The basic concept of a stablecoin is simple, a stablecoin is a cryptocurrency whose value is linked in a 1: 1 ratio to an asset.
These cryptocurrencies can have their price anchored to that of a fiat currency, either in dollars or euros, but they can also link it to the price of other assets, for example bitcoin, or even for precious metals such as gold.
One of the stigmas surrounding cryptocurrencies is the volatility of their prices. Stablecoin solve this problem and take another step towards the adoption of this sector.
How do you create a stablecoin?
Having an asset-backed value. To create for example a stablecoin associated with the dollar, the creative company must have a fund with as much fiat currency as stablecoin you want to create.
In the case of creating a stable currency linked to a cryptocurrency the format would be the same. A company that wants to create a stablecoin associated with the value of gold, must have both the amount of gold and stablecoin stored that it wants to create.
What are the best known stablecoin?
Linked to the Dollar
Tether (USDT)
Created in 2014 by Tether Limited, Tether is one of the best known stablecoins. But there are a number of problems and scandals associated with their operations.
The largest of these is the ongoing controversy over reserves, where the issuer must maintain a ratio of one to one with the number of Tether units issued.
Tether owns fiat currency in a centralized bank account and does not provide legal protection to token holders.
“We believe that widespread adoption of Tether’s secure Blockchain-compatible ‘crypto-dollar’ will lead to better price discovery, market transparency and liquidity”, says Jean-Louis Van Der Velde (CEO of Bitfinex)
Links of interest
- Web: https://tether.to/
- Twitter: https://twitter.com/Tether_to/
- Linkedin: linkedin.com/company/tether
Standard Paxos (PAX)
Created by Paxos Trust Company, this cryptocurrency, like Tether, is associated with the value of the dollar. Paxos uses the Ethereum ERC-20 protocol.
Paxos funds are deposited in banks insured by the FDIC and domiciled in the United States.
“PAX is a digital dollar. Like other crypto assets, it can move instantaneously, anywhere in the world, any time of any day, and it’s programmable. Unlike other crypto assets, PAX is stable. It is backed 1:1 for the dollar and it’s issued by the Paxos Trust Company, so the funds are carefully protected, audited and regulated.”, they state on their website.
Links of interest
- Web: https://www.paxos.com/
- Twitter: https://twitter.com/paxosglobal
- Linkedin: https://www.linkedin.com/company/paxos/
TrueUSD (TUSD)
Created by TrustToken, TrueUSD is the first fully regulated and dollar-backed cryptocurrency.
They also have other stablecoin associated to the fiat of other countries such as TrueGBP (for the British Pound), TrueAUD (for the Australian dollar), TrueCAD (for the Canadian dollar) and TrueHKD (for the Hong Kong dollar).
TrustToken has plans to continue growing its stablecoins bag.
“Hello! We’re TrustToken.
We’re on a mission to open access to financial opportunities and global trade. We embrace change, love to build, and thrive on ownership and growth.”
Links of interest
- Web: https://www.trusttoken.com/
- Twitter: https://twitter.com/trusttoken
- Linkedin: https://www.linkedin.com/company/trusttoken/
USD Coin (USDC)
The stablecoin USDC has been created by Circle and Coinbase,
“True financial interoperability requires a price stable means of value exchange. CENTRE’s technology for fiat-backed stablecoins brings stability to crypto. The initial implementation is USD Coin (USDC), an ERC-20 token creating possibilities in payments, lending, investing, trading and trade finance — and the ecosystem will grow as other fiat currency tokens are added.”
Linked to the Euro
Stasis EURO (EURS)
EURS is a stablecoin whose price is anchored to the Euro. This cryptocurrency stands out for its transparency. They update their account statements daily, have weekly checks and quarterly audits by BDO Malta.
“EURS, an EIP20 token, is the first stablecoin to introduce delegated payments on the Ethereum network. Users no longer have to pay GAS fees in order to make transactions. Instead, they can pay transaction fees in EURS or any other digital asset supported by the STASIS wallet — a huge improvement in terms of user experience.”
Links of interest
- Web: https://eurs.stasis.net/
- Twitter: https://twitter.com/stasisnet
- Linkedin: https://www.linkedin.com/company/stasisnet/
Linked to Gold
PAX Gold (PAXG)
Paxos Trust Company has not only created Paxos Sandard (PAX), in addition to this stablecoin collapsed by the dollar, it has other assets such as PAX Gold (PAXG).
Each PAXG token is backed by an ounce of gold, stored in Brink’s vaults and guarded by Paxos Trust Company.
“Physical gold on the blockchain has the advantages of representing legal ownership of physical allocated gold, but does not have the drawbacks of limited transportability or high storage costs usually associated with it. Instead, it has the divisibility, fungibility and tradability of any digital asset like bitcoin. In other words, the best of physical and digital assets at the same time!”
Links of interest
- Web: https://www.paxos.com/paxgold/
- Twitter: https://twitter.com/paxosglobal
- Linkedin: https://www.linkedin.com/company/paxos/
Digital Gold (GOLD)
Created by DIGITAL GOLD LTD, Each GOLD ERC20 token is backed by a gram of gold. This token, in addition to allowing you to invest in a precious metal safely, allows you to do so while remaining anonymous.
“Each GOLD token is 100% backed by physical gold stored in secure vault. Amount of physical gold stored can be verified at any time. We guarantee GOLD token’s liquidity. Unlimited amount of GOLD can be purchased/redeemed at our website instantly 24/7.”
Links of interest
- Web: https://gold.storage/
- Twitter: https://twitter.com/gold_erc20
- Telegram: https://t.me/digitalgoldcoin
