Crypto asset lovers are certainly familiar with the term stablecoins. Here we get to know 5 types of stablecoins from fiat currencies in the Indodax market.
Stablecoins have gained popularity in the last year or so. However, there are still many who are not sure why these coins are important. Even people who have invested in crypto assets do not have enough understanding of Stablecoins.
One of the functions of crypto assets is for payment transactions around the world. This system was created for payments that are more secure, transparent, decentralized, fast, and use cryptocurrency as a medium of exchange.
But almost all cryptocurrency values experience rapid fluctuations, especially Bitcoin. This is where the role of stablecoins is as a currency whose price is quite stable. Stablecoins are not suitable as assets for investment. However, it is more used as a means of payment.
One type of stablecoin is adopting fiat currency. What is that?
What are Stablecoins?
Stablecoins are a new class of cryptocurrencies that offer stable prices. Stablecoins get their attention when they claim that this coin is second best after Bitcoin.
Although Bitcoin is still popular, it tends to experience high volatility. For example, some time ago, Bitcoin reached Rp. 851 million and then dropped at Rp. 750 million and is currently at Rp. 699 million per 1 BTC.
Even a single day’s price change can be wild. It is common practice for Bitcoin to see cryptocurrency move by more than 10 percent.
So it’s no wonder that Bitcoin is called a highly volatile crypto asset.
Therefore, Stablecoins have the advantage of instant processing and guaranteed security. As well as cryptocurrency payment privacy with stable and volatility-free fiat currency valuations.
Stablecoins can be interpreted as “stable coins” because these digital coins are pegged at a 1: 1 ratio to various types of assets.
In order to issue Stablecoins, companies need to present an amount of fiat currency equivalent to USD on a bank account.
What is Fiat Currency?
Fiat money is a currency with no intrinsic value. However, this currency is used as a legal tender and is designated as money by government regulations or laws.
Fiat currencies tend to be the emblem of a country and represent a country. Examples are Rupiah, Dollar, Singapore Dollar and others.
The value of fiat money is not supported by commodities such as gold or silver. However, its existence as a means of payment is declared legal by the government.
With this guarantee, you don’t need to worry about using it in various transactions.
In the modern economy, fiat money can be said to be a medium of exchange (barter). You can see the nominal value of this money as it appears on the paper. Meanwhile, the real value depends on the goods or services that you can buy with the money.
5 Stablecoins from Fiat Currency in Indodax Market
To facilitate transactions between countries, crypto asset developers create stablecoins from fiat currencies. Here are 5 of the most popular stablecoin crypto assets on Indodax.
1. Tether (USDT)
Tether is the short name for USDT. This title is taken from a company called Tether Limited from Hong Kong. USDT itself stands for United State Dollar Tether.
In fact, USDT is a digital token to represent fiat money using blockchain technology. This token was made to simplify the cross-border money transfer system.
The value of 1 USDT equals the value of 1 US dollar. This value can be converted into fiat currency including rupiah. Indodax is one of the crypto asset markets that provides USDT to Rupiah exchange.
2. USD Coin (USDC)
Similar to others, USDC is a token that is used to make investments, loans, payments and trades. USDC is also one of Coinbase’s Stablecoins category.
USD Coin can be called a digital dollar because the price is equivalent to the American dollar. The value of 1 USD Coin is equal to 1 United States dollar. This proves that the USDC value is fairly stable.
3. Dai (DAI)
Dai is a cryptocurrency that is stabilized against the value of the American dollar. Unlike the others, the value of DAI is supported by Ethereum on the Blockchain network.
4. IDK
IDK is a Stablecoin that fixes its price based on Rupiah with a ratio of 1: 1000 IDR (Rupiah). This asset is created according to the terms of the ERC20 token on the Ethereum network.
With the presence of IDK, it is hoped that it will be able to boost digital assets in Indonesia and become a giant economy in Southeast Asia.
5. XSGD
XSGD is a Singapore Dollar stablecoin. It compares 1: 1 to the Singapore dollar (SGD). XSGD token serves to remove cross-border transaction fees. Besides that, it can also be used as a means of payment for other digital assets.
Indodax has started accepting Stablecoin deposits with the five types of fiat currencies mentioned above. For those who are interested in owning Stablecoins, you can have your account at Indodax right now.
