What are digital stablecoins?
Stablecoins are a type of digital currency with a fixed value relative to another type of asset, often fiat currencies, but may also be linked to precious metals or other digital currencies, and are generally more stable than other digital currencies, making them prevalent. For use as an intermediary in crypto-based transactions, such as trading cryptocurrencies or transferring funds between users.
|Everything you need to know about stablecoins
How stable cryptocurrencies work
Unlike most digital currencies, stablecoins are not an attractive investment asset, but the stability of their value makes them practical for a number of uses, and overcoming obstacles related to the difficulty of converting between cash and digital currencies, especially with regard to the relatively long times that trading platforms take to deposit cash, except for cases Rarely, these platforms allow near-instant deposits from local bank accounts, such as the Easy Funding and Bolt options at BitOasis.
Objectives of using stablecoins
This type of currency is used for two main purposes, which are as follows:
Cross Border Transfer
Unlike other digital currencies that may lose or gain additional value between the dates of sending and receiving remittances, the stability of the price of stable currencies makes them suitable for international remittances, as their remittances are made at high speeds and low cost compared to the costs of making the same remittances through traditional financial institutions, in addition to what they provide Concealing the identity of the sender and receiver.
Investing in digital currencies
Many traders rely on stablecoins linked to major fiat currencies (such as the US dollar and the euro) to trade other digital currencies, due to the speed in making transactions, especially when buying a currency that depends on the same stable digital currency blockchain, as is the case with many currencies Based on the Ethereum blockchain.
Most Popular Stable Cryptocurrencies
The following currencies are among the most important types of stable digital currencies, and the following is an overview of each of them:
Tether coin is based on the Ethereum blockchain, and its value is equal to 1 US dollar, and the issuance of new coins depends on depositing cash in currency reserves accounts so that the amount of Tether is issued equal to the money deposited after deducting the fees, and when the owners of the Tether coin re-exchange it into coins, it is deleted Exchanged currencies from circulation, and “ tether ” is the first and largest stable currency in the world, and its market value at the end of 2022 AD was more than 77 billion dollars, Gold is one ounce of gold.
USD Coin (USDC)
A coin issued by the Center Consortium and operating on several blockchain networks, including Ethereum, Algorand, Avalanche, Solana, and Tron, USDCoins are created with a value of $1 USD for the amounts users deposit into their own bank account. It is based on a smart contract on the Ethereum blockchain and can be exchanged for US dollars.
Stable Tera Coins
The Terra Blockchain provides a number of stable cryptocurrencies linked to other fiat currencies such as the US dollar, the euro, the Japanese yen, the British pound, etc. Unlike most other stable cryptocurrencies, the Terra stablecoins are based on the reserves of the Terra Coin (LUNA), which are either burned or removed from circulation When converted to one of the stablecoins, along with reserves in other digital currencies, especially Bitcoin.
It is a stablecoin issued by the decentralized independent MakerDAO, which also issues MKR, and tries to keep its value as close as possible to the US dollar, relying on a smart contract on the Ethereum blockchain.