Skip to main content
All CollectionsCrypto Basics
What are Stablecoins?
What are Stablecoins?

Learn what stablecoins are and how to buy/swap them in Best Wallet.

Updated over a week ago

Stablecoins are a type of cryptocurrency designed to have a stable value and are typically pegged to a national currency like the US dollar, meaning that the cryptocurrency's value sits at 1:1 with a national currency.

Unlike other cryptocurrencies, such as Bitcoin or Ethereum, which can experience significant price fluctuations, stablecoins aim to maintain a steady value over time.

They, therefore, represent a unique category of cryptocurrency, designed to uphold a consistent value, unlike the more typical unpredictable type of cryptocurrencies.

Stablecoins achieve this stability through various mechanisms:

  • National currency-backed stablecoins: These are tethered to traditional currencies like the US Dollar or the Euro. For instance, Tether ($USDT) maintains its stability by being backed by the US dollar.

  • Crypto-backed stablecoins: Instead of relying on national currencies like the US Dollar, these stablecoins find support in other cryptocurrencies. Take Dai ($DAI), for instance, which is pegged to the US Dollar, but reaches this value from smart contracts on Ethereum, rather than being backed by physical dollars.

  • Algorithmic stablecoins: Employing intricate algorithms, these stablecoins dynamically adjust token supply to stabilise value. Though complex, they offer an innovative approach to stability.

Why own stablecoins?

Stablecoins offer several compelling advantages:

  • Stability: True to their name, stablecoins provide a dependable store of value and a secure medium of exchange, shielding users from the jolts of sudden price swings.

  • Fast and Borderless Transactions: Like their volatile counterparts, stablecoins facilitate swift and cost-effective transactions globally. They function as an ideal solution for cross-border payments, offering a quicker and more economical alternative to traditional banking channels.

  • Transparency: Many stablecoins undergo regular audits, ensuring complete backing and transparency. This transparency fosters trust among users, reassuring them of the safety of their funds.

  • Funds for Swaps: Having stablecoin funds allows you to swap and own new cryptocurrencies very quickly. Instead of the slower bank-to-crypto process, you can quickly and seamlessly swap some of your stablecoins for a pumping meme coin or altcoin.

Uses of stablecoins

Stablecoins serve a multitude of purposes:

  • Trading: Cryptocurrency traders often rely on stablecoins to safeguard their funds during turbulent market conditions, minimising the risk of value erosion.

  • Remittances: Offering a swift and cost-effective channel for transferring money across borders, stablecoins prove invaluable, especially for individuals without access to traditional banking services.

  • Decentralised Finance (DeFi): Vital cogs in the burgeoning DeFi ecosystem, stablecoins furnish liquidity and stability for protocols like decentralised exchanges and lending platforms.

Can I buy stablecoins in Best Wallet?

Yes, you can buy stablecoins directly in the Best Wallet app. Through Best Wallet’s integration of Onramper, you can seamlessly buy stablecoins like Tether ($USDT), USD Coin ($USDC), and Dai ($DAI).

Swapping your stablecoins

You can also easily swap your stablecoins in Best Wallet for another cryptocurrency, meaning you can react to market movers quickly and own fast-moving cryptocurrencies.

Stablecoins, a crucial crypto hold

Stablecoins epitomise a dependable bridge between traditional finance and the crypto sphere, combining the advantages of cryptocurrencies with the stability of national currencies.

Their versatility and utility render them appealing to a broad spectrum of users, from traders to individuals seeking efficient cross-border transfer solutions.

Despite lingering regulatory uncertainties, the future appears bright for stablecoins. Their capacity to facilitate fast, borderless, and cost-efficient transactions positions them as indispensable components of the evolving cryptocurrency landscape.

Did this answer your question?