Is Buying Stablecoins Worth It?

A stablecoin is a digital currency whose value is pegged to a real-world asset like the US dollar. Crypto users buy stablecoins to retain their investments in marketplaces and wallets without necessarily converting them to fiat currencies. Thus, they save money by eliminating the hefty conversion fees imposed by card processors.

Another reason people buy stablecoins is to use them to transact between cryptocurrency businesses and hold crypto without the volatility risk. However, these coins are controlled by centralized companies, which, to a large extent, operate opaquely.

Are Stablecoins a Good Investment?

Apart from using stablecoins to avoid volatility and transact between crypto businesses smoothly, stablecoins also have other uses that make good investments. They are valuable in ways standard cryptocurrencies aren’t due to their stable prices.

As such, though you can use digital currencies for day-to-day transactions, their volatility is a major barrier to mass adoption. Business owners are hesitant to receive payments in assets that could dip with a single tweet from Elon Musk. At the same time, customers are unwilling to pay using an asset that could increase in value within the next hour, month, or year. Stablecoins offer solutions to both challenges.

Other Features That Make Stablecoins a Great Investment

• They act as an effective way of moving funds between crypto exchanges and wallets.
• People from countries with unstable currencies can use stablecoins to beat the inflation of their currencies
• You can lend your stablecoins in lending platforms like Compound and generate passive income. As a matter of fact, you can earn interest rates of up to 25 by lending out stablecoins, especially during the bull market.

The Safest Stablecoins to Buy

Following the recent collapse of TerraUST, many people have been asking, “Which is the safest stablecoin to buy? Well, USDC is often considered the safest stablecoin to buy.

Better still, it has the second largest market cap after USDT, which most crypto users have little trust in because of its lack of transparency and lawsuit history. USDC custodians are Coinbase members, a regulated US crypto exchange, and its reserves are fully verified by an independent agency.

Bearing that in mind, some crypto users who prefer decentralization to centralization strongly feel DAI is the safest stablecoin. They argue that not being under a centralized issuer makes DAI less vulnerable to crashes and attacks.

Is market cap necessarily an issue for you? Do you fully trust a centralized authority to control your money, or do you prefer trusting an algorithm? When all is said and done, the safest stablecoin to invest in depends on your money safety principles and what you want in a stablecoin.