For many, cryptocurrency is immediately associated with Bitcoin. And yes, even though BTC is the very first and most popular cryptocurrency, now many other assets have appeared in the top. As the cryptocurrency market was growing, the types of digital money were changing. Conventionally, now there are four of them: bitcoins, tokens, altcoins and stablecoins. In this article, we will discuss the latter.
What are stablecoins?
Stablecoins are cryptocurrencies that are pegged to underlying assets, e.g: dollars, euros or gold.
Initially, only cryptocurrencies and tokens of their native projects were traded on the cryptocurrency market. The market was characterized by low capitalization and high volatility. All trading pairs on exchanges consisted of either volatile assets or volatile asset and fiat currency. If a trader wanted to take profits, he had to withdraw cryptocurrency to fiat.
These issues inspired the creation of stablecoins, which allowed people to fix their earnings in cryptocurrencies without resorting to CEXs or exchanges.
The most popular stablecoin is USDT (Tether); it is also in the top 3 cryptocurrencies by market capitalization.
How is USDT backed?
“All Tether tokens are 1:1 pegged to their respective fiat currency and are 100% backed by Tether reserves,” - the company says. On their website you can find the cost of those same reserves, and they are updated every day.
What does it mean? A certain part of the reserves is held in unreliable assets. Reliable: short-term US bills and dollars themselves. As long as the US economy is working, these assets can be counted on. Unreliable: precious metals, cryptocurrencies, etc.
Despite all the controversy regarding the backing of this cryptocurrency, USDT is trading confidently for $1, and has remained in the top for several years.
It is also impossible not to mention that USDT is a token that is based on the blockchain of other cryptocurrencies. This means that it does not have its own blockchain and only works as a second-level token, which makes it much easier to transfer money from person to person compared to using fiat currency. Transferring USDT is like texting instead of calling.
Pros and cons of USDT
The main pros and cons of this cryptocurrency follow from the previous block:
Where to buy USDT?
USDT can be used for profit taking when trading cryptocurrencies or for convenient transfers. In addition, stablecoins holders can earn passive income by accumulating tokens in smart contracts of decentralized financial platforms.
If, after taking all the pros and cons into consideration, you decide to buy stablecoins, then we will tell you about the best place for it.
You will need a crypto wallet in Telegram – i.e. Any.Cash. With it, you can buy USDT and easily exchange it for BTC, ETH, LTC, TRX, or fiat and cash if needed.
The feature of this crypto wallet is that it works like a chat bot, so transactions are fast and transparent. In order to buy it, follow the link, and make sure that crypto is easy!
