There are different stablecoins in the cryptocurrency market. However, they are different from typical virtual currencies. While Bitcoin (BTC), Ethereum (ETH) or Litecoin (LTC) fluctuate at all times, stablecoins offer a way for users to hedge against volatility in the market.
In this guide, we will go through the top 4 stablecoins you can find in the cryptocurrency market. Although they do not fluctuate, they are different in the way they operate. We will tell you all the details below.
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Stablecoins are cryptocurrencies that have a price tied to a fiat currency. For example, Tether (USDT) has a price of $1 and it does not fluctuate. The same happens with other stablecoins. They have a price that is always pegged to the price of a fiat currency.
The most common stablecoins are pegged to the U.S. dollar. But there are also other coins that follow the price of the GBP or the EUR. If Bitcoin falls by 20%, users can hedge this move by purchasing USDT or any other stablecoin.
These are now the top 4 stablecoins in terms of market valuation in the crypto market.
Tether (USDT) is not only the largest stablecoin in the market, but it is also the most popular one. USDT was launched back in 2014 and it became one of the largest cryptocurrencies in the world. Each of the USDT tokens released to the market is backed by an equal amount of assets.
Nowadays, Tether is the standard stablecoin in most of the exchanges in the market. Although there have been some controversies around it, the company behind USDT has shown they were usually FUD.
At the time of writing, USDT has a market valuation of $44 billion and it is the 5th largest virtual currency in the world after Bitcoin, Ethereum (ETH), Binance Coin (BNB) and XRP. The coin is also running on top of different blockchain networks such as Tron (TRX) or Ethereum, among others.
The second stablecoin in our list is USD Coin (USDC). This virtual currency is pegged to the U.S. dollar and it is currently running on top of different blockchain networks. Each of the USDC released to the market is backed by a USD that is held by the parent company (Circle).
USD Coin was introduced to the Coinbase virtual currency exchange. Nowadays, this is one of the platforms with the largest volume for USDC pairs. In this way, users can easily exchange their cryptocurrencies for a stablecoin paired to the USD.
At the time of writing, USD Coin is the 15th largest cryptocurrency in the world with a market capitalization of $10.96 billion. It is worth mentioning that VISA announced it would start using USDC to process transactions.
Let’s move on with the following stablecoin in the market. We are talking about Binance USD (BUSD). As the name suggests, this is the virtual currency used on the Binance USD platform and on the Binance ecosystem.
The digital currency was launched by the Binance exchange in order to offer users an alternative to USDT and USDC. Nowadays, it has been integrated into the whole Binance ecosystem of decentralized applications (dApps) and projects.
At the moment, Binance USD is the 30th largest cryptocurrency and the third-largest stablecoin in the market right after USDT and USDC. BUSD can be traded in the Binance exchange against a wide range of virtual currencies such as Bitcoin, Ethereum or Litecoin, among others.
DAI is the 43rd largest cryptocurrency with a market capitalization of around $3 billion. This stablecoin is widely used by people in different countries to get access to foreign currencies.
The main goal of this virtual currency is to keep its value as close to the U.S. as possible. However, this currency does not have a reserve account in a bank, it is indeed backed by other virtual currencies.
This is done thanks to MakerDAO, an organization that ensures the stability of this virtual currency. This is perhaps one of the first decentralized finance stablecoins to be released to the market. Nowadays, this coin is traded in most of the largest exchanges around the world.
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