Top 10 Stablecoins 2023
Stable coins are cryptocurrencies that are pegged to another type of asset. These assets range amongst normal currencies or commodities. The US dollar, gold or silver are some of the commonly used types of altcoins.
For example, if we put a gram of gold away for every coin we create, the price of the currency will be linked to the price of gold as well.
By creating a coin like this, in theory, you would make the price of the asset less volatile.
The cost of our coin will always be equal to the worth of the gram of gold with which we backed it with. In more straightforward terms: we tokenized the gram of gold, and we’ve put it on the blockchain
Have you ever heard about Tether? Or maybe USDT as which is it’s a more common name? It’s a stable coin, and it was released on the 6th of October in 2014 by Tether Limited. The creators were looking for a way to create a stable price in the unpredictable crypto world.
Tether created their coin, but instead of backing it with gold, they claimed to have backed each coin with one regular United States dollar. So every USDT should always be worth one dollar.
However, there has been a lot of controversy around Tether. Skeptics have voiced a lot of criticism and issued multiple audit requests. They don’t believe that Tether has enough collateral to back the USDT in circulation.
After the company failed to provide an audit where it showed enough reserves, it also got accused of having a role in manipulating the price of Bitcoin and having an unclear role within the exchange Bitfinex. To make things worse, In April 2019 the New York Attorney General filed a lawsuit accusing Bitfinex of using Tether’s reserves to cover up a loss of $850 million.
It’s safe to say that USDT has multiple sides to it. On the one hand, Tether has grown into the most popular stable coin and even acts as a replacement for the dollar on some of the biggest exchanges. On the other side, there are still a lot of unanswered questions that need to be answered.
Another coin that is backed by the United States dollar is USDC, which is created by CENTRE, a company that is backed by crypto exchange Coinbase. It is created to develop price-stable crypto assets and network protocols, and it is more transparent than Tether.
USDC is issued by licensed financial institutions that maintain full reserves of the equivalent fiat currency. CENTRE notes that issuers are required to report their USD reserve holdings regularly.
Lastly, an interesting stable coin will be PYUSD . PayPal USD (PYUSD) , backed by USD deposits, connects fiat and digital currencies on PayPal.
It's an ERC-20 token on Ethereum, streamlining payments, enabling fast transfers, and expanding digital asset use.
With stable coins being an exciting way to reduce volatility in a youthful market as the cryptocurrencies are in, it shouldn’t be the end goal of this new finance system that we’re exploring. As can be seen in the table above, stable coins have been widely adopted by cryptocurrency users.
For instance, USDT is the 6th cryptocurrency in market cap. They help crypto traders to easily store their funds on a stable coin without the need to exchange their crypto for fiat money.
Without any doubt, stable coins have contributed to enhance the liquidity and confidence in the crypto market. Especially for traders, this new type of altcoin is very helpful. Now, they can easily store their funds in a stable asset when the market is bearish, or simply trade from a stable coin.
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