Cryptocurrency is an umbrella term used to describe digital currencies that are built on the blockchain. Cryptocurrencies have become popular among the general masses because they can be traded for potentially lucrative returns.
In addition, many cryptocurrencies also have powerful utility functions such as smart contracts, cross-platform interoperability and lightning-fast transaction speeds..
That said, there are a few aspects of cryptocurrency like the relatively high volatility and unpredictability that can elicit a cautious and measured response amongst existing and potential investors alike.
There are also cryptocurrencies whose value rarely fluctuates and they are known for their stability compared to others like Bitcoin, Ethereum, and more. Such coins are called ‘Stable Coins’.
What Are Stablecoins?
Stablecoins are cryptocurrencies that are pegged or tied to a stable external asset. The most popular stablecoins are tied to fiat currencies like the US Dollar, precious metals like gold, or at times even to other cryptocurrencies.
Stablecoins are also known to maintain a reserve of the asset they’re pegged to. For example, a stablecoin tied to USD with 5,000,000 coins in circulation will have the equivalent in cash in holding at a bank.
This acts as collateral and if an investor sells stablecoins, its equivalent is taken out of the reserve. It also means unlike other cryptocurrencies this is backed by an asset that has more than just perceived value.
These features allow stablecoins to avoid the unpredictability and volatility associated with other cryptocurrencies.
The different types of collateral that stablecoins are pegged to include:
- Fiat currencies like the USD or Turkish Lira
- Precious metals like gold and silver
- Other cryptocurrencies
- Debt instruments like bonds
In fact, you’ll notice that the value of popular stablecoins is equal to USD 1 or close. However, the collateral opens up some stablecoins to certain risks.
Since the collateral is stored in a bank more often than not, there’s counterparty risk (3rd party risk). There may even be trust-based issues stemming from whether the stablecoin has a reserve as it claims to.
In many ways, it’s the marriage of modern-day blockchain-based cryptocurrencies and the old school banking system.
While this may make it undesirable for many crypto purists, it makes stablecoins a great stepping stone for new investors to enter the world of cryptocurrencies without taking an unprecedented risk. You can consult a Cube Wealth coach or download a Cube Wealth App.
All things considered, stablecoins appeal to crypto investors because of factors like:
- Stability in cryptocurrency
- Safety of being backed by real-world assets
- Comparably low fees
- A certain degree of regulation (fiat-based)
Now that you know everything about stablecoins, it’s time to move on to the list of the biggest and most stable cryptocurrencies in 2022 by market cap from the world of stablecoins.
List Of 5 Most Stable Cryptocurrency For Investment In 2023
This list of the most stable cryptocurrencies is sorted by market cap because it is considered to be a true indicator of the value and worth of stablecoins as most of them are pegged to the USD with value 1.
1. Tether
Tether (USDT) is one of the oldest stablecoins in the crypto market. It was launched in 2014. Tether is also the 4th most valuable crypto by market capitalization and one of the most stable cryptocurrencies.
- Name: Tether
- Ticker: USDT
- Price: $1
- Market Cap: $82.44 Billion
Tether is pegged 1 to 1 to the USD, which simply means that the value of one Tether USDT is equal to USD 1. Tether claims to have reserves of cash and cash equivalents to back every USDT on the market.
2. USD Coin
USD Coin (USDC) is also pegged 1 to 1 to the USD. It was introduced back in 2018 and is managed by Circle and Coinbase through the Centre Consortium that they co-founded together.
- Name: USD Coin
- Ticker: USDC
- Price: $1
- Market Cap: $51.35 Billion
USDC is the 9th most valuable cryptocurrency in the world. USD Coin claims to have a mix of cash and cash equivalents along with US Treasuries in reserve to back every USDC in circulation.
3. Binance USD
Binance USD (BUSD) is a stablecoin offered by the largest crypto exchange in the world Binance. BUSD is approved for use by the New York State Department of Financial Services (NYDFS).
- Name: Binance USD
- Ticker: BUSD
- Price: $1
- Market Cap: $17.88 Billion
1 BUSD is equal to 1 USD by design and investors may incur relatively low charges when buying or selling it. Binance USD is the 19th most valuable crypto in the world.
4. TerraUSD
TerraUSD (UST) is a stablecoin offered by Terra. It is designed to track the value of 1 USD, that is, it’s 1 to 1 pegged to the USD. TerraUSD is the 31st most valuable cryptocurrency by market cap.
- Name: TerraUSD
- Ticker: UST
- Price: $1
- Market Cap: $16.70 Billion
TerraUSD’s primarily used for earning returns with Luna, Terra’s staking and governance reward token system. Other use cases include earning returns through arbitrage opportunities.
5. Dai
Dai (DAI) is a stablecoin that’s unlike others on the list so far. Dai is pegged to the USD but is backed by ether tokens. Dai was introduced in 2015 by MakerDAO and is the 36th most valuable crypto by market cap.
- Name: Dai
- Ticker: DAI
- Price: $0.9936
- Market Cap: $9.45 Billion
Here’s a bonus list of the most stable cryptocurrencies in 2022.
Name | Ticker | Price (In USD) | Market Cap (In USD) |
TrueUSD | TUSD | 0.9993 | 1.24 Billion |
Pax Dollar | USDP | 0.9993 | 945.18 Million |
Neutrino USD | USDN | 0.9748 | 561.63 Million |
Reserve Rights | RSR | 0.03608 | 479.48 Million |
Conclusion
Stablecoins are generally tied to assets like fiat currencies, precious metals, and other cryptocurrencies. They’re known to be far more stable than regular cryptocurrencies like Bitcoin, Ethereum, and others.
What stablecoins are not known for is generating lucrative returns because that’s not what they’re designed to do. Stablecoins are generally used for arbitrage opportunities or as cash holding in crypto. You can consult a Cube Wealth coach or download a Cube Wealth App.
Frequently asked Questions AboutStable Cryptocurrencies
Q. Is there a stable cryptocurrency?
Yes, there are stable cryptocurrencies called "Stablecoins". These stablecoins are generally equal to 1 USD or in crypto terms, stablecoins are "pegged" to 1 USD. Stablecoins can also be pegged to other cryptos like Bitcoin. The most stable cryptocurrencies in the top 20 by market cap are known to rarely lose value.
Q. What is the best stable coin?
The best stablecoins include the likes of Tether (USDT), USDCoin (USDC), Binance USD(BUSD), TerraUSD (UST), and Dai (DAI). These are known to be top stablecoins because of their market cap, which puts them in the top 20 cryptocurrencies.
Q. What is a stable cryptocurrency?
A stable cryptocurrency or stablecoin is pegged to an asset like a fiat currency or cryptocurrency. Most top stablecoins are pegged to USD 1 and are rarely known to drastically lose value.
Q. Is litecoin a stable coin?
No, Litecoin isn't a stablecoin. It works similar to Bitcoin and in fact, was designed to be a better version of the world's largest cryptocurrency. You can read all about Litecoin Vs Bitcoin here. You can consult a Cube Wealth coach or download a Cube Wealth App.
Note: Facts & figures are true as of 06-04-2022. None of the information shared here is to be construed as investment advice. Exercise caution when investing in unregulated assets like cryptocurrency.
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As a seasoned enthusiast and expert in the realm of cryptocurrencies, I bring a wealth of knowledge and hands-on experience to the table. My journey through the evolution of digital currencies, blockchain technology, and the intricacies of various cryptocurrency projects has equipped me with a deep understanding of the subject matter.
Now, let's delve into the concepts presented in the provided article on stablecoins and the list of the most stable cryptocurrencies in 2023.
Cryptocurrency Basics:
Cryptocurrency Definition: Cryptocurrency is a digital currency that operates on a decentralized network using cryptography for security. Blockchain technology underlies most cryptocurrencies, providing transparency and immutability.
Stablecoins:
Stablecoins Definition: Stablecoins are a subset of cryptocurrencies designed to minimize price volatility, often by pegging their value to external assets like fiat currencies, precious metals, or other cryptocurrencies.
Utility Functions of Cryptocurrencies Mentioned:
- Smart Contracts: Self-executing contracts with the terms directly written into code.
- Cross-platform Interoperability: Ability to operate across different blockchain platforms.
- Lightning-fast Transaction Speeds: Quick and efficient transaction processing.
Characteristics of Stablecoins:
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Pegging to External Assets: Stablecoins are tied to stable external assets like fiat currencies (USD, Turkish Lira), precious metals (gold, silver), other cryptocurrencies, or debt instruments (bonds).
-
Asset Reserves: Stablecoins often maintain a reserve of the asset they are pegged to, acting as collateral. This reserve is used to back the value of circulating stablecoins.
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Risk Factors:
- Counterparty Risk: The risk associated with the third party (usually a bank) holding the collateral.
- Trust-based Issues: Concerns about whether the stablecoin has the claimed reserve.
Notable Stablecoins:
-
Tether (USDT):
- Launched in 2014.
- Pegged 1:1 to USD.
- Market Cap: $82.44 Billion.
-
USD Coin (USDC):
- Introduced in 2018.
- Pegged 1:1 to USD.
- Market Cap: $51.35 Billion.
-
Binance USD (BUSD):
- Offered by Binance.
- Approved by NYDFS.
- Market Cap: $17.88 Billion.
-
TerraUSD (UST):
- Offered by Terra.
- 1:1 pegged to USD.
- Market Cap: $16.70 Billion.
-
Dai (DAI):
- Introduced by MakerDAO in 2015.
- Pegged to USD but backed by ether tokens.
- Market Cap: $9.45 Billion.
Benefits of Stablecoins:
- Stability in Cryptocurrency: Reduced volatility compared to other cryptocurrencies.
- Safety: Backed by real-world assets, providing a sense of security.
- Comparatively Low Fees: Lower transaction fees.
- Regulation: Some stablecoins are fiat-based, subject to a certain degree of regulation.
FAQ:
-
Is there a stable cryptocurrency?
- Yes, stable cryptocurrencies, known as stablecoins, are designed to minimize value fluctuations.
-
What is the best stable coin?
- Notable stablecoins include Tether (USDT), USD Coin (USDC), Binance USD (BUSD), TerraUSD (UST), and Dai (DAI).
-
Is litecoin a stable coin?
- No, Litecoin is not a stablecoin; it operates similarly to Bitcoin.
In conclusion, stablecoins offer a bridge between traditional banking systems and modern blockchain-based cryptocurrencies, making them an attractive option for investors seeking stability and reduced risk.