Which stackcoin is the safest?

Stablecoins seem simple, but they come in all different shapes and sizes. It can therefore be difficult to choose which stack coin to use. Of course, you will prefer to use a stablecoin that is easy to use but which is one of the most secure stable cryptocurrencies in the world.

In this article we would like to tell you more about the most popular stack coins that you can use. I also go into more detail about how each stablecoin is covered, and about the security of the stablecoin

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What is a stablecoin?

Stablecoins are cryptocurrencies that always have a stable value† This value is linked to the price of another asset. In most cases, it is a fiat currency. For example, the value of a stablecoin can always be equal to euros or US dollars, which means that one stablecoin is also worth one euro or dollars.

A stack coin must be supported by an underlying asset. In many cases, it does not matter what the underlying asset is, as long as the total value is equal to the demand. Supply and demand must be equal to ensure stability.

What stack coins are there?

Today you can choose from a large number of stack coins. It can be difficult to make a choice from the large selection. Even if you know which stablecoin is the safest. Below we tell you what the most popular stack coins are, how they work and how they are supported.

Tether (USDT)

Tether (USDT) is the most popular stablecoin in the world† This stablecoin has been among the 5 largest cryptocurrencies for years based on market value. Tether reflects the price of the US dollar, as do most other stack coins.

Tether was launched by the company of the same name in 2014 as Realcoin. At the time, Tether was running on the Bitcoin blockchain in combination with the Omni platform. Not much later, Realcoin’s name was changed to USTether, only to be changed back to USDT shortly after. As you probably also know, Tether is not only available on the Bitcoin blockchain right now. You can now trade this cryptocurrency on blockchain Ethereum, EOS, Algorand, OMG and TRON.

Is Tether safe?

In 2020, Tether made headlines when it emerged that the majority of USDT coins were backed by commercial bank money† This involved at least 97% of the circulating coins.

Commercial bank money is money that does not exist physically, but can only be found as a number in a bank account. In many cases, commercial bank money is considered less secure compared to cash. Tether then indicated that it would convert commercial bank money into cash.

In the past, the USDT has once fallen to a value of $ 0.88, which is also USDT’s ATL (all-time-low) is.

Some people say they are concerned about Tether’s safety. Still, it has never gone wrong so far, and Tether says it will make itself even more secure in the future.

Want to know more about Tether? Then you could watch the video from AllesOverCrypto below. In this video, I explain what Tether is, how this stablecoin works, and what you can do with it.

USD Currency (USDC)

The USD (USDC) is pegged to the US dollar† This stablecoin was launched in 2018 and is now available on more than 30 blockchains, including blockchain by Solana, Algorand, Binance Smart Chain and Fantom.

Circle and Coinbase are the companies behind the development of USD Coin. They created this stablecoin because they wanted to issue a secure stable cryptocurrency that is also easy to use. Therefore, they have made the stack coin available on a large number of blockchains.

USD Coin is the second largest stack coin in the world by market value.

How Safe is the USD Coin?

So far, no major issues with USD Coin have been detected† In 2020, the founders of USD Coin indicated that a major update would take place in USD Coin protocol and smart contracts. These updates should facilitate the use of USDC. Users should be able to use USD Coin for daily payments without worrying about security.

The value of USD Coin is supported by cash† The amount of cash that USD Coin has in reserve is equal to the number of USDC coins that have been used. In this way, the stable value of the USDC is guaranteed.

Binance USD (BUSD)

Crypto Exchange Binance, along with Paxos, has released a stack coin running on the Binance Chain† Binance USD (BUSD) has been trading since 2019 and has linked its value to the US dollar. BUSD is issued as ERC20– and BEP2token, which means it can also be used on other blockchains, such as Ethereum.

Is Binance USD (BUSD) a Secure Stack Coin?

BUSD is approved and regulated by the New York State Department of Financial Services (NYDFS)† Every month, the BUSD Monthly Audit Report is published on Binance’s website. In this report you can find the evolution of BUSD, such as the total number of stack coins issued and how they are covered. Binance is therefore very transparent about BUSD, and thus wants to ensure that people have confidence in BUSD.

Paxos ensures that dollars are kept in reserve, to guarantee a constant value. These reserves are held by a US bank and by US government bonds.

So far, there have been no security issues in Binance USD† Meanwhile, BUSD is one of the most popular stack coins in the world.

In the video below you will learn more about what Binance USD is, how it works and what you can do about it. The coverage of BUSD is also discussed in more detail.

Dai (DAI)

DAI. running on Ethereum blockchain† This is a stablecoin that has the same value as the US dollar. However, the value is not supported by US dollars. This is actually kept the same using Maker Protocol and MakerDAO and covered by cryptocurrencies

Maker Protocol ensures that a number of cryptocurrencies are kept in a smart contract. The value of these cryptocurrencies must be equal to the total number of DAI stack coins issued† Therefore, the protocol is constantly engaged in the purchase and sale of cryptocurrencies. This not only takes into account the number of stack coins in circulation.

Of course, the value of the cryptocurrencies held may also change. Therefore, the protocol will have to ensure stability on several fronts.

Is DAI a secure stablecoin?

The value of DAI is supported by other cryptocurrencies. An automated algorithm ensures that supply and demand remain the same, so DAI has a constant value of $ 1. Despite the fact that DAI works in a completely different way than most stack coins, no problems with DAI have been discovered so far.

Would you like to learn more about how DAI works? The video below from the Coin Bureau takes a closer look at how DAI works.

TerraUSD (UST)

TerraUSD (UST) is the stack coin issued by Terraform Labsn. The value of this stablecoin is kept stable by Terra (LUNA). This is a protocol that ensured that UST is covered by LUNA. As the demand for UST increases, LUNA owners are encouraged to switch their LUNA to UST. They receive more UST than LUNA for this, making it economically attractive to exchange tokens.

As the demand for UST decreases, UST owners are encouraged to exchange their UST for LUNA. In this way, the coverage of UST is kept equal to the number of UST tokens issued.

Is TerraUSD (UST) secure?

By mid-May 2022, it became clear that TerraUSD is not a secure stablecoin† The value of the stack coin decreased, after which many people decided to sell LUNA tokens. This caused a decrease in LUNA. This fall was so rapid that Terra’s protocol could not burn UST fast enough. The result: Both UST and LUNA fell in value even faster.

On May 13, 2022, the team behind Terra even decided to pause the blockchain† They first wanted to draw up an action plan before proceeding. It is not yet clear if it will be possible to make TerraUSD work again. A bigger question is whether it will be possible to regain confidence in Terra and TerraUSD.

Sand USD (TUSD)

TrueUSD (TUSD) is a stack coin issued by the company TrustToken† The value of TUSD is always pegged to the US dollar and supported by dollars. All TUSD tokens are issued through a smart contract on the TrustTokens platform. The company has several banks as partners that hold dollars for the number of tokens they have issued.

In 2019, TrueUSD became the world’s first stack coins to issue real-time audits† It is possible for everyone to see the status of TrueUSD on the TrustToken platform. TrustToken appears to be open and transparent about TrueUSD.

Is TrueUSD (TUSD) a secure stackcoin?

There have been no issues with TrueUSD since its launch in 2018† TrustToken has also so far been very open about TrueUSD’s coverage. Stablecoin is fully supported by dollars, which are held in reserve by banks. On the TrustToken platform, you can see how many dollars are in reserve, and then you also know if TrueUSD is adequately covered.

At the same time, TrueUSD is a lesser known stablecoin. Therefore, it may be wise to do good research yourself in this stablecoinbefore you decide to move your assets to this currency.

USDD (USD)

USDD (USDD) is one of the newest stack coins you will come across in this article† This stablecoin was issued in May 2022 by TRON DAO Reserve and runs on TRON blockchain. TRON has built a mechanism in the stack coin that ensures that USDD can always remain stable. The value is linked to the US dollar.

Is USDD safe?

The value of USDD is supported by TRON DAO Reserve† This makes USDD the world’s first stablecoin backed by a cryptocurrency reserve. Since USDD has only just been launched, it is not yet clear whether USDD is safe. It will be some time before we know if USDD contains vulnerabilities or if it can withstand all kinds of attacks. It therefore does not hurt to be careful and do thorough research on USDD before you decide to buy this stablecoin

Conclusion

There are many different stack coins. Each stablecoin works differently and is also supported in a different way. This can ensure that certain stack coins are more secure than other stack coins. It is always wise to research how a stablecoin works before you decide to have your assets protected by this stablecoin

Hopefully, after reading this article, you will know more about security of stablecoins† Want to know more about this topic or other DeFi projects after reading this article? Then ask your questions in our AllesAboutCrypto Facebook group and our experts will answer all your questions.

Do you have other crypto-related questions? The easiest way is to look up your question in our FAQ. You can also google your question + “AllesOverCrypto”. You will then quickly come to one of our other articles dealing with that topic so you can quickly learn more about that topic.

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