The surge toward Crypto adoption has led to more people performing faster transactions with minimal fees. However, crypto and its market are extremely volatile which makes it difficult to use crypto as an accepted payment gateway. What then is the solution to this problem? The solution lies in Stablecoins which protect against crypto volatility.
Stable coins are built to retain their fixed value while tied to a primary asset, like fiat currency. There are types of stablecoins such as Commodity-backed stablecoins (coins stabilized with hard assets such as gold, real estate, and other precious metals), Fiat-backed stablecoins (reserves conventional currency as collateral), Crypto-backed stablecoins (backed by crypto) Seigniorage-style stablecoins (regulated and backed by an algorithm).
Recently, stablecoins have become an increasingly important alternative for investors and companies interested in cryptocurrencies. Unlike other coins that fluctuate with the asset price, stablecoins are fixed to a less volatile asset.
In this article, we will review the six safest and top stablecoins you can invest in in 2022.
Binance USD (BUSD): This is an ERC20 token issued on the Ethereum (ETH-USD) blockchain. It is one of the most traded tokens on Binance and has several utility functions that can be used for cryptocurrency trading. Its value is fixed against the U.S. dollar and can be used for transactions in any place where Ethereum is accepted. Ethereum is safe for investment because It is certified by the New York State Department of Financial Services and cannot be part of any bankruptcy filings. This means that they are safe and secure, even during bankruptcy.
TrueUSD: This is a stable coin with a decentralized governance system. The stable coin is based on the USDT protocol developed by TrueBit.TrueUSD is safe for purchase as it is tied to the U.S. dollar which means that, at any given time, one USD worth of TrueUSD will always be worth $1. The idea behind TrueUSD is to provide stability for cryptocurrencies by ensuring that their value doesn’t fluctuate too much. It has zero transaction fees and is often associated with decentralized technology.
TerraUSD: TerraUSD is an emerging proprietary cryptocurrency that fuels the Terra ecosystem. The currency allows users to trade with other users on the terra marketplace, which means investors can earn money by selling their unused resources or buying other people’s new resources at a discount. Terra‘s ambitious goal of being both price-stable and growth-driven makes it more desirable. It also provides low-risk profits to users when the price of TerraUSD goes up in value. If the price of TerraUSD falls at any point, users lose a significant part of their money.
The USDC: This is a stable coin created by the decentralized blockchain platform MakerDAO. USDC is a digital currency that uses the U.S. dollar as an additional security measure. USDC combines the functions of cryptocurrencies and fiat currencies to make it easier for investors everywhere to invest without having to worry about fluctuations or wildly fluctuating prices. The coin’s volatility rankings currently stand slightly higher than Tether but remain low risk compared with many others.
Digix Gold Token: This was built to be more than just an investment, rather It also serves as a medium of exchange to protect investors from volatility in traditional markets by providing them with security when trading cryptocurrencies or fiat currency. The DGX token is redeemable for one gram of gold so there’s no way to exchange the DGX into fiat currency. When the price of gold fluctuates, so does that of DGX. This makes this currency more volatile and causes investors to lose money on their investments if they buy when prices are high rather than low (as people often do with stocks). This coin is ideal because many still believe in hard assets like precious metals because they’ve always been valuable. Investing in stable coins like Dgx protects you from the volatility of cryptocurrency because it’s attached to gold and has a low risk of losing value.
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