What are Stablecoins?

Stablecoins became very popular in the last years. Although they have been for a long time in the market, interest for them expanded in recent months. There are different types of stablecoins and each of them has different characteristics.

However, the main benefit of stablecoins is that their price is tethered to a fiat currency (sometimes virtual currency) and they do not fluctuate (or fluctuate very little). In this guide, we are going to share with you all the information you should have about stablecoins.

Disclaimer: the information shared by AltSignals and its writers should not be considered financial advice. This is for educational purposes only. We are not responsible for any investment decision you make after reading this post. Never invest more than what you are able to lose. Always contact your professional. financial advisor.

Stablecoins are virtual currencies that have their price derived from a fiat currency or another virtual currency. For example, Tether (USDT), the largest stablecoin in the world, has a price of $1 USD. 1 USDT is equal to $1 USD. Although there could be some fluctuations (0.999 USD or 1.001 USD) the price of the coin is always $1 USD.

Other stablecoins can follow and track the price of other fiat currencies such as the euro (EUR) or the British pound (GBP).

These stablecoins usually run on different blockchain networks such as Ethereum (ETH) and they are fast ad cheap to use. Rather than running on top of legacy systems, transactions can take just a few minutes to be processed.

Stablecoins require backing in order to keep their price tethered to a fiat or crypto pair. For example, Tether’s parent company has assets backing the entire supply of USDT. There is an asset worth $1 backing each USDT released to the market.

There are other types of stablecoins, those that follow the price of a cryptocurrency. For example, Wrapped Bitcoin (WBTC). This digital currency follows the price of Bitcoin. Thus, it is always worth 1 BTC (with some price fluctuations).

Although holding stablecoins is not the same as holding “real assets”, they have many advantages.

Top Stablecoins in the Cryptocurrency Market

There are several stablecoins in the cryptocurrency market. Not all of them are the same. Indeed, you will find that there are many differences between stablecoins in the crypto market. Some of them are larger, and not all of them are supported by the same exchanges.

Tether (USDT)

This is the largest and most popular stablecoin in the world. This virtual currency became the 5th largest in terms of valuation with $47.83 billion.

Tether is supported in most of the crypto exchanges and it became very useful when there were no fiat on-ramps in several crypto platforms. Nowadays, several companies are using not only Tether but also other stablecoins.

USD Coin (USDC)

This digital asset has been released by Circle and it is available in several crypto exchanges in the market. It is now the second-largest stablecoin in terms of market valuation with $11.3 billion. It is usually the favourite stablecoin used by large companies.

Binance USD (BUSD)

Binance USD (BUSD) is the stablecoin created by the Binance crypto platform. The BUSD coin is supported on different DeFi platforms and it powers the Binance ecosystem (one of the largest in the market).

Nowadays, BUSD is the 33rd largest virtual currency with a market cap of $5.40 billion. It is also the third-largest stablecoin in the world.

Wrapped Bitcoin (WBTC)

Wrapped Bitcoin is a stablecoin that follows the price of Bitcoin and it is used in different DeFi platforms. Users that want to get access to BTC exposure on Ethereum-based decentralized finance platforms could purchase WBTC. This token is now the 19th largest in the world with a market valuation of $9.25 billion.

Stablecoin Use Cases

There are many different use cases for stablecoins. The first use case is related to providing a hedge to traders against volatility in the crypto market. Users can trade their favourite virtual currencies even if there are no fiat pairs. By using stablecoin pairs, they could get access to a coin that tracks the price of fiat currencies.

Moreover, companies are using stablecoins to process international fast and cheap transfers. They make it easier for firms to send and receive money. Rather than waiting long periods of time for their fiat transfers to be confirmed, these stablecoins process transfers in minutes and for very low fees.

Proficient authors guiding you with transparency, integrity and education through the finance international markets

The AltSignals writing team consists of experts dedicated to the world of finance and technology, with a particular focus on cryptocurrencies and forex. Our writers bring a broad range of knowledge and experience, cultivated through years of arduous and direct involvement in financial markets, as well as intense technological collaboration.

Editorial approach

At AltSignals, we believe that transparency and education are the key to empowering our readers. Therefore, our content is meticulously researched to ensure its accuracy and thoroughness. Each of our articles is created with the aim of providing educational insights and in-depth analysis, helping both beginners and experienced traders.

Commitment to quality

Integrity is certainly the foundation of our editorial process. The team follows rigorous journalistic standards with careful review, all to ensure that each publication is meticulously researched and exceeds our readers’ expectations.

Our mission is to provide analysis that informs as well as guides users and enthusiasts through the complexities of the cryptocurrency and forex markets. In line with our motto of “quality over quantity”, we guarantee that only the highest quality trading signals are published.

In addition to our commitment, which extends beyond the simple transmission of useful information, our in-depth analysis focuses on profitability and effectiveness squarely, avoiding the common industry habit of prioritizing profit over accuracy. Our traders are strategic experts who offer personalized help to those seeking worthwhile portfolio management tactics.

Diverse knowledge

Our authors are proficient in a variety of topics across the financial spectrum, from emerging trends in blockchain to the nuances of forex trading. This diverse range of knowledge allows the team to cover several topics, ensuring our content is always comprehensive and deeply specialized.

Interactivity and support

We understand that the world of trading can be complex for many. Therefore, alongside producing informative articles, our team is also committed to interacting with the community. Through comment sections, forums and direct support, we encourage our readers to seek clarification and sharpen their understanding, promoting an environment of continuous learning.

Future vision

Looking to the future, the AltSignals writing team is imbued with a vision that transcends regular publishing, and continues to dedicate itself to discovering and reporting on the latest innovations and trends available in the market. We are constantly seeking to improve our skills and expand our knowledge, with the ultimate goal of being a reliable and respected source in digital financial journalism.

There is great commitment to discovering and reporting not only the latest news and trends in the market, but also to equipping our readers with the tools they need to navigate volatile markets with confidence. We firmly believe that, with the support of an appropriate platform coupled with accurate guidance, our readers and traders can turn market volatility into a competitive advantage.

Join us

Follow AltSignals to stay up to date with the latest developments in the world of finance and technology, and explore how our insights can help improve your trading strategies. The AltSignals team is here to guide you through the exciting, dynamic and challenging world of financial markets.

What are Stablecoins?