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Have you heard about stablecoins? Cryptocurrencies have grown in popularity with the general public due to their ability to be traded with a potentially lucrative return.
However, some aspects of cryptocurrencies, such as their volatility and unpredictability, end up causing a cautious and measured response from existing and potential investors.
However, there are cryptocurrencies whose value fluctuates infrequently and are known for their stability, these coins are known as Stablecoins.
What are Stablecoins and what are their advantages?
One of the biggest obstacles in the cryptocurrency market is the high volatility in asset prices. This factor makes it difficult for the mass adoption of the public, which is why Stablecoins were created, as a solution to this problem.
Stablecoins are currencies backed by real assets such as gold, oil or fiat currencies, with the dollar or euro representing their real value.
The great popularization of Stablecoins caught the attention of several governments, initiating the movement to create the Central Bank Digital Currencies – CBDCs, which are Stablecoins issued by central banks.
It is important to make it clear that all CBDCs are Stablecoins, stable and tied to real assets, but not all Stablecoins are CBDCs, as they are not always created or issued by Central Banks.
Stablecoins seek to offer the best of both worlds, the digital security and privacy of cryptocurrency digital payments, as well as the speed in processing transactions, along with the less instability and volatility of fiat currencies.
Here we list the main benefits of Stablecoins
- They are backed by real-world assets.
- They have cryptographic security.
- Can be used for global transactions.
- Lower transaction fees.
- Protection for traders and investors during market volatility.
- They can be sent and received by anyone, anywhere, anytime.
- They are ideal for payments between central banks and companies.
- They can be linked to almost any asset.
What are the top Stablecoins in 2022?
Here we list the cryptocurrencies considered to be the most stable in terms of their market value.
Tether (USDT) is one of the oldest stablecoins on the market, being considered the fourth most valuable cryptocurrency in terms of market capitalization, as well as one of the most stable cryptocurrencies.
The USD Coin (USDC) is also a cryptocurrency pegged to the USD. USD was launched in 2018, being managed by Circle and Coinbase through the Center Consortium.
Terra USD (UST) is also a Stablecoin that Terra provides. Terra USD is the 31st most valuable cryptocurrency in terms of market capitalization.
Dai is a different stablecoin from the others on the list, it is backed by ether tokens and is pegged to the USD. Dai was introduced to the market by MakerDAO in 2015, being the 36th most valuable cryptocurrency on the market.