Tether is the first stablecoin and by far the most popular one out there. It’s been around since I first discovered crypto’s back in 2014-2015.
What Stablecoins Are The Best?
Ultimate Guide to Stablecoins
Stablecoins are cryptos that are used in cryptocurrency markets as an off-ramp when buying and selling cryptocurrency. Stablecoins are pegged to fiat currency like the US dollar. Pegging stable coins to a stable asset like the US dollar acts as a replacement for a currency that helps with rapid day trading, for example.
Imagine having to buy bitcoin, then sell it off the trading platform your bank account, then having to send money back to the trading platform when you want to buy another coin. The delays could be days in-between. Stablecoins fix this problem by making the whole system of trading far more efficient.
Stable coins are used to avoid volatility while still being able to invest in other cryptocurrencies. The crypto market is extremely volatile; any tool that can help mitigate the risks is very welcome. Tether is the most famous stablecoin. I remember using this coin back in 2015 when I first started trading. Tether was by far the best way to keep yourself safe from volatility.
What are stablecoins?
Stablecoin is a crypto that tries to have a 1:1 ratio to the dollar, but in reality, it’s always fluctuating between $0.9 USD and $1.1 USD. If you can buy it at $0.9 and have the opportunity of a trade at $1.1, then you will already be ahead 10% or more. The dollar and stablecoins are not interchangeable.
Just because the stablecoin is pegged to the USD doesn’t mean anyone will accept tether for USD. China pegged the RMB to the USD to facilitate trade between the two for approximately 20 years. This never made the RMB interchangeable for the USD; it was just to help facilitate trade. Kinda the same as pegging stablecoins to the dollar.
Stablecoins Are NOT An Alternative to Bitcoin
Stablecoins are a semi-stable cryptocurrency that has a relatively stable value. This is not an alternative to bitcoin because, and I don’t recommend you buy any stablecoin as an investment; that’s what Bitcoin is for. The stability makes it a medium of exchange, an off ramp when you need to get out of a cryptocurrency you just traded for a profit. A stablecoin will help you avoid losses if used correctly.
Here’s a list of other articles I recommend on Bitcoin and Cryptocurrency: