Stablecoins have been around for a while. There are many available, but are all of them the same? And how do they compare to Bitcoin?

What exactly is a stablecoin?

As the name suggests, it’s a coin that does not have any price action whatsoever. Hence stable. And because of that, they’re quite a fun concept. Let’s take Bitcoin. In early 2019, it was worth $3,000. Now, it’s trading at around $10.000. We won’t see that with a stablecoin because it is always pegged to a fiat currency or other assets. The ratio is 1:1. So if one happens to have stablecoins worth $100, this essentially means that they are holding a $100 bill. 

Is volatility possible?

A small degree of volatility is still possible, but it won’t be something significant like in Bitcoin. That said, do you still remember why the community is wary of Tether (USDT)? Precisely, because its volatility is a bit too high even for stablecoin.

Besides, it’s important to note that stablecoins are centralized. The latter means that a certain party may choose to manipulate its price. 

Stablecoin Advantages
  • Great for storing crypto profit (or moving in just to be safe during market crashes).
  • Good for taking on some platforms since they don’t lose value.
  • Faster than all the other cryptocurrencies.
  • Used for trading pairs on exchanges.
Stablecoin Disadvantages
  • Won’t gain value in the long run.
  • Centralization.
  • Being subject to higher fees on exchanges.
Bitcoin vs Stablecoin

In conclusion, Bitcoin is a decentralized coin that has really high volatility and cannot be controlled by anyone. For stablecoins, this is not the case.

A stablecoin is faster than Bitcoin and has lower transfer fees. However, it may not be safe to hold for a long period of time due to centralization.

Bitcoin is the brand of crypto, meaning it’s a great investment in the long run.

A stablecoin must be used for “quick moves” only. 

I find staking very risky, especially with stablecoins. Think of it this way. You want to stake for one year. The stablecoins will be locked. A lot of things can happen in one year (issuer side or staking platform).

Stablecoin List

This list includes the most used stablecoins among crypto enthusiasts: TrueUSD (TUSD), USD Tether (USDT), USD Coin (USDC), Paxos Standard (PAX), Centre, Gemini Dollar (GUSD), Bitcoin Air (USDAP) and Libra, the upcoming coin by Facebook.

Anything said in this article must NOT be considered financial advice. The article has educational purposes only.

Related articles that may be helpful: Bitcoin TA & Trading Terms

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