Digital currencies based on the blockchain technology are collectively referred to as “cryptocurrency.” Cryptocurrencies’ widespread acceptance can be attributed to the high potential rewards associated with trading them. Smart contracts, cross-platform interoperability, and ultra-fast transaction times are just some of the tremendous utility features offered by several cryptocurrencies. However, current and potential investors alike may respond to cryptocurrencies with caution and measured judgment due to factors such as its relatively high volatility and unpredictability. There are also stable cryptocurrencies, whose value is mostly unaffected by market forces and is widely seen as a competitive advantage over Bitcoin, Ethereum, and others. Stable Coins are a specific type of currency. This article is your guide to find the best cryptocurrency to invest in 2022, as investing in others but the best will only disappoint you.
What Are StableCoins?
Pegged stablecoins are digital currencies that are linked to a trusted third party asset. Some of the most well-known stablecoins are pegged to the US dollar, some to precious metals like gold, and yet others to other cryptocurrencies. Stablecoins are characterized by the fact that they have a reserve of the underlying asset. For simplicity’s sake, let’s say that a stablecoin is pegged to the US dollar, and there are 5,000,000 in circulation. This would be comparable to $2.5,000,000 in cash on deposit. When an investor sells stablecoins, the reserve is reduced by an amount equal to the sale. This also suggests that the value of this cryptocurrency is based on something more than just speculation.Because of these characteristics, stablecoins are immune to the volatility and unpredictability that plague other digital currencies.
Stablecoins can be tied to a variety of collateral, including but not limited to the following:
- Precious metals like gold
- Debt instruments
- Other cryptocurrency
- Fiat currencies like USD
Actually, you’ll see that the value of most stablecoins is USD 1 or very near to it. However, some stablecoins are vulnerable to specific dangers because of the collateral.Since collateral is typically kept at a financial institution, there is counterparty risk (3rd party risk). Even if the stablecoin does have a reserve, there could be trust issues related to verifying that amount.
It’s like a cross between traditional banking and the latest blockchain-based cryptocurrency.
While this may turn off some crypto purists, it provides a terrific way for new investors to get their feet wet in the cryptocurrency market without taking on an excessive amount of risk.
List Of The Most Stable Cryptocurrencies
Since most stablecoins are tied to the USD at a value of 1, market capitalization is used to order this list of the most stable cryptocurrencies.
Binance
As the largest cryptocurrency exchange in the world, Binance also provides a stablecoin known as Binance USD (BUSD). New York’s Department of Financial Services has given BUSD its stamp of approval (NYDFS).
- Ticker: BUSD
- Price: $1
- Market Cap: $17.88 Billion
TerraUSD
Stablecoin TerraUSD (UST) is one of Terra’s offerings. To put it another way, it is “pegged” to the USD at a rate of 1 for 1. According to coinmarketcap.com, TerraUSD is the 31st most valuable cryptocurrency.
- Ticker: UST
- Price: $1
- Market Cap: $16.70 Billion
Dai
The stablecoin Dai (DAI) is unlike any of the ones we’ve seen so far. Dai is backed by ether tokens and is tied to the US dollar. Dai, which was established in 2015 by MakerDAO, is the 36th most valuable cryptocurrency by market cap.
- Ticker: DAI
- Price: $0.9936
- Market Cap: $9.45 Billion
Tether
Tether (USDT) is a stable cryptocurrency that has been around for some time. It debuted in 2014. Tether is one of the most stable cryptocurrencies and ranks as the fourth most valued in terms of market capitalization.
- Ticker: USDT
- Price: $1
- Market Cap: $82.44 Billion
USD Coin
As with the dollar, one USD Coin (USDC) is equivalent to one USD. Introduced in 2018, it is run by the Center Consortium, which Circle and Coinbase formed.
- Ticker: USDC
- Price: $1
- Market Cap: $51.35 Billion
So Why StableCoins?
Stablecoins are digital currencies that are pegged to real-world assets like government-issued money, precious metals, or even other stablecoins. In comparison to other cryptocurrencies like Bitcoin, Ethereum, and others, they are renowned to be quite stable. Stablecoins are not well-known for their ability to produce profitable returns because it is not their intended purpose. Stablecoins are commonly employed as a store of value or for arbitrage purposes in the cryptocurrency market.
Frequently Asked Questions
How does one buy cryptocurrency?
Cryptocurrency exchanges like Coinbase, Kraken, and Gemini make it possible to purchase digital currency. You can also purchase cryptocurrency through brokerages like WeBull and Robinhood.
What Are Cryptocurrencies
Cryptocurrency, sometimes known as “digital currency,” is a new kind of decentralized digital cash. Cryptocurrency is a digital asset that may be exchanged directly between users without the need for a third party (like a bank) to process the transaction.
Is It Possible To Invest In Cryptocurrencies Via An ETF?
It’s natural to want to spread your bets among a number of different cryptocurrencies in order to reduce the likelihood of a catastrophic loss of capital in the crypto market, what with the thousands of different coins available and the extreme volatility of most of them. Many firms, including Fidelity, have proposed crypto ETFs, but regulatory barriers have hampered the rollout of any consumer products. There are no exchange-traded funds (ETFs) for retail investors as of June 2021.
Do I Have To Pay Taxes On Crypto
You should be aware of the cryptocurrency tax regulations if you trade coins. Instead than being regarded as money, cryptocurrency is viewed as a form of investment capital, similar to stocks. That implies you’ll owe taxes on any profits you make from selling cryptocurrencies. This remains true even if you pay with cryptocurrency. Taxes must be paid on the profit made if the item is sold for more than it was originally purchased for.
Why Are There So Many Cryptocurrencies
More than 19 thousand crypto projects are already active, indicating that this is a rapidly developing field with few entrance hurdles. In particular, the cryptocurrency market expanded by the thousands in the previous year. Some forms of crypto are used as currency, while others are built within systems. In the case of Ethereum and Solana, for example, developers are creating new cryptos on top of these platform currencies, which opens up even more possibilities (and cryptos).
