Breaking Down Stablecoins: What Are Stablecoins And How to Get TUSD
What Are Stablecoins

Breaking Down Stablecoins: What Are Stablecoins And How to Get TUSD

By Swapzone | Swapzone Blog | 4 Dec 2020


The crypto space is highly volatile. Charts go up and down every day, traders are awake 24/7, checking their Blockfolio apps and making sure not to miss the next swing, and everyone, everyone is talking about the market moves. At some point, volatility and the market relying on hype is good – after all, this is what gives us all an opportunity to play from time to time. On the other hand, cryptocurrency being so changeable becomes a massive stop on the way of mass adoption. 

Imagine being a merchant accepting cryptocurrency as a payment. Every day somebody ends up in a loss – either you or your customer. Both of the options are not quite favourable. Another example – you are a trader. With everything going down on the market, you need a safe and stable bay to wait for the storm to end. Is it fiat? Going crypto-to-fiat and back every time something happens is costly and overall inconvenient, isn’t it? There needs to be a solution for both of these issues (as well as some other ones), and there is one. It’s called Stablecoins.

What are stablecoins?

Stablecoins are a type of cryptocurrency. Just like Bitcoin, Ethereum, or Monero, stable currencies are based on a blockchain. However, unlike their more traditional peers, stablecoins are designed to mimic the value of fiat or other valuable items (gold, oil, etc.). The main goal behind the creation of stablecoins is allowing crypto users to transfer value rapidly and on the cheap while maintaining fixed prices.

There are several ways for stable cryptocurrencies to be pegged to real-world assets and maintain their price. Let’s take a closer look at the types of stablecoins and how they work.

Stablecoins explained

Stablecoins are different. There are several types, depending on which asset the coin is pegged to. Here are the major ones.

Fiat-backed cryptocurrencies

This is certainly the most popular type of stable currencies. Usually, the coins are directly backed by fiat currency of choice in 1:1 ratio. To make sure the price remains stable, the issue needs to hold an equal number of fiat in a special reserve. If an issuer decides to issue one million YEN tokens, they will need to hold one million Yens in a reserve. Pretty logical. There is one thing that is questionable about fiat-collateralized currencies – the issuer that creates the currency needs to be ultimately trusted. 

How to Get TUSD?

Swapzone offers quite a variety of stablecoins on board, including but not limited to, True USD TUSD – the first token to be backed by the US Dollar. To know a little more about stablecoins and try it out for yourself, you can always get some TUSD for any other supported crypto asset. 

Here is how you do it:

  1. Go to the main page of Swapzone.
  2. Select the currency you would like to exchange as well as its amount in the Deposit input.
  3. Pick the option to swap your coins to TUSD.
  4. Choose the offer that suits you best – don’t forget that you can sort the exchanges by rates, time, and service provider rating!
  5. Choose the best option and click Exchange.
  6. Enter the recipient’s address on the next screen. Make sure you have entered all the information correctly – the coins will be sent to this address.
  7. Check the information once again. If all the data looks good, click Proceed the Exchange.
  8. Send the necessary amount of cryptocurrency to the address the service provider has generated. After the deposit is received, our partners will exchange it to TUSD.

Now, you have successfully onboarded the stablecoin train! 

Other types of stablecoins – what are those?

Besides the usual fiat-backed coins, including TUSD we have just given an example of, there are currencies backed by other assets. There are coins and tokens backed by other cryptos (cryptocurrency, in this case, is used as a collateral). This type of assets is way more decentralized, but it should be said that everything depends on the monetary policy of the project that is determined. You are to trust all the participants of the network, as they take part in governance. 

There is a simpler way – backing the currency by valuable assets (we have mentioned this before). The coins can be pegged to gold, oil, diamonds, and other quite obvious items. The system will work the same as with fiat-backed coins – the issuer needs to have the asset in the vault somewhere. 

Summary – what are the benefits of stablecoins?

There might be some issues of trust when we are talking about stable cryptocurrencies. However, the addition of assets like TUSD to the market solved a major problem (and a feature you can’t escape) of the crypto market – its ultimate volatility. Stablecoins allow users to pay, manage the risks of trading, and transact in a more traditional way. These coins are considered a powerful tool of mass adoption, serving the cases that were not there before.


Swapzone
Swapzone

Swapzone is a cryptocurrency exchange aggregator that discovers and pinpoints the most relevant cryptocurrency exchange deals on the market. Exchange 300+ cryptos while saving your money and time.


Swapzone Blog
Swapzone Blog

Swapzone is a cryptocurrency exchange deal aggregator. We do things that would help you get the most out of your crypto swaps, make an informed choice of platform, check the rates and fees right away, and have all your exchanges in one interface. Like an instant exchange, but better. Here we are writing everything we think about the crypto space. Also, posting guides and tutorials. Tune in!

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