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5 Best Stablecoins to Buy in 2024 – Safe and Reliable

5 Best Stablecoins to Buy in 2024 – Safe and Reliable

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Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take two mins to learn more.

The best Stablecoins in 2024:

  1. USD Coin (USDC)
  2. Binance USD (BUSD)
  3. Dai (DAI)
  4. Tether (USDT)
  5. Pax Gold (PAXG)

Cryptocurrencies have been making waves in the financial world for many years, but for investors or traders who are looking for a way to get into digital currencies without some of the volatility risks, stablecoins could be the answer.

In this article you will learn what stablecoins are and how they differ from other crypto coins.

You will also learn about the five best stablecoins that could be considered both safe and reliable and get you some idea of what to look for when you are choosing the right stablecoin for your portfolio.

The Best List of Stablecoins 2024

1. USD Coin (USDC)

As the name suggests, USD Coin is pegged to the US dollar, at a ratio of 1:1. This means that every USDC in circulation is backed by one dollar in the reserves held.

USDC was created by a consortium called Centre, which consists of a regulated fintech company called Circle and the well-established cryptocurrency platform Coinbase.

As far as digital currencies go, this one might be considered safe, as it is regulated in New York, and the reserves are maintained by institutions like BlackRock and BNY Mellon, with annual audits.

USDC is one of the biggest stablecoins available, both in terms of market cap ($26 billion) and value; and thanks to the multi-tiered approach to security and stability through transparency and accessibility, it has gained significant traction in the DeFi space.

2. Binance USD (BUSD)

This is another fiat-backed stablecoin, pegged at a ratio of 1:1 to the US Dollar. It was created as a collaboration between the crypto exchange Binance and the financial giant Paxos.

BUSD is approved by the New York State Department of Financial Services (NYDFS), and it delivers monthly audit reports of reserves.

BUSD has a small market cap of $3.8 billion, but it is a versatile currency that can be used for trading, payments, and investing, making it a popular choice for many.

3. Dai (DAI)

Dai is the most popular stablecoin that is crypto-collateralised. It was developed by Maker DAO, and is backed by both crypto and fiat currency, pegged to the US Dollar as well as Ethereum tokens.

Currently, 4.9% of the collateral is reserved as USD, while 68% are Ethereum derivatives.

DAI is overcollateralized by 213%, making stability easier to maintain – and the decentralized stakeholders that control the stablecoin ensure that value is maintained through a combination of algorithms and incentives.

4. Tether (USDT)

Tether was built on Bitcoin’s public ledger, and while it is a stablecoin that is pegged to the USD at a ratio of 1:1, it is carried on Ethereum, TRON, EOS, Algorand, Solana, and Bitcoin Cash blockchains.

Tether Ltd, the creators of this stablecoin, are based in Hong Kong – and they have created other stablecoins pegged to different fiat currencies such as yen and the euro, but there have been some questions about the transparency of the coin when it comes to auditing reserves.

While this might make the new trader a bit nervous, the $83 billion market cap and almost a decade of availability should ease the worries – and it remains one of the most sought-after stablecoins available today.

5. Pax Gold (PAXG)

This is another stablecoin created by Paxos. This is an ERC-20 stablecoin, built on the Ethereum blockchain – but backed by physical gold reserves.

Each token of PAXG is pegged to one troy ounce of a 400-ounce London Good Delivery gold bar. This gold is kept in protected gold vaults, overseen, and approved by the NYDFS, with monthly audits to confirm reserves.

The price of PAXG directly correlates to the current market value of gold, which has tended to hold value even when other financial instruments are taking a hit in turbulent economic conditions, making it one of the safest options for those just getting started in the stablecoins market.

What Are Stablecoins?

In essence, a stablecoin is a digital currency (a cryptocurrency) that has value tied into something else. The value of the stablecoin directly correlates to a financial instrument, like fiat currency or commodities.

Stablecoins were introduced to the blockchain space to bring some stability to a market where volatility is one of the key features. Cryptocurrencies like Bitcoin and Ethereum are popular, but the prices can vary hugely in a week, a year, or even in one day.

This volatility might be perfect for day traders who are looking to make a swift profit, but they are not as useful for long-term investors, or for use as a currency to replace fiat finances – which is what they were designed for in the first place.

As an example of this, one Bitcoin went from costing $5,000 to $21,000 in a little over a year (which is great for longer-term investors and traders), but then lost 50% of its value within just a couple of months, thanks to Elon Musk selling out – not a reliable investment option.

As mentioned, stablecoins were created to negate this volatility as much as possible, tying the value of each coin to something else (usually something less volatile).

Stablecoins, as part of the digital currency sector, are under scrutiny from financial organizations – they are not controlled by banks as part of the blockchain decentralization, but with such rapid growth in popularity, to a value of $130 billion, they have the potential to disrupt the wider financial market.

Some regulators are insisting that stablecoins should be regulated in a similar way to other payment systems – as financial market infrastructure. While this may make them more stable and ‘safe’, this regulation will make the stablecoins more centralized – and under the control of financial institutions.

There are three main types of stablecoins:

  • Fiat-Collateralized Stablecoins
  • Crypto-Collateralized Stablecoins
  • Algorithmic Stablecoins
5 Best Stablecoins To Buy in – Safe and Reliable
5 Best Stablecoins To Buy in – Safe and Reliable

Fiat-Collateralized Stablecoins

Fiat currency is essentially the everyday money that we use (dollars, pounds, euros). A fiat-backed stablecoin maintains a reserve of a specific fiat currency to assure the value of their stablecoin, and this reserve is matched by a specific ratio of coins (mostly 1:1).

Fiat-pegged stablecoins aren’t always tied to currency; they can also be matched with commodities like gold, silver, or oil.

The reserves that the stablecoins are tied to are usually maintained independently to assure value and will be regularly audited.

Crypto-Collateralized Stablecoins

These stablecoins are backed by cryptocurrencies, usually well-established altcoins.

As the reserve cryptocurrency is volatile, these stablecoins usually have more crypto in reserve to assure value – sometimes as much as double the amount of stablecoins available.

This over-collateralization of the cryptocurrency is an important part of the stability of a crypto-backed stablecoin, and they can also be tied to other financial instruments (like fiat currency, for example).

Algorithmic Stablecoins

An algorithmic stablecoin may or may not hold reserve assets or financial instruments, but they maintain their value and stability through algorithms that control supply.

When the value drops, the algorithm stops circulation of the coin, and when it increases more is created.

How to Pick the Best Stablecoin

As with any financial instrument or investment, buying stablecoins comes with risk.

Every investor is different, with different long-term goals and methods of managing their investment risk, so when you are deciding what stablecoins to add to your portfolio, you need to know what to look for.

Below are some tips that might help you make the decision on which stablecoin to invest in.

Step 1. Research Your Options

There are around 200 stablecoins available to buy, which means that you have a lot of choice when it comes to deciding which one is the best for you.

Make sure that you research each coin – it’s not about choosing the biggest stablecoins.

The more you know, the better your decision making will be. You will want to know the benefits of each coin, what it is pegged to that makes it stable, and how much it will cost you.

Step 2. Look at Available Platforms

Stablecoins are sold on the same markets as other cryptocurrencies, which means you need to have a broker that works with cryptocurrency markets.

When thinking about where to buy stablecoins, it’s worth noting that some people prefer to use a cryptocurrency platform to deal with buying and selling digital currency; this usually comes with benefits like a wallet and more altcoin-specific knowledge, research, and education opportunities.

Either way, you need to know which platform your chosen stablecoin is available on – not all are widely available, although most platforms will carry the stablecoins listed here and some of the other most popular stablecoins.

Step 3. Consider the Market Cap and Availability

Stablecoin value can be affected by many things, and one of them is availability. The more coins that are available, the easier it is to buy. This can make long-term value more assured but might not increase the value.

Inversely, lack of availability might increase the price of a coin, but it might make it less reliable long term.

Another thing to consider is market capitalisation. The market cap determines the value of publicly available coins – the higher, the better.

Cryptocurrencies and stablecoins are judged based on their market cap, with the more popular and successful coins having a higher figure.

Step 4. Understand the Risks

As mentioned, any investment is a risk, but, when it comes to a digital currency, there are more risks.

The volatility of cryptocurrencies like Bitcoin and Doge is the main risk for investors, especially those who are investing over the long term.

While stablecoins are designed to bridge the gap between a volatile, decentralized and mostly regulated currency and fiat currency, there are still risks to consider.

You can mitigate these risks in several ways. First, choosing a stablecoin that is pegged to a reliable underlying asset is a good start.

Look for one that has some regulatory oversight – like the NHFDS, for example – and one that offers regular third-party audits of reserves to assure value.

You are more likely to be safer with reliable, strong blockchains like Ethereum backing your choice of stablecoin.

No investment comes without risk, and it is up to you to decide what level of risk you are happy with when it comes to your chosen stablecoin.

Frequently Asked Questions

The top stablecoins to invest in for 2024 are:

  • USD Coin (USDC)
  • Binance USD (BUSD)
  • Dai (DAI)
  • Tether (USDT)
  • Pax Gold (PAXG)

It’s not that straightforward, as the volatile prices can make you lose your investment just as easily as gaining you any profit.

If you want to get rich, you need to create a portfolio that is diverse and look at adding the more reliable stablecoins to your assets.

A stablecoin is a digital currency that is supported by another financial instrument. The value of each coin is pegged to a reserve of something else, like the US dollar or a commodity like gold.

Some stablecoins are backed by cryptocurrencies, while others have their value managed through algorithms.

If you want to get involved in cryptocurrency but in a way that avoids much of the volatility of that particular market, then you could buy stablecoins. They maintain their value thanks to their connection to a reserve asset, yet they remain mostly decentralized, like other digital currencies.

Bitcoin and Ethereum are not stablecoins. They are cryptocurrencies, and their value is created through their own prices and relative popularity.

Stablecoins are digital currency, but their value is pegged to an underlying asset, usually something like a fiat currency or a commodity.

There have been several stablecoins that have failed. The most well-known was the collapse of a stablecoin called Terra (UST), an algorithmic stablecoin that was backed by a cryptocurrency. It collapsed in May 2022 following problems with maintaining the value of the underlying LUNA crypto.

Final Thoughts

Stablecoins are essentially a digital currency that are designed to mitigate some of the volatility that is inherent in cryptocurrency by tying value to an underlying asset.

Stablecoins are a relatively new creation – most have only been available for the last five years or so – but they are proving popular with investors who want to diversify their portfolio, as well as short-term traders and even those who are making the most of digital currencies in the DeFi space.

If you want to learn how to invest in stablecoins, it is important that you do your research – any investment is risky, and even the most popular stablecoins and cryptocurrency can find it hard to maintain value when the market fluctuates.

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take two mins to learn more.

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