What are stablecoins and how can you use them?

Guide to stablecoins - what are they and how to purchase them

In recent years, cryptocurrencies are experiencing a real “boom”! And not just for cryptocurrencies – the rise in popularity applies to blockchain technology in general. The craze for cryptocurrencies is in full swing, however, when we read the news, every now and then we come across information about rapid fluctuations in the price of individual tokens. This volatility is a key feature of digital money – overnight it can make an investor both a millionaire and bankrupt. So is there a method to keep stability in this madness? Of course! This method is called “stablecoin”, and it is to these special tokens that we dedicate this guide.

What are stablecoins?

Getting straight to the point – what are stablecoins anyway? Stablecoins are a subset of cryptocurrencies, or tokens based on blockchain technology. However, stablecoins are designed to offset the price fluctuations experienced by traditional digital currencies. Thus, they maintain a constant price level and are an investment asset. At this point, the question “how do stablecoins maintain a constant price?” may arise. This is because they are linked to another asset, which very often is simply a specific fiat money, such as the US dollar. With this in mind, it is also important to say that stablecoin is not mined in the same way as cryptocurrencies, which is by a dispersed network of miners who perform complex mathematical operations. It simply derives its price from the aforementioned other underlying asset.

What can stablecoins be used for?

One of the primary uses of stablecoins is to facilitate transactions on cryptocurrency exchanges. In this case, investors first buy the stablecoin associated with the exchange in question, and then use it to buy cryptocurrency. In this way, stablecoin provides a “middle layer” between the investor and the cryptocurrency. In this way, investors are able to reduce transaction fees, as almost always the exchange does not charge fees for exchanging fiat currency for stablecoins. Of course, this is not the only use of stablecoins. More sophisticated investors also use them for loans and also for overseas remittances. 

Government views on stablecoin

Recently, many governments have regulated cryptocurrencies, as well as all activities related to them, such as mining or selling them. In the case of stablecoin, this issue is not clear. While the U.S. government, for example, claims that they “need to be regulated,” it has yet to take any steps in that direction. 

Leading stablecoins available in the market

Although stablecoins are not yet as popular as, for example, Bitcoin (BTH) or Ether (ETH), it is still useful to know which ones are currently leading the market. This collection includes: Tether (USDT), USD Coin (USDC), Binance USD (BUSD), TerraUSD (UST) and DAI (DAI).

DisclaimerBlockbulletin does not take accountability of investments based on the information of the website. We highly advice readers to make extensive research prior to any invest

Share this post

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email

More Guides

Terra (LUNA)

What is Terra (LUNA)?

This time we take a look at another project that dived deep into the hearts of investors. What exactly is…

What is Avalanche (AVAX)?

Avalanche (AVAX) is a blockchain, which conquers the hearts of programmers and at the same time is a great bargain…

What is Sandbox (SAND)?

In this material, we take a look at one of the fastest growing spaces in the metaverse family. We are…
All articles loaded
No more articles to load

Latest News

All articles loaded
No more articles to load

Analyses

All articles loaded
No more articles to load

Knowledge Base

What is Terra (LUNA)?

This time we take a look at another project that dived deep into the hearts of investors. What exactly is Terra (LUNA)? Blockchain Terra (LUNA)…

What is Avalanche (AVAX)?

Avalanche (AVAX) is a blockchain, which conquers the hearts of programmers and at the same time is a great bargain for investors. What distinguishes the…

What are stablecoins and how can you use them?

In recent years, cryptocurrencies are experiencing a real “boom”! And not just for cryptocurrencies – the rise in popularity applies to blockchain technology in general.…

What is Sandbox (SAND)?

In this material, we take a look at one of the fastest growing spaces in the metaverse family. We are talking about Sandbox and SAND…

What is Polygon (MATIC)?

Another coin worth looking at is Polygon (MATIC). It is especially liked by many investors. So what makes its popularity constantly growing? Support for Ethereum…

What is Shiba Inu (SHIB)

Shiba Inu (SHIB) is one of the most sought-after coins on the market. This is evidenced by its dynamic rallies and global interest. But does…
All articles loaded
No more articles to load