Sirwin
Sirwin
Safe Ports - Stablecoin ...

Safe Ports - Stablecoin ...


 

Safe Ports - Stablecoin ...

 

Stablecoin is a cryptocurrency created to provide price stability. It removes security, privacy and volatility in payment transactions. It is fixed at the price of a commodity such as the US dollar or gold.

Most Stablecoins are designed to equal the reserve currency, the US dollar. The fact that Stablecoin is equal to 1 Tether (USDT) = 1 USD and Tether has been actively traded in the cryptocurrency markets for 6 years, shows that it is reliable in fulfilling its purpose.

Cryptocurrencies have high volatility. Bitcoin, which was $ 10982 on 23/10/2020, rose to $ 19412 on 25/11/2020, then dropped to $ 17131 on 27/11/2020. Intraday price fluctuations Bitcoin became very hard. It is possible to see Bitcoin moving more than 15% in both directions within a few hours.

This type of short-term volatility, Bitcoin and other cryptocurrencies are not suitable for everyday use by ordinary people. It should basically act as a currency, a currency exchange tool, and a form of monetary value storage. In doing so, the value of money must remain relatively constant over a long period of time. People are hesitant about cryptocurrencies that they don't know what will happen tomorrow.

Ideally, a cryptocurrency should maintain purchasing power and have the lowest possible volatility. Cryptocurrency encourages spending rather than savings. Stablecoin offers a solution to achieve this ideal behavior.

There are two main reasons for price stability. The first is the market actions of controlling authorities such as reserves and central banks that support them. The second is that it avoids sudden fluctuations as it is fixed to a core asset such as gold or forex reserves that serve as collateral.

Stablecoin tries to bridge this gap between the classic currency and the cryptocurrency.

markets

Graphic by coingecko

 

stablecoin

Data by coingecko

Stablecoins are divided into 3 categories in terms of working principle...

 

Fiat-Secured Stablecoin; The fiat-covered stablecoin is based on a fiat currency reserve such as the US dollar as collateral for issuing the appropriate number of cryptocurrencies. Other forms of guarantee; It can also include commodities such as gold, silver, oil. But today, most fiat-covered stablecoins use dollar reserves. These reserves are kept by independent custodians and regularly audited to comply with the required rules. Sample; Tether (USDT) and TrueUSD

Crypto-Secured Stablecoin; Crypto-collateral stablecoin is supported by other cryptocurrencies. This type of stablecoin is "over-collateralized" as the reserve cryptocurrency can be prone to high volatility. This means that a larger number of cryptocurrencies are protected for a small number of stabelcoins.

Unsecured Stablecoin; Unsecured stablecoin does not use any reserves. However, it works with a working mechanism such as the central bank to stay at a fixed price. Such transactions are similar to banknotes issued by a central bank to protect the value of fiat currency. Stablecoin transactions can be made unsecured by applying a smart contract that can operate autonomously on an independent platform.

 

Stable Coin Advantages

Stablecoin has a value designed to be stable over any period of time. This feature makes stablecoins an ideal safe haven asset because, unlike cryptocurrencies like Bitcoin, which can fluctuate dramatically every day, a person using stablecoins to store value does not see any risk of loss, especially since they have full protection of their assets.

Stablecoins are frequently used in trading.

Businesses benefit from accepting stablecoins as payment. Because in doing so, financial institutions do not pay the 2-3% transaction fees that accompany their intermediary transaction fees.

Wire transfers are one of the most real problems overseas workers face when trying to send money home. High fees are paid to send money internationally. There is a minimum processing fee of $ 10 for a $ 200 transfer. In Stablecoin, the transaction fee is around $ 1.

When transfers are made in fiat, they usually cannot be delivered immediately as they are subject to normal bank hours. As they operate on the Stablecoin blockchain, transactions are processed 24 hours a day, 7 days a week.

Stablecoin is fully automated with smart contracts that programmatically evaluate escrow conditions without the need for institutional intermediaries. Since smart contracts using Stablecoin are on the blockchain, they can be fully and publicly audited.

The ability of cryptocurrencies to be an anonymous, unlimited store of value has proven to be a real-world necessity for millions of people. Stablecoin is a more important investment tool as it is not subject to speculative markets or wild inflation.

Transactions on the blockchain can be viewed by anyone with internet access from a blockchain browser. In addition, stablecoin can offer full transparency as long as they are supported by regular audits by Stably. As trust in Tether eroded, cryptocurrencies that offer more transparency to circumvent it began to emerge.

Since Stablecoin basically consists of code, features can be added to them to adapt to changing needs. Like loyalty programs…

stablecoin

 

Fixed coins that are actively traded in the cryptocurrency markets

Tether (USDT)

tether

1 Tether (USDT) = a stablecoin built on the equity of $ 1.

 

USD Coin (USDC)

usd

1 USD Coin (USDC) = 1 USD is a stablecoin built on the equation.
USD Coin (USDC) is a type of stablecoin released by Circle, Coinbase and Center Consortium. USDC has a transparent and open source structure. It is based on ERC-20 (Ethereum).

 

Dai (DAI)

dai

Dai (DAI) is called the stablecoin produced by the Maker platform and is fixed to the US dollar.
A stablecoin built on the equity of 1 DAI = $ 1.
DAI has been produced to solve the fixed value coin problem in Ethereum and other blockchain systems in terms of production. One of the most important differences with other fixed coins is that it is decentralized. Tether (USDT) and Binance USD (BUSD) are examples of stable coins with a central structure. DAI is a fixed coin that is produced by users as well as the platform. Supply value in total has a variable structure.

 

Binance USD (BUSD)

binance usd

The stablecoin Binance USD (BUSD), launched by the crypto money exchange Binance, is produced to run on the Ethereum Blockchain. It partners with Paxos Standard (PAX) in terms of fixed price cryptocurrency issuance.

 

Paxos (PAX)

paxos

Paxos (PAX), regulated by the New York Financial Services Authority (NYDFS), is the stablecoin that acts as a bridge between virtual currency and fiat currencies. Paxos Standard, with a permanent price of 1 USD, is traded in the market as a common stable coin.
Paxos (PAX) describes itself as a stablecoin that has isolated itself from payment and transaction fees. Paxos (PAX) is developed on the Ethereum Blockchain.

Result

If you're worried about a market you don't know what will happen tomorrow, you can invest in stablecoin. You can invest in Stablecoin, staking and lending. So you can get additional returns. When the cryptocurrency markets are in a downward trend, there is a shift towards stablecoins. 76% of the market is traded on Tether (USDT) stablecoin. You can make unsupervised transfers with cheap transaction fees. You can shop online. As I always said, listen to everyone, decide for yourself...

 

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