{"id":625,"date":"2022-12-15T14:56:22","date_gmt":"2022-12-15T14:56:22","guid":{"rendered":"http:\/\/78.47.81.216\/?p=625"},"modified":"2023-02-28T14:34:22","modified_gmt":"2023-02-28T14:34:22","slug":"stablecoins-a-simple-guide-for-beginners","status":"publish","type":"post","link":"https:\/\/blog.ag.qubiq.cc\/?p=625","title":{"rendered":"Stablecoins: A Simple Guide For Beginners"},"content":{"rendered":"\n
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You have probably heard about USDT and other fiat-pegged cryptocurrencies, or even have some in your portfolio. Those are stablecoins, a highly popular digital asset that is also held in high esteem within regulators.<\/p>\n\n\n\n

Here\u2019s everything you need to know about these special coins.<\/p>\n\n\n\n

What are stablecoins?<\/strong><\/p>\n\n\n\n

Stablecoins are a type of cryptocurrency that serve as a bridge between digital money and real-world assets. Typically, stablecoins should be pegged one-to-one and hold their value with underlying fiat currencies like the US dollar, euro, yen, etc. Fiat money is expected to be kept on banking accounts of the issuing firms.<\/p>\n\n\n\n

What stablecoins are there?<\/strong><\/p>\n\n\n\n

There are many different types of stablecoins in the market with the respective backing of their underlying fiat currencies or commodities \u2014 hard physical assets such as gold or silver. <\/p>\n\n\n\n

However, there are also crypto-collateralized, or algorithmic stablecoins like Maker\u2019s DAI. Let\u2019s explore them all.<\/p>\n\n\n\n

Fiat-backed coins<\/strong><\/h3>\n\n\n\n

This type of stablecoins is backed by and relies on a one-to-one ratio with its corresponding fiat currencies. The examples are Tether USDT and Circle USDC. They are the most popular stablecoins nowadays, and the largest players by market capitalization with $66 billion and $55 billion respectively.<\/p>\n\n\n\n

To ensure the proper performance, fiat-pegged stablecoins must be thoroughly backed and transparently audited by trusted third parties. <\/p>\n\n\n\n

Commodity-backed stablecoins<\/strong><\/h3>\n\n\n\n

These stablecoins are backed by physical assets such as precious metals \u2014 certified gold or silver reserves. Some less popular coins are pegged by commodities, for example, crude oil or natural gas. Still, metals-backed cryptocurrencies are among the top-ranking ones, with Tether Gold (XAUT) and DigixGlobal (DGX) heading the list.<\/p>\n\n\n\n

Algorithmic stablecoins<\/strong><\/p>\n\n\n\n

The most decentralized type of stablecoins, algorithmic, is considered to be the most trustworthy by many advanced crypto users. Algorithmic stablecoins focus on improving market price stability through pre-programmed supply for matching asset demand.<\/p>\n\n\n\n

They are backed by other cryptocurrencies, and smart contracts on the Ethereum blockchain automatically stabilize their value.<\/p>\n\n\n\n

Maker\u2019s DAI is thought to be the most trusted decentralized stablecoin. It runs on Ethereum and aims to support a value of $1.00. Unlike fiat-pegged centralized stablecoins, DAI isn\u2019t backed by US dollar reserves.<\/p>\n\n\n\n

Stablecoins and governments<\/strong><\/p>\n\n\n\n

Surprisingly, the idea of connecting real-world currencies to their blockchain-based analogues has been welcomed in many countries. The most recent example is the UK, which upgraded its regulation toward stablecoins. They now are ‘digital settlement assets’, which means they have potential to develop into a widespread means of payment.<\/p>\n\n\n\n

In the US, the regulatory landscape for stablecoins is marked with uncertainty. However, stablecoins as a technology have achieved significant success, especially in the banking sector.<\/p>\n\n\n\n

Meanwhile, in the EU stablecoins are still neither prohibited, nor regulated. Only Switzerland and Malta have built a friendly environment for their circulation.<\/p>\n\n\n\n

Are stablecoins safe to invest in?<\/strong><\/p>\n\n\n\n

Normally, stablecoins maintain their pegged value and are less susceptible to volatility than cryptocurrencies like Bitcoin and Ethereum. The issuing firm should guarantee it by keeping each user\u2019s coin in fiat equivalent on its banking account.<\/p>\n\n\n\n

Unfortunately, there were cases where stablecoins failed to maintain their value because of hacks and liquidity issues. <\/p>\n\n\n\n

For instance, once-popular algorithmic stablecoin terraUSD (UST), which was supposed to maintain a $1 price, fell to $0.35 in May 2022. Its companion token LUNA, meant to stabilize UST’s price, also collapsed to a few cents. That happened because $2 billion worth of UST appeared to be unstaked (taken off the blockchain protocol), leading to liquidation of coins.<\/p>\n\n\n\n

So, how to use stablecoins?<\/strong><\/p>\n\n\n\n

By definition, stablecoins can\u2019t grow in price with time, unlike typical cryptocurrencies. But they can be a good option if you want to protect your fiat money from inflation by purchasing digital US dollars.<\/p>\n\n\n\n

Another great use case is trading stablecoins in pairs with other cryptocurrencies on exchanges. Typically, crypto\/crypto pairs (e.g. USDT\/BTC) are charged with less fees than fiat\/crypto trading pairs (euro\/BTC). <\/p>\n\n\n\n

And the last, but not the least reason to invest in stablecoins is faster and cheaper P2P transactions. Indeed, sending money to another person via crypto wallet<\/a> can save much time and dollars, compared to bank transfers.<\/p>\n","protected":false},"excerpt":{"rendered":"

You have probably heard about USDT and other fiat-pegged cryptocurrencies, or even have some in your portfolio. Those are stablecoins, a highly popular digital asset that is also held in high esteem within regulators. Here\u2019s everything you need to know about these special coins. What are stablecoins? Stablecoins are a type of cryptocurrency that serve […]<\/p>\n","protected":false},"author":7,"featured_media":626,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[40,56,38,72],"authors":[37],"class_list":["post-625","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-alphaguilty","tag-cryptocurrency","tag-education","tag-stablecoins","authors-alphaguilty"],"acf":{"reading_time":""},"author-name":"AG Content Manager","suggested-articles":[{"ID":714,"post_author":"7","post_date":"2022-12-21 15:57:48","post_date_gmt":"2022-12-21 15:57:48","post_content":"\n

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The world of digital art is changing rapidly. Remember when people admired Mona Lisa or Black Square? Now they have been replaced by cartoon pictures of cats, robots, and aliens. Do you know what we're talking about? NFTs, of course.<\/p>\n\n\n\n

NFTs became popular last year, but the first steps towards their creation were taken back in 2011. One of the first NFT projects can be considered ASCII Len \/ ASCII Bernanke. Not many people know about it, so mentions can be found on specialized crypto sites. Let's understand what non-fungible token means for digital artists and others. If you want to learn even more about NFTs - check out this ultimate guide<\/a> to them by our CEO, Mykhailo Sitalo!<\/p>\n\n\n\n

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What is the technology behind NFT artworks?<\/h2>\n\n\n\n

Let's start with the basic concepts. NFTs, or non-fungible tokens, are digital data stored on a blockchain. Not too clear, is it? To simplify, a non-fungible token is one whose monetary equivalent does not equal its value. A simple example would be the book Lord of the Rings, which has a price of $50. The same book, but autographed by Tolkien, would cost $300. The same principle applies to this type of digital art, which has become popular. We can conclude that this is the difference between NFTs and cryptocurrencies with fiat money. The second and third are interchangeable, but such tokens are not.<\/p>\n\n\n\n

As we said, NFTs are stored on a blockchain. Everyone who is even slightly connected with the crypto sphere knows about blockchain. It can be defined as a decentralized digital ledger that tracks transactions. It is on the blockchain used to support cryptocurrencies like Ethereum. <\/p>\n\n\n\n

The controversy surrounding the NFT marketplace is still going on. Technically, NFTs are just a unit of data in a blockchain. Many skeptics believe that paying huge sums of money for digital art that cannot even be touched is great folly. Fans, on the other hand, are convinced that NFT art is the engine of progress. After all, it's something completely new. It's up to you to decide who is right. One thing we can say for sure: NFTs are tokens that are more and more talked about all over the world.<\/p>\n\n\n\n

What do NFTs mean for creators?<\/h2>\n\n\n\n

When we talk about physical art, everything is clear. An artist can paint a picture, sell it, or transfer the copyright. When it comes to digital art, in particular blockchain data, things are a bit more complicated. Let's break down what value such tokens have for their creators.<\/p>\n\n\n\n