Stablecoin is a type of cryptocurrency that aims to maintain stability in its value, usually by being pegged to a fiat currency or a stable asset such as gold. Stablecoins are considered a secure and stable means of storing value and transacting, unlike volatile cryptocurrencies like Bitcoin and Ethereum.
There are several types of stablecoins, including those backed by fiat currencies such as the US dollar and those backed by assets. Some stablecoins are also backed by a combination of fiat currencies and assets.
The most common use of stablecoins is as a store of value, especially in volatile markets, and as a means of payment due to their stability in value. They have also been used as a tool for remittance and arbitrage operations.
Main Stablecoin with reserve in US Dollars.
Tether (USDT) is issued by Tether Limited, a company that claims to have enough US dollars to back all units of USDT in circulation. Tether is widely used as a store of value and a means of payment on various cryptocurrency exchanges.
USDC is issued by Circle, an American financial company that offers blockchain-based solutions, and also by Coinbase, one of the largest cryptocurrency exchanges in the world, both are respected companies in the market and have a good reputation. USDC is regulated by the New York State Department of Financial Services and is considered a secure and transparent stablecoin.
BUSD, USDP is issued by Paxos Trust Company, a company regulated by the New York State Department of Financial Services and which is also regulated by the US Financial Crimes Enforcement Network (FinCEN). It is considered a secure and transparent stablecoin.
Binance USD (BUSD) is issued by Binance + PAXOS, one of the largest cryptocurrency exchanges in the world, it has a large customer base and a good reputation in the market.
It is worth noting that Tether Limited is a company registered in the British Virgin Islands and is regulated by the US Financial Crimes Enforcement Network (FinCEN), similarly to USDC, Paxos Standard (PAX) and Binance USD (BUSD). However, Tether Limited is regulated as a finance company, while its stablecoin USDT is not regulated in the same way, this means that USDT is not subject to the same rules and regulations as other stablecoins and may not be as secure or transparent.
Stablecoin today like USDT, BUSD, USDC that work in the system, 1 token equals 1 dollar in the bank, cannot be trusted, after all, if the banking system was so good and correct, we would not even have arrived at the creation of bitcoin, even if the companies If we were completely honest, there is still the bank risk or the risk of governments blocking the bank accounts of those companies that control the stablecoin tokens.
As Bitcoin creator Satoshi Nakamoto once said, “Banks must be trusted to hold our money and transfer it electronically, yet they lend it out in waves of credit bubbles with only a fraction in reserve.”
Algorithmic stablecoins like DAI, VAI and others, have another problem, the contract needs to be secure, the oracle needs to be secure and decentralized, something that Chainlink is not, and the Chainlink Multisig case is really little publicized.
Multisig Chainlink FAQ https://chain.link/faqs?search=multisig
Basically I don’t like any stablecoin, I can’t trust those that have money in the bank, we already know the bank’s problems, I don’t like Algorithmic either, they need to trust contracts, oracles and ballast, DAI, VAI have serious problems, they could be simpler , accepting only the backing of the blockchain currency and not other tokens, the more tokens, the more complexity, the more errors and the more problems.
The solution for the future will be to really build decentralized stablecoins, with teams that strive to back up the front end of their platforms in solutions like IPFS, something I rarely see projects doing and also teaching users to manipulate contracts directly from the explorer, like the etherscan or the direct contract of a light client on your computer, but when we talk about light clients, well ….. this is missing in some blockchains or little publicized.
The future of stablecoins will look like something like LUSD, it’s a platform that creates stablecoins on the ethereum blockchain and only uses ethereum as collateral, if it ever adds anything other than ethereum to the ethereum blockchain, what I wrote here is void about them.
For you not to read this whole article and not know which one to choose, in my opinion the least worst is the USDC, thanks to its licenses in the US government, its listing on the stock exchange, I believe that in a judicial war, the USDC would live longer , however the USDC and stablecoins of its category, have total power over your token, freezing even the users’ dollars, in case they believe that you committed a crime or simply received a letter from the government ordering you to block your balance…., at that time you will remember what satoshi said.
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My goal is to help build a fairer and more inclusive financial world by providing accurate and up-to-date information about cryptocurrencies, as well as tools and resources to help users make informed and safe decisions when using these technologies. I invite you to join me on this journey, and together we can help democratize and mainstream cryptocurrencies for the benefit of all.
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