𝕊𝕥𝕒𝕓𝕝𝕖𝕔𝕠𝕚𝕟𝕤

The term covers all cryptocurrencies that align their value 1:1 with a fiat currency. Usually, the peg to USD is chosen. However, there are also stablecoins with other alignments. The way it works is relatively simple, if fiat (or equivalent) is deposited with the issuer of the stablecoin, then tokens of the stablecoin are created in the corresponding amount. Conversely, tokens are destroyed when they are redeemed.

𝐖𝐚𝐫𝐮𝐦 should one hold a 𝐊𝐫𝐲𝐩𝐭𝐨𝐰ä𝐡𝐫𝐮𝐧𝐠, 𝐰𝐞𝐥𝐜𝐡𝐞 is 1:1 𝐦𝐢𝐭 𝐅𝐢𝐚𝐭 𝐠𝐞𝐤𝐨𝐩𝐩𝐞𝐥𝐭? Here one idR not expect any increase in value. Stablecoin serve as a safe haven in particularly volatile times or as a medium of exchange when trading "normal" cryptocurrencies. Stablecoin have the advantage that values can be quickly exchanged for cryptocurrencies. Depositing fiat takes several days depending on the payment method and is thus not very suitable for the fast-moving crypto market. Holding values in stablecoin bypasses the slow handling of fiat. Bitcoin or Ethereum can be exchanged directly into most cryptocurrencies. However, in such trading pairs, both sides sometimes fluctuate wildly, while the value of a stablecoin is "relatively fixed."

The disadvantage of stablecoin can be cited as the fact that they combine the negative characteristics of both worlds. As with any cryptocurrency, there is a possibility that bugs or technical issues will significantly affect the value. Furthermore, stablecoins naturally lose just as much purchasing power as their real counterparts.

Additionally, most stablecoins are centralized. This means that their trustworthiness is also significantly related to the issuer. Away from USDT, all major stablecoins such as USDC, BUSD, TUSD, PAX, or GUSD strive for regulatory compliance. However, USDT (Tether) is by far the largest stablecoin. Especially with USDT, however, the quality of the reserves, i.e. the basis of the 1:1 peg, is questioned again and again. Tether almost exclusively holds debt securities, while BUSD and PAX, on the other hand, rely on cash. In addition, Tether also drags a bad history, including penalties. [3] [4] Regardless, Tether is very popular with institutional investors and market makers. Protos formulates this very appropriately in their research: 𝖳𝖾𝗍𝗁𝖾𝗋 𝗁𝖺𝗌 𝗂𝗇𝖽𝗂𝗌𝗉𝗎𝗍𝖺𝖻𝗅𝗒 𝖾𝗆𝖻𝖾𝖽𝖽𝖾𝖽 𝗂𝗍𝗌𝖾𝗅𝖿 𝗐𝗂𝗍𝗁𝗂𝗇 𝗍𝗁𝖾 𝖼𝗋𝗒𝗉𝗍𝗈 𝖾𝖼𝗈𝗌𝗒𝗌𝗍𝖾𝗆, 𝖺𝗇𝖽 𝖿𝗈𝗋 𝖻𝖾𝗍𝗍𝖾𝗋 𝗈𝗋 𝗐𝗈𝗋𝗌𝖾, 𝗌𝖾𝗋𝗏𝖾𝗌 𝖺 𝗉𝗎𝗋𝗉𝗈𝗌𝖾 𝗐𝗂𝗍𝗁𝗂𝗇 𝗂𝗍. [5]

I myself have mainly used BUSD so far. 𝐍𝐮𝐭𝐳𝐭 𝐢𝐡𝐫 𝐒𝐭𝐚𝐛𝐥𝐞𝐜𝐨𝐢𝐧 𝐮𝐧𝐝 𝐰𝐞𝐧𝐧 𝐣𝐚 𝐰𝐞𝐥𝐜𝐡𝐞?

[1] https://tether.to/wp-content/uploads/2021/08/tether_assuranceconsolidated_reserves_report_2021-06-30.pdf

[2] https://paxos.com/2021/08/24/the-digital-dollar-that-always-equals-a-dollar-paxos-standard-pax-is-now-pax-dollar-usdp/

[3]https://www.cftc.gov/PressRoom/PressReleases/8450-21

[4] https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether

[5] https://protos.com/tether-papers-crypto-stablecoin-usdt-investigation-analysis/