Given the fallibility of cryptocurrency, investors may want to look more closely at stablecoins as a safe investment.
What Are Stablecoins?
Stablecoins are digital money that has a connection with gold or other precious metal. Stable coins get their name from being at a fixed value, which is usually backed by the government. Over the years, cryptocurrencies have developed during this technology age.
Still, cryptocurrencies are not always stable with the value change within seconds.
With stablecoins, you worry less about plummeting values. There are several types of stablecoins:
- Commodity-backed stablecoins
Fiat stablecoins get its name after Fiat Chrysler Automobile (just kidding) being associated with a certain fiat currency. They are token coins supported by the US dollar, and they have a value of a 1 to 1 ratio. Unlike bitcoins, fiat stablecoins offer investors stability with a minimum of fluctuation.
Investors will find a quick relief in the simplicity of understanding fiat stablecoins.
One of the fiat family members is the Tether. This type of stablecoins has been popular with investors due to it having a important ability to capitalize on. Think of it like this, the tether coin equals the same value as each US dollar bill.
Individuals who use tethers decrease risks during a transaction. The list of benefits goes on from there.
Crypto-backed means your currency has been backed with a guarantee that allows you to exchange for a certain amount in other assets. Gold and silver are the popular assets used for crypto-backed currency. However, other assets can fall under the crypto-backed currency. You can read more here about the crypto-backed currencies, stablecoins and the best crypto exchanges that you can use to trade those cryptocurrencies if you would like to.
One of the most popular commodity-backed is gold. You know that shiny stuff. Commodity-backed stablecoins are secured assets such as Texos gold or Paxos gold. Commodity-backed stablecoins, otherwise known as collateralized physical assets, are precious metals, real estate, and oil.
Tether gold and Paxos are the favorites. Still, a drawback comes with this type of commodity and will change in prices, which could become a loss in value to an investor.
Why Stablecoins Are The Future
When buying stablecoin, you are getting an investment that is stable and not volatile. This type of investment has plenty of potential with fiat currencies being used everywhere you could buy goods.
As an investor, you may encounter significant discouragement in the form of volatility when dealing with bitcoin. Investors sometimes get confused when trying to figure out the long-term prospects of bitcoin investments. You don’t want all your assets to be at the whim of the bitcoin ecosystem.
You may find yourself taking a closer look at bitcoin and stablecoin differences since the sudden drop in bitcoin values may be enough to make your head swooned. Bitcoin can become unstable at a drop of a hat, leaving investors in a panic about their investment.
The Difference Between Bitcoin and Stable Coin
You already know by now that stablecoins price remains at a steady currency, which is why the name stable comes to play. Bitcoin’s prices are anything but stable.
Bitcoin has remained popular with some investors despite the risk.
Professional traders wait for the best time to transfer bitcoins into stablecoins. Stablecoins rate stays steady, making transferring bitcoins into stablecoins an attractive offer.
Bitcoins are developed by a bitcoin community and only a certain amount of them produce about 21 million. Developers wanted to make sure that bitcoins didn’t lose their monetary value, which is why they only make a certain amount. Bitcoins are good for trading and as a source for payment while stablecoins can be used for primary commerce.
Investors and people of other countries where the main currency has become voliable can use stablecoins as a reliable source.
The Benefits of Using Stable Coins
Besides being stable, these coins have an infinite supply or a fixed schedule. Stable coins increase depending on the economic situation. As a bonus, stable coins have the backing of safeguard so that investors don’t lose their investment.
Because of the stability, stablecoins can be a useful source for making purchases.
Did you know that you can earn high-interest rates with stablecoins? As much as 12.7% interest rate and the best part you’re at minimal risk of fluctuation on that interest rate.
How To Buy Stablecoins
When buying stable coins, you want to make sure you are purchasing them and not being scammed or paying a staggering fee. You will need to assess which exchange market is right for your needs. Stablecoins have several assets, including the United States dollar, gold, and cryptocurrencies. Here are some of the best stablecoins:
- True USD
- Binance USD
- Paxos Standard
- Reserve Rights
Look for an exchange market that will sell stablecoins. Once you have found a reputable exchange market, then purchase your stablecoins. The best place to buy the coins is from those that follow after the US dollar.
Once you sign up with the market of your choice. Most of the information will start with your name, email address, phone number. Before completion, you will have to verify your identity with a little more information, such as your date of birth and social security number, and driver’s license. You should be able to find a pay button to buy your stablecoins.
Sometimes the option is a buy button or it could be a page. You will want to place the amount and how many stablecoins you like to buy. A transaction will appear of the full cost, along with any fees. Plus, how many stablecoins you bought. After pressing the button, you receive a confirmation of your purchase, and you are all set.
Stablecoins can be used in a variety of ways, including letting them add up into a crypto wallet.