Today, people around the corner are considering cryptocurrencies a lucrative scope and taking a great interest in investing in these Digital Virtual Assets (VDA). As per reports, statistically, more than 420 million global people own cryptocurrencies, and over 2 lakh Bitcoin (BTC) transactions are taking place daily. It is expected to see a great rise worldwide in these statistics in the upcoming years.
As the cryptocurrency market continues to grow, investors keep their eyes on various investment strategies and approaches. Meanwhile, it would be great if, as an investor, you predict the prices of cryptocurrencies to make the maximum profit. In this case, stablecoins have become popular for investors looking to mitigate volatility. It is so because these stablecoins in crypto are pegged to fiat currencies or commodities, making them maintain a stable value. It offers a more reliable option for those seeking to invest in blockchain technology-based projects. We are providing you with some common stablecoins in which you can invest and make handsome profits in 2023. But before that, let’s understand the basic meaning of stablecoins. We all know that cryptocurrencies are known for their high volatility, making it difficult for investors to choose the crypto to trade and invest in. For them, stablecoin cryptocurrency can be the best option as the value of these cryptos remain stable, like Tether (USD), Dai (DAI), Binance USD (BUSD), etc., for a long. The stablecoins remain stable in value and do not fluctuate much or are simply less volatile. These stablecoins are designed to maintain a stable value, unlike other cryptocurrencies, such as Bitcoin and Ethereum, whose values frequently fluctuate within short periods. The stablecoins in crypto are pegged to a stable asset such as a fiat currency (INR, Dollar, Euro, etc.) or a commodity (e.g., gold, silver, metal, etc.). By being pegged to the fiat currencies or commodities, stablecoins do not fluctuate much and are less volatile. Stablecoins remain stable in value for a long because for these reasons- 1. Fiat-backed stablecoins: The stablecoin cryptocurrencies are backed by fiat currencies which makes them less volatile. For instance, Tether is the most popular stable digital currency pegged to the US dollar, known as USDT. 2. Cryptocurrencies backed Stablecoins: There are several stablecoins that are backed by other cryptocurrencies. For example, Dai (DAI) which is backed by Ethereum (ETH), and its value is pegged to US dollars. 3. Stablecoins designed on Algorithms: Besides the fiat and crypto-backed stablecoins, there are some algorithmic stablecoins, likewise, Basis (BAB), whose price is again pegged to US dollars. There are several types of stablecoins, including centralized and decentralized variants. Centralized stablecoins are backed by a centralized authority or company that holds reserves of the underlying asset. Decentralized stablecoins, on the other hand, are backed by collateral held in a smart contract on a blockchain. Characteristics of Stablecoins Besides providing a way for investors to hedge against market volatility, stablecoins are used for a variety of purposes, including trading, remittances, and payments. Additionally; Stablecoins are less volatile than other cryptocurrencies. International transactions via stablecoins are settled more quickly over traditional fiat currencies. Transaction fees of stablecoins are cheaper than fiat international transactions. As real-world assets and fiats back it up, it is more practical and transparent than other cryptocurrencies. Best Stablecoins for Investments Now let’s explore the top stablecoin list; we are presenting you with several stablecoin cryptocurrencies to consider for investing in 2023: 1. Tether (USDT) Tether (USDT) is one of the most popular stablecoin cryptocurrencies, with over $60 billion in market capitalization. The US dollar pegs Tether. It has faced some controversy over its transparency and reserve holdings, but it remains a widely used stablecoin. It is often used as a trading pair on cryptocurrency exchanges. 2. Dai (DAI) Dai is a decentralized stablecoin pegged to the US dollar but not backed by any centralized authority or company. Instead, it is backed by collateral with Ethereum (ETH). Dai has gained popularity among decentralized finance (DeFi) enthusiasts and is often used as a trading pair on decentralized exchanges. 3. Binance USD (BUSD) Binance USD is a stablecoin developed by one of the world’s leading cryptocurrency exchanges, Binance. It is pegged to the US dollar and is backed in the partnership of Paxos, which the New York State Department approves of Financial Services. The stablecoin market cap of Binance USD is over $9 billion and is available on the Binance exchange and other cryptocurrency exchanges. 4. USD Coin (USDC) USD Coin is another stablecoin pegged to the US dollar and has gained popularity in recent years due to its transparency and regulatory compliance. It is backed by a consortium of companies and financial institutions and has over $10 billion in market capitalization. USD Coin is available on most major cryptocurrency exchanges. 5. Gemini Dollar (GUSD) Gemini Dollar (GUSD) is an ERC-20 token whose value is pegged to US dollars. GUSD is managed and audited by BPM, an independent accounting firm, to ensure that the total amount of Gemini Dollar’s market circulation is equivalent to the number of USD available in reserve. 6. TrueUSD (TUSD) TrueUSD is another stablecoin pegged to the US dollar and backed by fiat currency reserves held in escrow accounts. It has a market capitalization of over $1 billion and is often used as a trading pair on cryptocurrency exchanges. TrueUSD offers high transparency and auditability, making it a popular choice for investors looking for a more reliable stablecoin. Conclusion After considering the characteristics as mentioned above and other features, we can conclude that stablecoins offer a more stable option for investors looking to invest in the cryptocurrency market. While there are many stablecoins available, Tether (USDT), Dai (DAI), Binance USD (BUSD), USD Coin (USDC), Gemini Dollar (GUSD), and TrueUSD (TUSD) are some of the most popular options. But before making any investment, it is important to do your research and assess the risks before making any decisions. [Disclaimer: The views expressed in this blog post solely belong to the author. The main aim of providing the above content is to spread information only. Also, you are advised to do your own research before investing in any cryptocurrency.] By-Riteshu Sen JaiswarWhat are Stablecoins?
How do Stablecoins remain stable?
