What status are stablecoins dealing with now? How will the future develop?

特邀专栏作者

2020-10-04 12:00 (UTC+8)

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Cryptocurrencies are notoriously volatile, so this factor reduces mainstream user participation and limits their use as a usable exchange platform for goods and services.

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Cryptocurrencies are notoriously volatile, so this factor reduces mainstream user participation and limits their use as a usable exchange platform for goods and services.

Editor's Note: This article comes fromCrypto Valley Live (ID: cryptovalley)Editor's Note: This article comes from

Crypto Valley Live (ID: cryptovalley)

Stablecoins are an effective avenue for investors looking to keep their assets in the crypto space. Switching from cryptocurrencies to fiat currencies is costly and time-consuming, yet stablecoins offer investors the best of both worlds – stable assets within the crypto space with favorable transaction speeds.

What are stablecoins?

Due to their relative stability, stablecoins are also easier to align with regulators. The Gemini Dollar (GUSD) and Paxos Standard (PAX) are two currencies that have regulatory approval from the New York State Department of Financial Services.

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When consumers buy or sell non-monetary goods and services, they may experience large price changes during or after the transaction. Stablecoins level the playing field without requiring either party to exchange currency back.

Types of Stablecoins

Stablecoins have become popular after the frenzy of 2017. After Bitcoin rallied to nearly $20,000 and then fell more than 50%, investors looked for a less volatile crypto-based store of value. The success of cryptocurrencies has prompted the Federal Reserve and other governments and central banks to announce investigations into their own digital coins.

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Types of Stablecoins

There are many kinds of stablecoins, which are mainly distinguished by the assets that support the stablecoins. Following are the main types:

Commodity-backed stablecoins

Commodity-backed stablecoins are stabilized with hard assets such as gold or real estate. The asset most commonly used as collateral for stablecoins is gold, although many use a diversified basket of precious metals.

Fiat-backed stablecoins

Stablecoins backed by fiat currencies such as the Chinese yuan hold reserve currencies as collateral. Other forms of money include precious metals, such as platinum or silver, and commodities, such as corn or oil.

Most fiat-backed stablecoins are backed by U.S. dollar reserves. The currency's reserve is managed through an independent custodian that is regularly audited to ensure compliance.

Cryptocurrency-backed stablecoins

Cryptocoins can also support other cryptocurrencies. This is the case with cryptocurrency-backed stablecoins. To offset the higher relative volatility of crypto-backed stablecoins, the coin will maintain an overcollateralized position."Siegniorage-style stablecoins"。

Siegniorage is managed and supported by algorithms or programs rather than other assets or currencies. The idea of siegniorage as an endorsement comes from a white paper by the famous cryptographer Robert Sams, who proposed the idea of a Fedcoin, which can serve as such a function. Smart contracts deployed on decentralized platforms can serve as autonomous

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1. Tether(USDT)

The Best Stablecoin Currently"to bind"Not all stablecoins are created equal. As the number of stablecoins grows, it is good to know the most useful and reliable options. Here are the best stablecoins out there right now:

2. True USD(TUSD)

It is so named because it associates itself with the value of the dollar"TrueUSD"to bind

, Tether is the most well-known stablecoin in the crypto world. It is backed by gold, traditional currencies and cash equivalents. Tether is also known for its security and smooth integration with crypto-to-currency platforms.

True USD (aka

4. USD Coin(USDC)

) is 100% backed by the U.S. dollar and is the 1 most liquid stablecoin on the market. The coin has lower transaction fees than fiat wire transfers and higher interest rates on stored balances. TrustToken, the company behind True USD, also has stablecoins pegged to other major currencies — TrueAUD, TrueGBP, and TrueHKD, to name a few.

5. Binance USD(BUSD)

The goal of Paxos Standard is to maintain a 1:1 parity with the US dollar. It was created in response to the money-printing controversy of Tether, which has come under fire for unsubstantiated claims that it holds $1.8 billion with Deltec Bank & Trust Ltd to back its stablecoin.

USD Coin is a stablecoin backed by Coinbase, the world's largest bitcoin broker and largest bitcoin exchange holder.

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Advantage

Advantages VS. Disadvantages
Like any form of cryptocurrency, stablecoins have their own strengths and weaknesses.
no border. Stablecoins retain all the power of cryptocurrencies and can move regardless of physical boundaries.

disadvantage

transaction speed. Financial transactions on the blockchain are objectively faster than traditional processes. Stablecoin transactions do not need to wait for a third party to verify the transfer, which means that no one pays fees to any third party.
transparency. Unlike fiat currencies, transactions using stablecoins are recorded on a public ledger, which can be monitored by anyone.
centralized. Unlike some cryptocurrencies, stablecoins are mostly created by centralized organizations that own the currency. Even DAI, a highly regarded stablecoin that markets itself as decentralized, has faced scrutiny for its centralized organization.