What are Stablecoins? The Future
In this post you will learn about stablecoin, a type of cryptocurrencies that it price is pegged to another asset.
In July 2014, Dan Larimer and Charles Hoskinson, two brilliant blockchain pioneers, release a digital token called BitUSD. Their goal was to create a digital currency that is backed by another asset.
It was the first stable coin to be released.
What are stable coins?
A stable coin is a type of cryptocurrency that is tied to another asset, such as Gold, US dollars, or Naira to stabilize the price.
Is it not like Bitcoin?
Cryptocurrencies like Bitcoin are unpredictable. What differentiates stable coins from other types of cryptocurrencies is that they’re not speculative.
As I am writing this post to you, the price of Bitcoin is $42,137.04, by the time you are reading this the price will either go up or down.
But,
1 dollar = 1 dollar
In America, 1 dollar will always be 1 dollar, and in Nigeria 1 Naira will always be 1 Naira.
If anything changes, it is only what 1 naira or 1 dollar can purchase.
Due to this local price stability, several cryptocurrencies were created to represent physical money like dollars, euros, and pounds online.
Got it, give me some examples of stable coins
There are several stable coins available online today that anyone, regardless of where you are from, you can buy, sell, or use for transactions.
Here are the top 5 by market capitalization:
Tether (USDT)
USD Coin (USDC)
Binance USD (BUSD)
Wrapped Bitcoin (WBTC)
DAI
Tether (USDT) is a cryptocurrency whose price will always be the same as dollars.
What this means is that 10 USDT will always be equal to 10 dollars. And more importantly, you can be able to redeem back your USDT to Naira.
Remicash lets you buy, save, and turn your USDT into naira at competitive rates.
Zoom out: In 2020, a cryptocurrency company in Nigeria called BuyCoin partnered with Paxful, a cryptocurrency exchange in Kenya, to create a stable coin called NGNT to represent the value of the naira.
Thank you for reading this issue. If you like to know more about stablecoins here is a great guide.