๐๐ฅ๐๐๐๐๐๐ ๐๐๐ค
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.
๐๐๐ซ๐ฎ๐ฆ should one hold a ๐๐ซ๐ฒ๐ฉ๐ญ๐จ๐ฐรค๐ก๐ซ๐ฎ๐ง๐ , ๐ฐ๐๐ฅ๐๐ก๐ is 1:1 ๐ฆ๐ข๐ญ ๐ ๐ข๐๐ญ ๐ ๐๐ค๐จ๐ฉ๐ฉ๐๐ฅ๐ญ? 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: ๐ณ๐พ๐๐๐พ๐ ๐๐บ๐ ๐๐๐ฝ๐๐๐๐๐๐บ๐ป๐ ๐ ๐พ๐๐ป๐พ๐ฝ๐ฝ๐พ๐ฝ ๐๐๐๐พ๐ ๐ฟ ๐๐๐๐๐๐ ๐๐๐พ ๐ผ๐๐๐๐๐ ๐พ๐ผ๐๐๐๐๐๐พ๐, ๐บ๐๐ฝ ๐ฟ๐๐ ๐ป๐พ๐๐๐พ๐ ๐๐ ๐๐๐๐๐พ, ๐๐พ๐๐๐พ๐ ๐บ ๐๐๐๐๐๐๐พ ๐๐๐๐๐๐ ๐๐. [5]
I myself have mainly used BUSD so far. ๐๐ฎ๐ญ๐ณ๐ญ ๐ข๐ก๐ซ ๐๐ญ๐๐๐ฅ๐๐๐จ๐ข๐ง ๐ฎ๐ง๐ ๐ฐ๐๐ง๐ง ๐ฃ๐ ๐ฐ๐๐ฅ๐๐ก๐?
[3]https://www.cftc.gov/PressRoom/PressReleases/8450-21
[5] https://protos.com/tether-papers-crypto-stablecoin-usdt-investigation-analysis/
