Stable Coin for Beginners

Cryptocurrencies have been around for more than 10 years, the volatilities in the encrypted world are unpredictable and the sudden, volatility of the cryptocurrency market is greater than the stock market, chaos, manipulation, and supervision never leave the crypto market, in order to survive in such a violent market is a very difficult job. In the encrypted world, there are multiple factors that affect the prices of cryptocurrencies therefore Stable coins have a presence in the crypto world, stable coins always ensure the constant price and maintain a stable relationship with fiat currency.

A stable currency is a digital currency with relatively stable legal currency prices, Stable coin helps in capital hedging, transaction intermediary, and payment in the encrypted world with violent price fluctuations, Stable coins have three types of categories

1. Centralized Issuance
2. Collateral Backed
3. Control Circulation

Centralized Issuance

In the centralized issuance category, the coins have been issued with the equivalent deposits of fiat currency in the bank, for example, if you want to issue your ERC-20 token as a Stable coin in Ethereum chain then you need to deposit let suppose 1 million USD in the bank after this you can issue the same number crypto coins in the Etehreum network.

Collateral

A collateral type is the complete decentralized type such as Dai, the basic idea behind is to deposit the ETH in Dai’s network, and against this the corresponding amount of Dai worth of USD issued to the users. The complication in this type is the fluctuated price of the Ether, for example, if you issue the DAI with the ratio of 1:1 against USD and suddenly ETH decline then the ratio will become 0.74.

Controlled Circulation

This type has basically the flexible one as compare to others, in this type when cryptocurrency supply exceeds demands then issuance of the currency must be restricted to less and when demand exceeds the supply the more currency has been issued in the market, in this way a certain kind of control is achieved for maintaining the prices of stable coins, however, this method is quite difficult but with the help of the algorithm these crypto coins will be issued in the market.

Binance BUSD

This coin was issued by the Binance Exchange in cooperation with the Paxos, this coin has been approved by the New York State Department of Financial Services, it is a stable coin and priced at 1:1 U.S. dollars, the holders of this coin can redeem it at any time, the coin can be used in any types of crypto services such as trading platforms, Defi and encrypted asset exchanges.

Coinbase USDC

This stable coin has been released by the Coinbase exchange in the United States, it is rank second in the market value, Coinbase is the world largest currency exchange, founded in 2012 allow merchants and consumers can buy and sell cryptocurrencies, the platform has 43 million certified individual users, 7,000 institutional users, and 115,000 ecological partners.

Tether USDT

Tether USDT is a token that based on the fiat currency U.S. dollar was launched by Tether and it is equivalent to 1 USD in value, users can use USDT to exchange 1:1 with fiat USD at any time.

Source: https://medium.com/cryptocurrencies-ups-and-down/stable-coin-for-beginners-13291584fac?source=rss——-8—————–cryptocurrency