Stablecoins are an interesting type of cryptocurrency that differs from Bitcoin. Instead of their value being tied to the consensus algorithm, stablecoins are tied to something else, like Tether to USD.
With so many stablecoins out there, many might wonder which are the best. In this post, we’re going to break them down and decide.
1. Tether (USDT)
Tether is one of the first stablecoins. It’s backed by the United States dollar and is used by over 94% of all stablecoin trading volume. Many traders utilize the asset with Ethereum, as it’s basically a decentralized dollar. Tether helps users keep track of their investments, as they can convert it to other assets without going through Bitcoin first.
However, it’s worth noting that the asset isn’t audited, which raises some suspicion in experts. After all, Tether could potentially be lying about its 1:1 ratio with the dollar. Various lawsuits have gone after its parent company BitFinex, though nothing has come of the matter. That doesn’t change the fact that Tether is still the world’s most popular stablecoin.
Goldcoin is a gold-backed stablecoin built on the Ethereum network. It allows you to purchase and hold the asset via cryptocurrency.
Why buy Goldcoin over traditional gold? The cryptocurrency allows you to buy fractional amounts of gold without worrying about storage solutions. In fact, the company stores the gold for you in high-security vaults.
Goldcoin also allows you to request physical bullion shipped out to you. However, this requires you to provide an identity that can put off some investors. Otherwise, you can buy gold anonymously with this stablecoin.
3. Paxos Standard Token (PAX)
Paxos Standard Token, otherwise known as PAX, was built as an aside to Tether. The asset is also backed by the US dollar, and the fiat is held in government-controlled treasuries. PAX is built on the Ethereum blockchain and has even been approved by the New York State Department of Financial Services. That approval is huge for the growing crypto space.
It’s one of the most used stablecoins on the market and may replace Tether as the most popular one day. After all, PAX posits itself as more trustworthy than USDT.
4. Binance USD (BUSD)
BinanceUSD (BUSD) is a stablecoin put into place by the Binance exchange itself. It’s an Ethereum-powered asset also tied to the dollar. Interestingly enough, BUSD was also partly-developed by the Paxos Trust Company, the team behind PAX.
BUSD is also held in FDIC-insured banks in the US and is used to help pay for trading fees on the exchange. Users who purchase BUSD receive various benefits and discounts when trading on the platform. Considering Binance is one of the largest exchanges in the world, this is a big plus.
One of those bonuses is the ability to earn on staked BUSD. The more funds you lock-in, and the longer you do so, the more you’ll earn in interest.
5. TrueUSD (TUSD)
TrueUSD is another stablecoin looking to dethrone Tether. While it’s a limited coin, for now, the asset is looking to be more transparent than Tether is. To counter the activity of its competitor, TUSD has partnered with an accounting group to consistently monitor the asset.
That, and it’s simply a solid asset for stablecoin investors. It can be used as an alternative to traditional fiat or Bitcoin to purchase various cryptocurrencies. If crypto is to take over the world as many expect, a stablecoin like this will help bring a sense of normalcy for newcomers.
Of course, that normalcy means TUSD must require know-your-customer and anti-money-laundering policies. Some in the crypto space might be against this as it reveals your identity, but stablecoins aren’t exactly traditional cryptocurrencies.