Fiat -backed stablecoins are those that are based on the price of an official currency, such as the dollar, euro or yen, among others. Their main function is to offer investors an alternative to keep their money in a cryptocurrency with a stable and predictable value in the market , without having to worry about the fluctuations that usually occur in non-stable cryptocurrencies.
These stablecoins are issued by organizations that back their listing with a set amount of fiat money , which is stored in a reserve to maintain its stability. Every time a fiat-backed stablecoin is issued , it is guaranteed that there is an equivalent amount of the fiat currency backing its value , allowing for more secure trading.
Among the advantages of fiat -backed stablecoins are the ability to operate more efficiently in the market, allowing investors and traders to maintain their investment without the risk of abrupt price changes. In addition, they are also used as a tool for international trade, since the need for currency conversion and exposure to exchange rate fluctuations is avoided.
Backed by raw materials
Commodity-backed stablecoins are a variant of cryptocurrencies that bolivia whatsapp data use a reserve of commodities as collateral. This means that the value of the stablecoin is backed by the amount of commodities held in reserve , allowing for a stable market price.
The advantage of using commodities as backing is that they are tangible assets that can be evaluated and their value is usually less volatile than other options, providing greater confidence in the backing of the cryptocurrency.
Within commodity-backed stablecoins , two types can be distinguished: those backed by a single commodity and those backed by a basket of commodities. In both cases, the backing of the commodities is done through financial assets backed by commodities , such as futures or options contracts.
These stablecoins offer a safe and interesting alternative to investors, as they can be used as a form of protection against the volatility of the cryptocurrency market and as a form of investment in commodities . However, it is important to note that the value of these cryptocurrencies is linked to the supply and demand of the underlying commodities , which can lead to changes in their valuation.
Cryptographically backed
Crypto-backed stablecoins are those that use blockchain to back their value. They are based on a mathematical algorithm and a decentralized infrastructure that guarantees confidence in the stability of their price. Unlike commodity-backed stablecoins, they do not need to rely on any physical commodity to maintain a stable value in the market . These types of stablecoins are created by issuing tokens that are linked to a cryptocurrency or a set of them, and their value is kept stable thanks to the constant monitoring of prices and supply and demand in cryptocurrency markets.
One of the main advantages of cryptographically backed stablecoins is their high security and transparency , as they are fully auditable and their blockchain is public and decentralized. Among the best known are Tether, USD Coin, TrueUSD, Gemini Dollar or DAI .
Stablecoins , or stablecoins , are designed to maintain a stable value over time and can be backed by different assets, such as fiat currencies, precious metals, US dollars, among others. In this sense, their value is backed by a reserve of physical assets , which allows them to have greater stability in their price.
In addition to being a safer option for investors who want to avoid the volatility of the cryptocurrency market, stablecoins also offer a more practical solution for those who want to trade cryptocurrencies or other digital currencies.