Cryptocurrencies have a bad identity of being volatile assets. The type whose value changes rapidly in a very short time. Did you know, however, that there are cryptocurrencies designed to remain fairly stable in value even with market volatility? We refer to these as stablecoins, and many of them have their value pegged to a fiat currency such as the dollar. In this review, we will have a look at some of the best stablecoins as we compare them. Read on.
Stablecoins are earning themselves a reputation as the next frontier in the world of digital currency. Previously, many people and even financial institutions have taken a step back from investing in these digital assets because of their volatility. However, with the launch of stablecoins and them having their value pegged to local currencies, market observers and crypto enthusiasts note some level of stability. At the time we were publishing this post, the three largest stablecoins had a combined market capitalization of more than $4.7 billion. These stablecoins are Tether ($4.06B), USDC ($424.29M) and TrueUSD ($194.27M).
So which are the most popular stablecoins? Let’s find out.
Tether is a stablecoin that has seen some of the harshest times of all other stablecoins on this list. Aside from being the most common stablecoin, it is also the most controversial. This controversy comes from the integrity of its USD reserves. Experts in the cryptocurrency space have raised questions periodically on the true value of this particular stablecoin’s reserves. Tether maintains that it has a market capitalization of up to $4.06B, which some people refute. Additionally, there have been questions about the reserves with regards to its relation to the USDT. Tether’s reserve
This stablecoin is a brainchild of Coinbase. From the name, you may already derive that this is a USD stablecoin; what you didn’t know however is that it is also an Ethereum token. What does this mean? It means that aside from Coinbase, you can store this coin on other Ethereum compatible exchanges and wallets. Some of those wallets are OKEX, Poloniex, Bitfinex, and Binance.
TrustToken created this particular stablecoin, and its developers pegged its value on the US dollar. TrueUSD holds the reserve for this coin in an escrow account to create trust among users. Another thing that we found very interesting about this coin is that it can be exchanged on over 70 exchanges. Additionally, it is viable for use in over 160 markets and has a little over 20 OTC desks that accept it. This stablecoin has also diversified to create a compatible coin for five other local currencies. These are TrueGBP (British Pound), TrueAUD (Australian Dollar), TrueSGD (Singaporean Dollar), TrueHKD (Hong Kong Dollar) and the TrueCAD (Canadian Dollar).
PAXOS Standard Token
Pegged to the USD and acceptable on Ethereum exchange platforms. This particular stablecoin is a creation of the Paxos Trust Company. It has gained a reputable name for itself, especially after approval and regulation by the New York State Department of Financial Services. Additionally, the coin earned a classification as an ERC20 token and is acceptable on several OTC desks and exchange platforms.
This is one of the most outstanding stablecoins currently on the market. What we found most appealing about this coin is that BPM LLP audits its US dollar reserves monthly. A product of the Gemini Exchange platform that was started by the Winklevoss twins, it is set to be the greatest rival to Facebook’s Libra. Experts are touting this sentiment because of the protracted intellectual property court battle between the twins and Mark Zuckerberg. Despite this ongoing skepticism, Gemini Dollar continues to be a go-to option for many institutional crypto traders.
DAI came to be as a result of the MakerDAO project. This stablecoin has its value pegged to the US dollar, but what you don’t know is that its reserves are in Ethereum. In fact, excess Ethereum is used as a reserve to help retain its value fairly stable even with any market volatility. With this setup, one DAI can be exchanged for $1 worth of Ethereum.
This was the first stable coin for the Euro. Malta-based Stasis Foundation created it. We found this coin to be particularly interesting in that there are audits available daily on their website. Additionally, it holds its reserves in Euros through a connection of liquidity providers, payment platforms and exchanges.
This coin was the first-ever stablecoin to be created back in 2014. The coin is issued through the Bitshares Blockchain platform. The coin is backed by the original cornerstone token on Bitshares BTS. This is held securely in a smart contract on the blockchain. It is interesting to know that for every BitUSD, you can access an amount of BTS in exchange for the BitUSD. For reserve requirements, we found that this stable coin holds twice the number of BitUSD in BTS. This allows the dollar peg to remain stable even in the face of market volatility.
With the wave of stablecoins taking over, it was only time before the Hong Kong dollar got one. Sparkdex is a coin whose reserves are held in the HKD. Many people use this as a bridge coin when conducting transactions with other cryptocurrencies. Most commonly, this happens when buying or selling other cryptocurrencies such as Bitcoin and Ethereum. However, we also found out that it has gained a reputation that has made it a frontier currency for BitSpark products.
The Philippine Peso got its first stablecoin when Stable.PHP was launched. In our research, we found that the country has quite a large number of cryptocurrency remittances from abroad. The coin was introduced to bring some level of value stability when conducting transactions. Other than just being a bridge currency, you will be surprised to know that in some parts of the country, it is used to pay solar electricity bills as well. Okra Solar and Bitspark entered into a partnership to make this possible.
Brazilian Digital Token
We found out that this stablecoin was launched to give Brazilians access to crypto exchanges and other people access to the Brazilian market. It is pegged on the Brazilian Real with its reserves in BRL to ensure the peg works and guards against volatility. This coin has made progress that has seen it listed on several exchange platforms, among them BITTREX and BitForex.
This Indonesian based stablecoin is pegged on the Indonesian Rupiah (IDR) and runs on the Ethereum blockchain. One IDK can be exchanged for 1,000 IDR. It was created by the IDK Foundation to help spur the adoption of cryptocurrencies in Indonesia. Currently, you can access these coins on the Tokenomy platform.
The Philippines is a country hungry to adopt cryptocurrencies. Aside from Stable.PHP, they also have PHX offered by Union Bank. This became the first commercial bank in the Philippines to get approved to offer its own stablecoin. The bank aims to connect rural banks and through that facilitate more efficient transactions through cryptocurrencies and blockchain. The reserves for this coin are held in PHP on a 1:1 basis.
The case for stablecoins
As the world keeps adopting cryptocurrencies, stablecoins are playing a crucial role of bridge currencies. Currently, a majority of the stablecoins are pegged to the US dollar, but experts suggest that future launches could be geared towards exotic currencies. This is in line with blockchain’s prime goal of financial inclusion. Emerging markets continue to play a crucial role in advancing the use of cryptocurrencies. Platforms such as Bitspark continue to offer opportunities for more efficient transactions using cryptocurrencies. The platform upholds its aim to be a frontier digital currency enabler in various markets and economies around the globe.
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