The crypto industry as we know it is plagued with uncertainty, volatility in price and coin value is a predominant factor in the cryptocurrency space.
This is actually what led to the creation of stablecoins, the most popularly of which is Tether (USDT).
What are stablecoins?
Stablecoins are a unique type of cryptocurrencies which are usually linked to real-world assets. They help to bring stability to cryptocurrencies.
Stablecoins may be fiat-backed i.e. backed up by traditional currencies like (USD, EUR, CNY or JPY), asset-backed i.e. gold or oil or even crypto-backed i.e. backed by other cryptocurrencies. This backing up of cryptocurrencies is believed to be able to help reduce cryptocurrency variations. This is as opposed to the highs and lows observed in the prices of other popular cryptocurrencies like Bitcoin and Ethereum.
Tether is the most popular stable coin available today and sometimes it is used as a replacement for the dollar.
Tether converts cash into digital currency to serve as an anchor to the value of the coin to the price of currencies in its use country like the US dollar, the Euro, and the Yen.
Tether is similar to other digital currencies because it exists on a blockchain. It is also unlike other cryptocurrencies because it is 100% backed by the USD. This simply means that 1 dollar (USD) equals 1 Tether (USDT).
Apart from Tether, there are several other stablecoins in use today, they may not be as popular as Tether but they have similar use cases.
Some of such Stablecoins is:
TUSD was launched in March 2018. At a time, it was Tether’s largest competitor, irrespective of the fact that it has a much smaller market cap. The TUSD is truly a “spectacular” coin, it does everything that Tether has ever promised, and does them even better than Tether (USDT).
TrueUSD is very accountable, it is audited on a regular basis, its conversion to the dollar is usually hitchfree and is easily carried out. Investors love TUSD. It is based on the Ethereum network and can be found on over 28 different exchanges.
Gemini Dollar (GUSD)
The Gemini Dollar was launched on on October 6, 2018. It was being created by the Winklevoss twins. The Gemini Dollars have only been around for a short time yet they have attracted a lot of attention from all over the world. Presently, it can be found on nothing less than 15 exchange platforms. According to experts, the Gemini Dollar has a lot of potential and would most likely be one of the top stablecoins in the world.
bitUSD is a stablecoin belonging to BitShares. The coin was launched in September 2014, same day as NuBits. bitUSD is presently the longest running stablecoins available. The highest level of volatility this coin has gone through never went beyond 10%, this is quite clearly a wonderful improvement since cryptocurrencies are known for wide unexpected variations. The coin is quite in step with the US Dollars. The only issue with this coin is that it can only be used on two exchanges.
DAI is a stable coin backed by cryptocurrency. It is based on Ethereum and so backed up by its collateral loans. Having a stablecoins backed up by a cryptocurrency will also allow coin holders to vote on the best method of stabilizing the coin(DAI)and if their suggestion is deemed useful, they receive a reward for their contribution.
DAI was launched in December 2017, and its market cap continues to grow on a regular basis.
Paxos Standard Token (PAX)
The PAX is a stablecoin launched on the 28 September, 2018. Despite the fact that it is a new coin, it is already making waves in the cryptocurrency space. Its main aim is to take over from Tether and with its adoption rate this doesn’t seem like a problem at all. It is regulated by New York’s Department of Financial Services (DFS), which means that it was designed as a coin for serious business. Paxos is also based on the Ethereum’s network, and it is backed by a lot of influential individuals.
NuBits is a stablecoin that makes use of PoW. It is seen as the first stablecoin to achieve wide circulation. It was released in September 2014.
NuBits is backed by the US Dollars (USD), and is hinged on the fact that it can be sold if its price goes higher than $1, and bought back if the opposite happens.
This sounded like a pretty good idea until the coin crashed in 2016. Presently it is valued at about $0.11, and experts do not think it will ever climb back to $1.