Stablecoins are cryptocurrencies that are designed to maintain price stability. Most commonly, stablecoins are pegged to and directly backed by an underlying asset, for example fiat currencies. The idea behind this is that stablecoins can enable users to benefit from the security, speed and low costs of cryptocurrencies, without the volatility.
Many people use stablecoins as a bridge between the traditional financial system and cryptocurrency. But now stablecoins have started to achieve some mainstream adoption as payment methods and savings vehicles with extremely high interest rates – compared to traditional levels.
Different types of stablecoins
Fiat-backed stablecoins – The simplest version of stablecoins are fiat backed stablecoins. Essentially, these cryptocurrencies are pegged to the price of a fiat currency. Most fiat-backed stablecoins are pegged to the US dollar, but others are pegged to different currencies too. As long as the underlying currency stays stable, the stablecoin will maintain its value. For the most part, fiat-backed stablecoins are backed by the full faith, credit and legitimacy of the issuer, with a value that is governed by central banks.
Asset-backed stablecoins – An asset-backed stablecoin is similar to a fiat-backed one, except that it’s backed by a physical asset instead of a currency. The most common asset that stablecoins are backed by is gold, but others are also backed by baskets of precious metals and real estate. Generally, these stablecoins are linked to a specific amount of an asset and subject to frequent outside audits to ensure legitimacy. While these types of cryptocurrencies can go up and down in value (when measured against a fiat currency) the stablecoin remains true to the value of the asset that it’s backed by.
Algorithmic stablecoins – The most complex version of stablecoins is the algorithmic stablecoin. This is not backed by any kind of collateral, rather the value is controlled by specialized algorithms and smart contracts that automatically reduce or increase the supply of tokens on the market to keep the tokens price stable. If the market price starts to fall, then it will remove tokens from circulation. If the market price starts to rise then it will issue new coins into existence.
REAL GOLD uses Stablecoin – USDТ
What is Tether?
Tether (USDT) is the world's first stablecoin (cryptocurrency pegged to the value of fiat currency), launched back in 2014 by bitcoin investor Brock Pierce, entrepreneur Reeve Collins, and software developer Craig Sellers.
It is also a cryptocurrency asset issued on the basis of the Bitcoin blockchain through the Omni Layer, Ethereum (ERC-20), TRON, EOS, Algorand, Solana and OMG Network protocols. Each USDT unit is backed by a US dollar held by Tether Limited and can be withdrawn through the Teher platform.
Initially, the coin was called Realcoin. However, during the subsequent rebranding, she changed not only the name, but also the underlying technology. In fact, this is the most popular stablecoin in the cryptocurrency market, which, as stated, is backed by US dollars in a ratio of 1:1. This cryptocurrency is presented on various blockchains, and over the past few years has shown an increase in trading volumes and increased liquidity.
Tether is an important part of the cryptocurrency ecosystem. As of mid-February 2022, this cryptocurrency was considered the third largest in the world with a market capitalization of almost $78.7 billion, behind only Bitcoin and Ethereum.
Now the USDT exchange rate to the dollar is $1.
Why does REALGOLD use Tether(USDT)?
- Stability and security. Each token is pegged to a specific fiat currency, so its value always remains the same. The stability of the value provides a ratio of 1:1, that is, 1 USDT will always be equal to one 1 USD.
- Transparency. If you have any doubts about the reliability of the fiat reserve, don't worry. Tether publishes daily reports and you can verify that all USDT in circulation is in line with the reserve.
- Blockchain technology ensures the security of use. Tether is based on open blockchain and other similar technologies, and because of this, it can use the features that make the blockchain secure and transparent.
