Stablecoins: what are their features and advantages

A stable exchange rate is what is lacking in the cryptocurrency market due to the increased volatility. Sharp ups and downs in prices discourage many potential investors from using virtual assets. In order to solve this problem, stablecoins were created, the main advantage of which is a fixed rate. Translated from English, stable means “stable”, hence the name of these coins. Traders who are thinking about which cryptocurrency is now profitable to buy can turn their attention to stablecoins and bring a little stability and reliability to their crypto portfolio.

How to use stablecoins

The stablecoin rate is pegged to fiat currencies (dollar, euro) or physical assets (gold, oil). This fact is their main advantage, making them a convenient means for calculations. Since fiat is still the most common currency, stablecoins allow traders to lock in fiat profits while trading in the market. It is not necessary to withdraw your assets from a cryptocurrency exchange or wallet. This approach is especially effective in a bear market when investors want to keep their profits.

At the same time, having a certain number of stablecoins on the balance of the exchange, traders can use them to buy cryptocurrencies at the time of their fall. This is a good trading strategy that many people use with digital assets.

Stablecoins help financiers quickly and profitably exchange stable currencies from anywhere in the world. But before deciding which cryptocurrency is better to buy, you need to determine for what purpose it is necessary.

Popular stablecoins

The most popular and commonly used stablecoins are those backed by traditional assets. Tether (USDT) is the number one crypto asset as it is pegged to the dollar. Among the clear advantages of Teser are:

  • Capitalization is 4 times higher than the total capitalization of the rest of the stablecoins.
  • Flexibility of the protocol used, which allows the use of USDT tokens on multiple blockchains (Ethereum, Bitcoin (via Omni), Tron, Algorand, EOS).
  • Presence on all centralized exchanges.
  • High liquidity.

Many traders and investors who are considering which cryptocurrency to buy now prefer another stablecoin – USD Coin (USDC). The coin is 100% backed by US dollars, which allows it to maintain the price even with strong volatility in the crypto market. This project is the result of cooperation between the well-known company Circle and the Coinbase exchange. The stablecoin USDC is listed on many major exchanges and exchanges, which makes this crypto asset even more attractive.

When considering which cryptocurrency to buy, it is important to take into account its reliability and integrity in scandals.