Obii 1 year ago
ObiiOkafor1 #education

7 Must-Have Stable Coins For Your Crypto Portfolio.

This article highlights the crypto 7 must-have stable coins to have for your crypto portfolio.

Despite all the buzz around cryptocurrencies, it’s still early days for blockchain technology. The rapid rise of bitcoin and its fellow digital currencies has left some wondering if we’re in a bubble about to pop. While you should always buy crypto with a long-term investment horizon, that doesn’t mean you can’t hedge your bets with a bit of strategy. Stable coins are typically one of the best ways to protect your portfolio against downside risk while also keeping inflation risks low. If you’re looking to add stable coins to your cryptocurrency portfolio, here are some of the best options available today.

What Are Stable Coins?

Stable coins are cryptocurrencies that are pegged to a traditional store of value like gold or the dollar. That means their prices are stable and don't fluctuate as wildly as regular cryptocurrencies like bitcoin and ether. Stable coins are typically issued on the Ethereum blockchain as ERC-20 tokens. That means they’re an entirely new type of digital asset that isn’t controlled by any single party. Instead, the blockchain acts as a decentralized third party that ensures the token’s supply and value remain consistent and trustworthy.

USD Coin (USDC)

USDC is a stable coin created by the blockchain startup Circle. It’s designed to be the new go-to token for crypto exchanges and other financial institutions. USDC is a fully collateralized and transparent dollar-backed coin that can be used to instantly transfer and store value on the blockchain. With a growing number of exchanges, payment processors, and financial apps like Coinbase Wallet adopting USDC, it’s quickly becoming one of the most widely used stable coins in the world.

Tether

Tether was one of the first companies to pioneer the idea of stable coins. The company uses the same concept as USDC, where each token is backed by an equivalent amount of dollars in a bank account. Although Tether has been the subject of a great deal of controversy over the years, its token (USDT) is still one of the most widely used stable coins in the world. Tether is a great option for investors who want to hedge their risk without committing to a long-term investment strategy. It’s also a great choice for traders who want to quickly exchange their bitcoin and ether for fiat without having to deal with the hassle of a bank transfer.

Gemini Dollar

Gemini Dollar is the first stable coin created by a major crypto exchange. The coin was fully licensed by the state of New York, making it one of the first stable coins to be fully compliant with regulations. That puts Gemini Dollar in a unique position among stable coins since it can be used by financial institutions that are required to follow strict Know Your Customer and Anti-Money Laundering rules. Gemini also promises that its stable coin will be audited regularly to prove that its dollar reserves are fully intact.

Paxos Standard Token

Created by the New York-based fintech firm Paxos, Paxos Standard is one of the first stable coins to be audited by the Big Four accounting firm Ernst & Young. That’s a big deal since it means the team behind the token verifies its dollar reserves are correct and up-to-date. That’s a particularly important distinction compared to other stable coins on this list since auditing is a one-off process that happens only once every year. If you ever want to audit another company’s stable coin, you’ll need to pay for it again. Not so with Paxos Standard.

Consensus-Based Stable Coins

There are also a growing number of consensus-based stable coins like Basis, Carbon, Saga, and Havven. These coins are backed by something like a collateralized token system or a decentralized exchange rate system (like Basecoin). Because these systems will likely be refined and improved over time, consensus-based stable coins could ultimately become the standard for stable coins. That said, they’re not quite ready for prime time yet and are therefore better suited for long-term investors.

Reserve Rights

Finally, the Reserve Rights stable coin is backed by a combination of equity in the company and a collateralized bond. That’s a unique approach that’s expected to lead to lower volatility than other stable coins. That makes it a great option for investors who want to invest in a stable coin but don’t want to tie up all their capital. Tying up all your money in stable coins would mean ignoring the upside potential of volatile cryptocurrencies.

Wrapping Up: Should You Buy a Stable Coin?

If you’re looking to invest in cryptocurrency but don’t want to deal with high price volatility, stable coins are a great way to hedge your bets. They’re also an excellent choice if you want to convert your crypto holdings into fiat money with a minimal amount of effort. While stable coins may not offer the same profit potential as your favorite cryptocurrencies, they can help you sleep a bit easier at night. That’s because stable coins are designed to minimize your risk and offer you a certain amount of price stability. If you want to minimize your risk and hedge your bets against crypto’s rollercoaster price swings, stable coins are a great option.

DISCLAIMER !!!!

The information contained in this article is not meant to be taken as financial advice and should not be interpreted in that manner. Tafabot and its authors accept no responsibility for your profits or losses as a result of reading this article. The information contained in this document is based on data gathered from a variety of sources. This should not be used as a deciding factor when investing. Users are responsible for conducting their own independent research in order to make educated decisions regarding their cryptocurrency investments .

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