You’ve probably already seen how cryptocurrencies like Bitcoin and Ethereum have become in recent years. But if they’re the only type of cryptocurrency you’ve heard of, you might be surprised to learn that there are thousands more.
One increasingly popular type of cryptocurrency is stablecoin. Stablecoins have a number of benefits in the crypto space and solve a few of the issues associated with other currencies. Most notably: volatility. Let’s have a look at stablecoins a bit more closely so that you can understand their rise in popularity and why they’ve filled an important gap in the crypto market.
What are stablecoins?
There are generally four different types of stablecoins available, although most of them fall under the category of fiat stablecoins. These coins are backed by the value of a fiat currency, like USD or EUR.
There are other stablecoins, like commodity coins, crypto-tethered coins, and algorithm coins, but fiat coins are probably the most well-known at this point and also present the most opportunities for mass-market adoption. They’re also easy to understand and manage for those new to cryptocurrencies in general, people who might have been put off or confused by the volatility of other currencies.
Generally, fiat stablecoins serve as a bridge between digital currencies and legal tender—so that hodler’s can enjoy the benefits of cryptocurrencies without some of the volatility.
Why are stablecoins popular?
One big drawback to currencies like Bitcoin is how volatile they are. Prices can fluctuate up to 30% every single day. This means payments that might be made today could actually cost a lot more or less by the time they’ve been processed in a day or two.
This doesn’t give people spending them much confidence. Most major cryptocurrencies are seen as investments or assets rather than stable currency. If you think your holding of ETH is going to be worth a lot more in a week’s time, why would you spend it now on everyday items like groceries or an online service?
So stablecoins fill that gap. They’re tied to the value of another currency, most notably fiat currencies like USD. These currencies are much less volatile so you won’t have to worry about how much something is going to cost further down the line.
Major stablecoins include Tether, USDcoin, and MakerDAO, as well as an increasingly popular newcomer to the crypto space, SameUSD.
As part of the Samecoin ecosystem, SameUSD is poised to become one of the most popular stablecoins in the crypto space. SameUSD is the perfect solution for those who want to enjoy fast payments, reduced fees, and all the other benefits of a digital currency without some of the drawbacks of volatile coins like Bitcoin.
SameUSD is tied to the value of a basket of USD-backed stablecoins, one of the most secure and stable stores of value in history. It’s perfect for online payments and gives holders and users all the benefits of crypto and fiat in one digital currency, with the least volatility and risk.