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Understanding stable coins and their origins.

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Written by   21
8 months ago
Topics: Stablecoin, Crypto

(Source)

I read a post on bitcoin.com Twitter page few days ago. The post was an update about the progression of UST, $USDT, $USDC, the entire stable coins in general. According to the post, stable coins volume is over 50% total crypto trade volume.

They were kind enough to leave a link to a page explaining intensity stable coins, where to buy them and their origins.

(Source)

Origin of stable coins

Types of stable coins

  • USDT

  • FLEX USD

  • USDC.

Where to buy stable coins.

Origin of stable coins

Stable coins are basically crypto coins that are linked with stable currencies or assets like the United State Dollars (USD), e.g. One USDT is equivalent to one USD ( 1 USDT = 1 USD ). The main difference between the two is that a stable coin can only be used in anything crypto realted. That is, trading , and transfers.

Stable coins came to be due to popular demand by crypto traders and investors. They demanded for coins that can be used for storage of their profits gotten from volatile assests. Why is crypto currency volatile?

Over the years USDT and stable coins in general are getting more and more popular. Most business now use USDT to Settle international Payments, this method is faster and more efficient compared to the traditional USD method.

Types of stablecoins

There are two types of stable coins ;

  • Centralized stablecoins

  • Decentralized stablecoins

Centralized stablecoins

This stable coins use backed up reserves to maintain their equivalent or peg to the United States Dollars ( USD ). Meaning for every dollar converted to a stablecoin, there is a corresponding dollar sitting in a bank account. This helps stablecoins to maintain their equivalent to Dollars.

Decentralized stablecoins

This stablecoins use transparent and programmatic mechanisms that need no permissions to be accessed, and in most cases they are driven by incentives. Meaning, it is made possible in such a way that anyone can see exactly how stable coins operate.

USDT

USDT Is the first stable coins to to be prominent and become very popular among all crypto traders. It was created in 2014 by a Hong Kong based company, Tether Limited. USDT became popular on the Ethereum (ETH) network, but it is now accessible on every major public blockchain network, including Bitcoin Cash (BCH) , Tron, Solana, Binance Smart Chain, Matic, and much more. The advantages of USDT are its popularity and the fact that, the company behind it is based in Hong Kong, it is less subject to American regulatory authority.

The biggest downside of Tether however, is the very same thing that gives it an advantage. The lack of American regulatory authority has led to a belief that it may be less reputable or safe, and prone to fraud or hackers. Regardless, USDT remains one of the world's most popular stablecoins.

FLEXUSD

FLEXUSD is a US dollar stablecoin that is collateralized by USDC. FLEXUSD is unique among other stable coins in that it pays holders interest automatically. FLEXUSD is based on the BCH network as an SLP token and on smartbch, which is an (EVM)Ethereum virtual Machine, compatible sidechain of BCH.

USDC

USDC is a stable coins that was created by an American based company called circle. It has a shorter history than USDT, but it has also quickly risen to fame. USDC is mainly used on the Ethereum network, although it is available on other major networks such as Solana, Binance Smart Chain, and Matic.

Where to buy stable coins

There are numerous sites to buy stable coins from one being, buy.bitcoin.com , you can get USDC, USDT there and pay with your credit card.


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Written by   21
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Topics: Stablecoin, Crypto
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Comments

I recently began to swap a part of my BCH savings to USDC so I can have a stable savings apart from my savings in my volatile Portfolio.

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8 months ago

That's great

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7 months ago