A Stablecoin is the name assigned to a Cryptocurrency that has a stable value, in the sense that its worth is determined by a stable asset, like the US Dollar. As such, while traditional Cryptocurrency is volatile, Stablecoins tend to be traded at a fixed price.
The most common Stablecoins, Gemini (GUSD) and Tether (USDT), are all backed by the US Dollar at a 1:1 ratio. That means that 1 GUSD is equal to 1 USD, as is USDT. One Bitcoin (the most popular traditional Cryptocurrency), for comparison, is valued at 9501 USD.
The Advantages Of Using A Stablecoin
Now we know what a Stablecoin is, we ought to turn our attention to the benefits that come part and parcel with them. Obviously, the first is the secured value — the worth is valued against a stable asset, so little risk associated with holding a balance.
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In fact, that's the main advantage; Stablecoins present all the same advantages of a standard Cryptocurrency, like faster international transfer speeds and reduced transaction fees, without the risk of the value plummeting while funds are in transit.
The Most Popular Stablecoins
As is the case with traditional Cryptocurrency, there are oodles and oodles of Stablecoins on the market — the most popular being Tether and USD Coin, with being the largest with a market cap of $4.03B and the latter the second-largest at $415M.
- Tether (USDT)
- USD Coin (USDC)