Do you want to know which stablecoin is the safest?
You are not alone because everyone else is looking for the same thing right now.
The dramatic collapse of TerraUSD (UST) has triggered some fears in crypto investors and traders, and now everyone thinks twice before choosing a stablecoin.
People are now concerned and more careful.
They want to know the stablecoin that is safest for them.
After all, not all stablecoins are created equal, and with the number of stablecoins growing, it can be difficult to decide which one to choose over the other.
But in this post, I will share the three (3) best stablecoins to choose from.
These are the stablecoins I trust.
They are also the largest and most popular stablecoins.
What is A Stablecoin in Cryptocurrency
Stablecoins are cryptocurrencies that peg their value to stable currencies such as the U.S. dollar.
They are designed to maintain a fixed price, to reduce volatility in the shaky crypto market.
This means a U.S. dollar-based stablecoin will always trade for one dollar, hence the term “stable.”
What is The Purpose of A Stablecoin
The key purpose of a stablecoin is to provide low volatility.
However, their use cases have grown.
But for active crypto traders, the use of stablecoins can be their initial purpose, which is to protect the funds you would otherwise store in volatile assets like Bitcoin.
So crypto traders use them to keep their money safe.
For example, when investors and traders expect a hit in the crypto market, they put their money into stablecoins to protect their funds.
So, if you have $10,000 in a stablecoin, you will have the same amount tomorrow, the day after, and the other days that follow.
But as I mentioned earlier, not all stablecoins are created equally, and for this reason, you must only choose the best.
Which Stablecoin is The Safest to Use
After what happened to TerraUSD (UST), these are stablecoins you can trust.
1. USD Coin (USDC)
From the information that is out there, USDC is the safest stablecoin to use.
That is because they have built credibility by focusing on regulation and transparency.
They have backed every digital dollar of USDC on the internet to make sure that 1 USDC is always redeemable for $1 U.S Dollar.
To prove that, the reserves that are held to back the USD Coin are audited monthly by an independent accountancy company to confirm that the USDC is sufficiently backed.
These monthly reports are published where anyone can see them.
USDC is the second largest stablecoin.
2. Tether (USDT)
Tether (USDT) is the largest and most popular stablecoin on the market.
The stablecoin is pegged to stick to a 1:1 value to the U.S. dollar.
They have also backed the USDT with assets like gold, traditional currency, and cash equivalents to add security and stability.
But there are rumors that USDT isn’t fully backed, and the rumors came from Tether’s lack of transparency in the past regarding asset reserves.
To respond to that, their team has moved to publish quarterly reserve reports carried out by BDO, the fifth-largest auditor in the world.
Tether has the highest trading volume and market capitalization of any other stablecoin.
3 Binance USD (BUSD)
BUSD is another stablecoin to consider.
The stablecoin is a collaborative project between Binance the largest crypto exchange in the world, and Paxos Global a regulated financial institution based in New York.
Paxos provides reports for BUSD reserves every month to prove that each BUSD coin is backed by dollar reserves.
According to the company’s filings, the stablecoin is backed by reserves held in fiat cash and U.S. Treasury bills.
Binance USD (BUSD) is one of the few fiat-backed stablecoins to receive approval from the New York State Department of Financial Services (NYDFS).
Sadly, Paxos on 13 February 2023, was directed to cease minting new BUSD by the New York Department of Financial Services.
2/ We were informed by Paxos they have been directed to cease minting new BUSD by the New York Department of Financial Services (NYDFS).— CZ 🔶 Binance (@cz_binance) February 13, 2023
Paxos is regulated by NYDFS.
BUSD is a stablecoin wholly owned and managed by Paxos.
Because of this, our confidence in BUSD is no longer the same, and we do not recommend them anymore for now.
We will be monitoring the situation while reviewing other stablecoins and will replace BUSD when we find another stablecoin to trust.
Where can I Buy Stablecoin
There are many places anyone can buy stablecoins or any other cryptocurrency, but for safety purposes, it is recommended to buy them from trustworthy crypto exchanges.
Cryptocurrency exchanges such as:
These are the best stablecoins that I believe can be trusted.
Although I will stick to USD Coin (USDC) which I believe to be the safest.
I also recommend Tether (USDT). These two stablecoins can be considered safe to use for now.
I hope this post has been helpful to you.
And check out other posts from us below to learn and understand crypto further.
- The Difference Between Stablecoin and Cryptocurrency
- Best Crypto Hardware Wallet for Storing Crypto Offline
- Common Mistakes Crypto Investors and Traders Make
IMPORTANT; you must never send money to anyone you meet online asking to help you invest in cryptocurrency. They are scammers. Crypto is easy, and you can do it all by yourself.
The information presented here should not be used as the sole basis of any investment decisions, nor should it be construed as financial, tax, legal, or accounting advice. I will also advise that you invest in cryptocurrency only what you are comfortable living without, at least temporarily.
[READ: How To Choose a Crypto Exchange]