Introduction – What you need to know about Crypto Stablecoins
Stablecoins are a value-stable cryptocurrency against a fixed external asset class. The primary purpose is to counteract most cryptocurrencies’ speculative nature and help create a more consistent and reliable market environment to increase digital asset adoption. At the moment, there are three different types of crypto stablecoins:
The most common category of crypto stablecoins. Backed by real-world assets that are tightly regulated and regularly checked by external auditors.
These are stablecoins for which other cryptocurrencies, usually Ethereum, support the value. Maker Dao’s DAI token is the best example and the most popular coin.
Either physical or digital asset collateral does not back such crypto stablecoins. These rely on a complex mix of algorithms and smart contracts to maintain a stable price by buying and selling the stable token and controlling its supply.
Crypto Stablecoins Past:
In 2014, the first crypto stablecoins were released. Instead of fiat money, both BitUSD and NuBits collateralized through other cryptocurrencies. Both initiatives still exist today, but only their former selves’ shadows remain.
It wasn’t until Tether arrived on Bitfinex in 2015 that the idea of off-chain collateralized crypto stablecoins, backed by real assets, began. Issued by the Bitfinex exchange, the USDT cryptocurrency, rebranded from the 2014 “RealCoin” asset. Highly controversial and remains in the U.S. authorities crosshairs due to a $31 million breach in 2017 and price manipulation charges. Related to trading on Bitfinex exchange accounted for nearly 50 percent of Bitcoin’s insane price rise in late 2017. Nevertheless, Tether has played a crucial role in the emergence of cryptocurrencies and remains the most well-known secure asset on the market today.
The advantages of stablecoins:
On top of crypto stablecoins pros, we can find that they can be transferred at any time, anywhere, for a minimal fee, no matter the amount transacted. This allows a new option for cross-border payments and also for those unbanked economies or businesses.
Of course, their stable price makes speculation a thing from the past, and you will get the same amount you were expecting.
If you want to keep real-time track of their performance, you can visit https://stablecoins.live/