DeutschWithout question, anyone who occasionally deals with cryptocurrencies such as Bitcoin, Ripple, Ethereum and Co. will not have been able to avoid the term Stable Coins (Stablecoins) lately. But what exactly is behind this term and what are its benefits?
What are Stable Coins?
Stable Coins are a cryptocurrency that is tied to a stable asset. This can be, for example, fiat money, i.e. Swiss francs (CHF), dollars ($) or the euro. But also precious metals such as gold or silver are included. Why do you do this? The idea is simple, you want to secure digital currencies. Because anyone who deals with them a little knows that the market and thus the price of crypto coins is very volatile. It feels like it’s going steeply uphill and steeply downhill. If an owner has now realized a profit with a cryptocurrency – this was always only theoretical in the past. There is still a lack of widespread possibilities to pay with digital currencies in real life. Conversely, this means that in order to realize profits with Bitcoin and Co., you always have to exchange them back into fiat money. A rather complex procedure – both in terms of time and, in some cases, financially (as fees are incurred again).
How Stable Coins Work
Companies that put Stable Coins into circulation link the underlying value of the stabilizer (e.g. Swiss francs) to the coin. This keeps the price reasonably stable, at least as stable as the CHF price. It is important to note here: The stability coins only map the fiat currencies and do not correspond to them in every case. Therefore, there are also fluctuations in these digital currencies, albeit less than in non-stabilized currencies. Therefore, for example, different Stable Coins, all of which are based on CHF, can have a slightly different value.
There is also an Index Here: the Stablecoin Index
As with many things in the financial market, there is also an index for these coins. So also here. The Stablecoin Index shows the fluctuations between the coins very well. For the sake of clarity, the index offers various categories. Some may still remember the summer of 2017 – there was a lot of uncertainty in the community surrounding the hard fork of Bitcoin (from which Bitcoin Cash BCH ultimately emerged). As a result, the better-known fiat currency-backed Stable Coins such as Tether, Circle or Trusttoken experienced a lot of influx from Bitcoin owners.
One of the best-known Stable Coins: Tether (USDT)
