The Most Used Stable Currencies by Market Cap
Types of StableCoins
Different stablecoins work with different working mechanisms. These are typically categorized into three different types - fiat-backed, cryptocurrency-backed and commodity-backed stablecoins.
The most common form of stablecoin in the market consisting of crypto assets that are directly backed by a government-issued currency with a fixed 1:1 ratio. Basically, their value is based on the value of the backing currency.
Similar to fiat-backed, here the stablecoins are issued with cryptocurrencies as collateral. Since everything occurs on the blockchain, their currencies are much more transparent and can be operated in a decentralized manner. Everything is done digitally on the blockchain, which means that the system depends on the use of smart contracts to handle the issuance of units, ensure governance and establish trust.
Also known as algorithmic, these stablecoins are backed by stable assets such as precious metals (gold), real estate, even oil. Algorithms and smart contracts manage the supply of tokens issued to maintain a stable price - like the monetary policy used by central banks around the world to manage national currencies. Implemented on a decentralized platform, these smart contracts can run autonomously, reducing or increasing the supply of tokens in circulation.
How/Where to buy StableCoins?
Just like all other cryptocurrencies, stablecoins may be purchased on cryptocurrency exchanges. You can buy them the same way you buy any other cryptocurrency, and you must first check if the exchange supports the stablecoin you want. Below you will find a table with the most used exchanges by circulating volume.
Frequently Asked Questions
Let us go over few basic questions:
Can you make money with stablecoins?
Like anything, the value of stablecoins fluctuates. You can make money by investing in stablecoins and reselling them at higher prices.
What is the most important trait of a stablecoin?
The most important feature in stablecoins is that their price remains relatively stable when compared to other crypto and there are no big fluctuations. So, you have basic security built in that the price will not become zero overnight.
How safe is a stablecoin?
StableCoins are much safer than regular cryptocurrencies which can rise or fall 10x in an extremely short period. Stablecoins are not able to deviate so fast and are a preferred investment by people who prefer to have more security than high-risk high-return on investments.
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