Stablecoins, what are they?

The need for stablecoins arose due to the significant volatility of cryptocurrency. Because today the price and capitalization of the project can be the same, and tomorrow it can be two times less.

Therefore, the cryptocurrency community decided to make a coin that will be equal 1:1 to $USD with a tie to a real asset "gold, real estate, bonds or, most often, the US dollar, and less often other assets and cryptocurrencies"

So Stablecoins are a class of cryptocurrencies that try to offer price stability compared to independent cryptocurrencies like Bitcoin. For example, Binance USD (BUSD), USD Coin (USDC), and Tether (USDT) are backed by the US dollar at a 1:1 ratio. One BUSD or USDC or USDT is the same as one US dollar.

Their main task is storage of cost and convenience in exchange between users, because their volatility is minimal or even zero. Therefore, stables are now simply necessary for all market players.

But stability, transparency, and fast transactions can overlap with a huge downside: we've all heard about the algorithmic stablecoin TerraUSD, which currently costs $0.02. It was built on a complex chain tied to the LUNA coin, and this collapse collapsed the capitalization of the crypto market by $400 billion and became the beginning of this cryptowinter (and this is far from the only example of stablecoin scams, or untying them from a stable price).

Therefore, closely follow the reserves and actions of those companies whose stablecoins you keep in your wallet.

What is the value and what can we do with it?

1. Stablecoins provide stability in a volatile market

2. Minimize volatility

3. Give an opportunity to earn interest

4. With the help of stablecoins, you can easily and quickly transfer assets

The most popular coins you can add to your crypto portfolio:

• Tether (USDT) with a price of $1.00. USA and with a market capitalization of 78,399.56 million dollars. USA
• Binance USD (BUSD) with a price of $1.00 USA and a market capitalization of 14,441.42 million dollars. USA
• USD Coin (USDC) has a price of $0.99 and a market cap of $45,453.71M. USA
• Dai (DAI) with a price of $1.15 and a market cap of $9.7 billion. USA

Conclusions

The cryptocurrency world, which has been predicted to collapse so many times, is growing and developing.

Stablecoins are an attempt to find a compromise between the traditional financial system and the cryptocurrency market, without opposing them, with the aim of their harmonious fusion. And the attempt is pretty good.

However, stablecoins are a virtual asset that is associated with certain risks. To buy them or not depends on your choice.