To begin with, let’s get a handle on what stackablecoins are in demand. This is the name of the cryptocurrency, which has a fixed value or close to it for a long time as a rule such tokens are tied to either the dollar or other world currencies. As a rule, the eleventh token is equal to one unit of fiat currency.
Now let’s understand what stabelcoins are for, are there any risks, and what they are used for.
The main purpose of stabelcoins is to track the asset to which they are attached. As a rule every such cryptocurrency has some kind of collateral, for example, a reserve of real currency is created, let’s say $100000, for this amount 100000 coins are issued with 1 dollar each, and if the owner of such token wants to get real money, he can get it now.
On the one hand, such coins are backed by real money, unlike market leaders like Etherium, Lightcoin, Bitcoin, but it is impossible to earn on them, because they don’t increase in value.
You have to understand that there are several options to keep the value at the same level, one of them is burning coins, this helps to keep the value of token at a given level. What coins are called algorithmic stackcoins.
What is the popularity of these coins related to?
First and foremost, these coins are designed for real transactions. You know exactly what the recipient will receive exactly what you are sending them.
These coins are used by individuals, as well as by brokerage companies that can transfer e.g. Ethereum Stablecoin, which is for example Tether, because transactions with them are available at any time of the day, unlike transactions with real money.
Also such coins are used with smart contracts, where they are the most popular due to the absence of volatility.
Now it is possible to understand what stabelcoins are the most popular
As a rule, they do not need PR, because they do not offer the opportunity to make a lot of money quickly, but this does not prevent some of them from having a fairly high level of capitalization. For example, the cryptocurrency Tether has a capitalization of $68 billion, the so-called digital dollar USDC less than Tether. And, for example, UST – TerraUsd – only $3 billion.
Of course, the size of capitalization is not as big as that of leading cryptocurrencies and will never compare with them, due to absolutely different goals they adhere to.
What risks can be expected in working with stabelcoins
In general, the main risks that are associated with the fact that many cryptocurrencies are not backed by anything are absent here, but there are typical risks like in any other digital currency, such as security. Any cryptocurrency has to be stored somewhere, these are so-called digital wallets, they can also be stored on an exchange or a brokerage company. The risk is that a digital wallet may not be secure enough, you can lose the password to it. The broker can be liquidated, and the exchange can be attacked by hackers.
Also, a major risk is that stablcoin may not be fully backed by real currency, and if even a 1% match rate between one coin and one unit of fiat currency is different, it’s already a risk.
The only way to find out how safe stablcoins are is to thoroughly examine all the information on the issuer’s reports. If you can’t find these reports, you shouldn’t buy these coins.
Even so, you need to have a full understanding of what assets support the coin’s value. For example, the most popular Stablecoin recently reported that it has much more assets than it needs, but only 76% of its reserves are in real money, the rest are bonds, metals, and other assets. For the most part, this is not a problem, but nevertheless there are some risks.
The main guarantee will be the use of cryptocurrency to pay for goods and services, using it to make transactions, and storing money in it.
Stablecoins add the stability that popular cryptocurrencies lack, but they absolutely cannot be used for generating any income. Before storing your savings in stabelcoins, you should carefully study the reports and understand what this cryptocurrency is backed by, then you will avoid big risks.