“Anything that can go wrong, will go wrong”. This is called Murphy’s law and it has been consistently true all throughout history. Why is it important for stablecoins? Well, potentially any stablecoin can lose value due to a multitude of reasons. Be it network issues or simply a lack of sufficient dollar reserve, stablecoins can drop in value as we have seen with IRON stablecoin. In that regard, security is the utmost priority when it comes to stablecoins. At this point, Tether is still the predominant stablecoin but there are rumors about its connection with Chinese real estate giants that are making investors uncomfortable. And here we are with a list of top stablecoins to buy with solid reputations to introduce as Tether alternatives.
Security Comes First
Considering the pegged value, the only reason to choose a stablecoin over another is the security. Primarily, a secure stablecoin is one that holds just as much US dollar reserve as the issued coins. However, there are tricks that some issuers can resort to for hiding their lack of reserve.
Generally speaking, an ideal stablecoin issuer must be fully transparent about how much dollar they are holding and in what form. And form, is what brings us to the second trick. Issuers can potentially hold different forms of assets for their reserve. Sometimes, these assets are in form of bonds or security papers issued from questionable companies. For example, the fallen real estate giant Evergrande used security papers to pay off or loan other companies. Subsequently, if you have security papers from Evergrande, good luck turning it into cash as it is exactly worth zero in 2022.
Bear in mind, these two tricks are just the tip of the iceberg as there are thousands of ways an stablecoin issuer can conceal their true dollar reserve. With that in mind, our top picks for stablecoins to buy are ranked by transparency and low diversity in assets. However, there is one outlier that utilizes a different method to hold a pegged value which we will talk about later in this article.
Top Stablecoins to Buy Available on HiExchange
You can invest on stablecoins or exchange your cryptocurrencies to stablecoins on HiExchange platform. HiExchange gives you three good reasons to join in:
- Anonymity: The platform does not require KYC (know your customer)
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On top of that, you can find guide articles for every exchange direction on HiExchange Blog. HiExchange blog is an all-in-one crypto blog where you can follow the latest news, guide articles, price analysis and much more!
TrueUSD (TUSD) is a stablecoin based on the Ethereum (ERC20) network. Stablecoins are cryptocurrencies that have their value pegged to another currency. In this case, as you might have guessed it, TUSD is backed by US dollar. However, the question is, why would someone create another stablecoin in this highly saturated market? The answer is, no one offers better transparency and security as much as TrueUSD.
Time and time again, we have heard concerns about Tether not being honest about their dollar reserve. Essentially, a stablecoin issuer must hold as much USD as they have their stablecoin in circulation. Sadly, these companies do not provide full clarity regarding their reserve. Subsequently, in case things get out of hand, the value of the stablecoin can drop in a matter of minutes.
TrueUSD has an emphasis on honesty and transparency to fight the bad reputation about stablecoins. They offer legal protections and real-time audits for users. All of the circulating supply of the token is fully collateralized by USD. The crypto exchange TrustToken issued TUSD in 2018. The TrustToken exchange has mandated a monthly audit for TUSD which means that the users are assured about the state of the reserve. Despite being based on the Ethereum network, TUSD has extremely low transaction fees. This is due to the fact that TrustToken generates revenue from their US dollar based holdings in different accounts. Here on HiExchange, we will exchange your TrueUSD with astonishingly low exchange fees!
TrueUSD is Certainly on top of our Stablecoins to Buy list!
Buy and Sell TrueUSD on HiExchange.
USD Coin owns the world’s largest stablecoin industry ecosystem in the world. It is a cryptocurrency that is pegged to US dollar in terms of value. That means that each USCD will always be worth $1. Stablecoins are used as a hedge against inflation and volatility in the crypto market. However, they can also be used as an alternative way to hold assets on the blockchain network.
As good as stablecoins might sound, there has always been concern about the companies not being honest about their dollar reserve. Basically, for every 1 USDC the company issues, they must hold $1 in their accounts. As a matter of fact, there are rumors regarding some large companies not having the dollar equivalent of their stablecoin. If a solid reserve does not back a stablecoin, the currency will lose value and seriously damage the investor’s funds. In that regard, USD Coin aims to provide full transparency about their reserves.
USDC is managed by a consortium called Centre which is a part of the payment technology company Circle. Much like TrueUSD, they offer monthly attestation reports by Grant Thornton to ensure investors regarding their reserves. Where they differ from TrueUSD, is that TrueUSD only holds dollar in different accounts but USD Coin also holds other assets such as gold.
Buy and Sell USD Coin on HiExchange.
DAI is an Ethereum-based stablecoin. A stablecoin is a cryptocurrency with a pegged value to another currency. In case of DAI, it is pegged to the US dollar and much like Tether and USDC, Dai will always be worth $1. Stablecoins are a crucial part of the crypto market as they offer very little volatility. In that regard, investors use stablecoins to save their funds in the form of a reliable and stable asset.
What makes DAI unique is a clever design that eliminates the biggest concerns for stablecoins. Generally speaking, conventional stablecoins require a massive reserve by the company. For example, for every Tether USD, the Tether company must hold $1 USD in their reserve. This is a huge issue for companies as it is difficult to provide liquidity and keep it consistent.
DAI offers a new solution for this problem. By using an automated system of smart contracts on Ethereum blockchain, DAI does now need a reserve. Using collateralized debt denominated in ETH allows DAI to maintain the 1:1 ration with USD. Simply speaking, users can deposit Ethereum or other cryptocurrencies can borrow against the value of their deposit and generate new DAI. The currency is this case is known as collateral.
Buy and Sell DAI on HiExchange.