In the crypto industry, there are cryptocurrencies called stablecoins. It was created not for volatility but for a fixed value. So, what exactly are Stablecoins?
What are Stablecoins?
Stablecoins are a new crypto asset class that offers price stability and is backed by a reserve asset. Stablecoins are widely used because they combine two main benefits, namely instant processing and security and privacy of crypto payments with the stability of the price of fiat money.
Stablecoins attempt to peg the value of each coin against the market value of an external reference. A stable coin can be pegged to fiat money like the US dollar or the price of a commodity like gold. Stable coins achieve price stability through collateralization or through the algorithmic mechanism of buying and selling referral assets and their derivatives.
There are three classes of Stablecoins. First, stable coins are guaranteed by fiat money reserves stored in banks. Second, stable coins are guaranteed by a reserve of crypto assets where the crypto assets that are pledged must be of greater value than the value of the stable coins issued. Third, algorithm-based stable coin. This type of stable coin is not guaranteed by a reserve but uses an algorithm to regulate its value through the issuance and burning of supplies.
The largest and most famous Stablecoin is Tether (USDT). USDT is pegged in value to USD with the support of assets in the form of gold, traditional fiat money, and cash equivalents. Tether is also known for its security and seamless integration with crypto to fiat platforms.
Because they are stable, Stablecoins are easier to comply with regulations from regulators. Gemini Dollar (GUSD) and Paxos Standard (PAX) are two examples of stable coins that have received approval from the regulators of the New York State Department of Financial Services.
What’s this for?
Stable coins are generally used to buy and sell other crypto assets on crypto exchanges. The trick is to convert fiat money into stable coins and then use them to trade other crypto tokens. Through this mechanism, USDT becomes the most widely used stable coin and the highest trading volume.
How to Get Stablecoins
Investors can get stable coins by choosing a stable coin brand first, such as USDT, GUSD, or others. After that, the investor visits his favorite crypto exchange and opens an account. The next step is to deposit fiat money, then buy Stablecoins of choice. Some crypto exchanges have their own stable coins, such as Binance with BUSD
What is the Whale Phenomenon?
Whale, which means whale, is a word intended for someone who holds most of the assets. In the Crypto world, someone who owns 1,000 Bitcoins is considered a Whale in that world.
With this large ownership, it means that if one day they decide to sell the asset, the market will suddenly have a lot of stock and cause large price movements. For example, the price of Bitcoin had soared to a level above USD $ 50,000 last April (this happened because many people bought Bitcoin). Then suddenly the price fell to the level of USD$30,000 in the last 1-2 months.
If analyzed, of course, the above incident occurred because there were several parties (the majority of the whales) who had bought up or sold Bitcoin at that time. So the price can go up very much at one time and can be very down at another time.
What Makes Whales So Special?
As said earlier, Those with this title are very rich people who hold large amounts of assets (e.g. Bitcoin) in their pockets as investments. And they are not only in Bitcoin, almost all other Crypto assets or outside Crypto certainly have a number of crypto whales in them.
However, because the Cryptocurrency world is very price-sensitive, the presence of crypto whales in this industry will certainly shake up the market conditions.
This is also due to the much smaller volume of Crypto and less liquidity in Cryptocurrency exchanges. Without sufficient liquidity, these whales are trapped in a small pool where the condition of the pool can be very influential with even the slightest movement (sell or buy).
Cryptocurrency assets are still very concentrated by nature. The sudden growth of Bitcoin means that most of the market is owned by a small percentage of traders who are lucky enough to buy a lot of Bitcoin when the price is low. Currently, about 40% of Bitcoins are held in about 2,500 accounts.
The equal goes for altcoins. For example, it was once published in February of this year that one character holds 28% of Dogecoin, which has surged almost 1,400% since the beginning of the year. An individual who owns a massive element of the market has a massive impact on prices.
Currently, the trend in investing is increasing. Lots of people start learning to invest. Investments are made in many ways. Someone who is already familiar with cryptocurrencies must have more knowledge to know the types of transactions. Such as activities originating from the stock market, namely exchanging conventional currencies with one type of cryptocurrency.
Then spending it personally with some notes. The note contains that all places for users who want to make transactions with currency payment facilities are in digital form.
Then, crowdfunding or massive data collection. This is to avoid transaction fees. This is especially true if the project that has been marked has actually suffered huge losses.
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