What are Stablecoins? – Concepts, Reasons to Buy and How to Buy.

Stablecoins are pegged to reserve assets such as the U.S. dollar or gold and serve as a bridge between the worlds of cryptocurrencies and fiat currencies.

Stablecoins are an extremely common way of storing and transacting value in the cryptocurrency economy.

Learn more about stablecoins and how to buy them through Binance.

People have long been accustomed to market volatility, so stability is even more valuable. Stablecoins are multi-functional cryptocurrencies that combine the stability of traditional assets with the flexibility of digital assets.

Cryptocurrencies such as bitcoin and Ethereum have many advantages, including decentralization and the absence of intermediaries for transactions. However, one of the major drawbacks of cryptocurrencies is that they are known to be extremely volatile. This means prices are unpredictable and prone to wild swings. While the exact mechanics of each coin vary, stablecoins exist to a degree that resists volatility and, as a result, one won’t see significant spreads.

In short, stablecoins deal with price fluctuations by tying the value of cryptocurrencies to more stable assets such as fiat currencies. In this article, we will look into the concept of stablecoins, their importance and advantages in the cryptocurrency space, as well as the popular stablecoins in the market.

Trusted by millions of users around the world, Binance is the world’s largest cryptocurrency exchange, leading by volume and number of users. Sign up for a Binance account and start trading stablecoins and other tokens today.

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What is a stablecoin?

Stablecoins are also a type of cryptocurrency that is more stable in price than cryptocurrencies such as Bitcoin that are not pegged to the U.S. dollar. The market value of stablecoins is pegged to “stable” reserve assets such as the U.S. dollar or gold. For example, Binance Stablecoin (BUSD), U.S. Dollar Stablecoin (USDC) and Tether (USDT) are all pegged to the U.S. dollar on a 1:1 basis, and the price of 1 BUSD, USDC or USDT is equivalent to 1 U.S. dollar.

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Why are stablecoins so important?

1. Stablecoins provide stability to volatile markets

In the eyes of cryptocurrency investors and traders, the value of stablecoins is comparable to the value of fiat currencies in traditional markets, and both have stability. For example, when volatility rises, traditional investors may choose to allocate parts of their portfolios to cash or treasuries, while cryptocurrency investors turn to stablecoins.

2. Stablecoins support traders to trade quickly and efficiently in the cryptocurrency market

In volatile market environments, cryptocurrency investors or traders often turn to stablecoins. This allows them to stand strong in the cryptocurrency market and complete transactions quickly without having to wait days to transfer fiat.

3. Stablecoins boost liquidity and trading volume in the cryptocurrency market

Stablecoins are stable and efficient, increasing people’s confidence in the cryptocurrency market. In other words, more and more people are willing to join this market. Increased market participation drives volume and market cap growth. This enhances liquidity and makes the cryptocurrency market more efficient. Efficiency gains in turn allow for more accurate asset pricing. As a result, asset prices become fairer and bid-ask spreads narrow.

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What are the uses of stablecoins?

With assets like stablecoins, safe-haven buyers and sellers can rest assured that the value of their tokens will not experience an unpredictable rise or collapse in the near future. Stablecoins are strong and certain in value and are high-quality assets to hold or invest for both novice and seasoned traders, especially during bear markets.

Earn interest

Traders and investors can earn interest on stablecoins by lending and staking. Stablecoin lenders earn interest paid by borrowers. Staking is the process of verifying cryptocurrency transactions. Earn rewards for staking tokens. The more tokens you stake, the more chances you have to earn higher rewards.

Binance offers a range of products to meet the financial needs of users. Cryptocurrency investors can earn compound interest by choosing stablecoins such as Binance Stablecoin (BUSD) through Binance Wealth Management. In addition, through regular investment , you can regularly buy USDT, BUSD, etc.

Transfer assets quickly and easily

Hold stablecoins without a bank account. Stablecoin transfers are convenient, not only fast in processing, but also in low transaction fees. In addition, stablecoins support fast cross-border transfers, including transfers to places where the U.S. dollar is difficult to circulate or the local currency is unstable.

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What are the popular stablecoins?

Stablecoins are a reliable safe-haven asset in volatile markets. We have listed various popular coins below for users to refer to when expanding their cryptocurrency portfolios:

1. The Binance Stablecoin ( BUSD ) price is $1.00 with a market cap of $14,441.42 million.
2. The price of Tether ( USDT ) is $1.00 with a market cap of $ 78,399.56 million.
3. The price of the USD stablecoin ( USDC ) is $0.99 with a market cap of $45,453.71 million.
4. The price of TerraUSD ( UST ) is $0.99 with a market cap of $10,685.48 million.
5. The price of Dai ( DAI ) is $1.15 with a market cap of $9.7 billion.
6. The price of TrueUSD (TUSD) is $1.00 and the market cap is $1,440.6 million.

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Stablecoin purchase channels and methods

Want to buy stablecoins? On Binance, the world’s largest cryptocurrency exchange, you can start trading in minutes. There are many ways to buy cryptocurrencies through Binance, including top-up with fiat, or using a debit/credit card.

Step 1: Complete the fiat currency deposit. This can be done via Binance Wallet transfer or bank transfer. Be sure to check the available fiat channels for the desired currency.

Alternatively, top up your Binance Cash wallet with another currency to exchange for the stablecoin of your choice.

Step 2: Purchase stablecoins through user wallet or directly with credit/debit card.

Stablecoins are an important part of the cryptocurrency economy, providing traders and investors with a safe and secure medium of exchange. And, in a bearish market environment, stablecoins are the mainstay of strengthening the cryptocurrency economy.

Ready to start your crypto adventure at Binance?

To get started, sign up for a Binance official account or download the Binance cryptocurrency trading app. Next, verify the personal account. After account verification is complete, there are three main ways for Binance Cash to buy cryptocurrencies: through bank transfer, bank card channels, or the e-wallet option.

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