Stablecoins are cryptocurrencies that are somewhat stable and are linked 1: 1 to a currency that we currently use a lot. In most cases, this is up to the dollar (USD). There are even stablecoins that are equal to the gold price. There are currently several Stablecoins available on different exchanges. Behind every Stablecoin is a company that ensures that a dollar (or another fiat currency) is in the bank for every coin issued. These companies are responsible for actually owning the assets.
Which Stablecoins are there?
USDT (Tether): 1: 1 against the dollar. Largest company with the largest market share and suspected of market manipulation and not having sufficient assets TUSD (TrueUSD): 1: 1 against the dollar PAX (PAXOS Standard): 1: 1 against the dollar DAI (Maker): 1: 1 against the dollar. Decentralized! GUSD (Gemini Dollar): 1: 1 against the dollar EURS: 1: 1 against the euro SGDR: 1: 1 against the Singapore dollar
What are Stablecoins used for?
Traders use Stablecoins to quickly switch to fiat. It is often not possible on an exchange to quickly switch from Bitcoin to Euro, for example. For this, the Bitcoin must first be withdrawn and converted to euros via a broker. But in the fast crypto market you have to be able to act quickly. So if a trader expects the price of Bitcoin to fall, he can buy USDT for example at the current price.
Example: 1 BTC currently costs exactly 8,000 USD, and you expect the price to fall. Then you can take position in a Stablecoin and convert 1 BTC into 8000 USDT. If the price actually drops to USD 7,000, you can then use your 8,000 USDT to buy up 1.14 BTC again. This means 0.14 BTC profit.
The benefits of Stablecoins
You always have a stable price when trading You can take a break by going back to USD Ability to protect your position Away from the fierce volatility.
Some companies behind a currency are not transparent and they may not have the assets. Companies behind a currency can manipulate the market by printing new USDT There is a central company behind the coin Although the coin must be equal to 1 USD, it can sometimes differ by a few percent.