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Digital currencies that are based on the blockchain are collectively referred to as crypto. As they can be exchanged for potentially profitable returns, cryptos have gained popularity among the general public.
Many cryptos provide robust utility features like cross-platform compatibility, smart contracts, and blazing-fast transaction times.
However, other characteristics of cryptos, such as their comparatively high volatility and unpredictability, may cause both current and potential investors to react with caution and moderation.
Without further ado, let’s look at what stablecoins are.
What are stablecoins?
Stablecoins are digital assets whose value is tied to another asset. Stablecoins that are most widely used “peg” themselves to the US dollar. While still providing the advantages of digital transactions, stablecoins eliminate the risk associated with fluctuations in crypto prices. They are thus a preferable alternative to conventional tokens as a medium of exchange.
These tokens provide the best of both worlds by bridging the gap between fiat currency and digital payments. The significant type of stablecoins is given below.
Types of Stablecoins
- Fiat-collateralized Stablecoins: Stablecoins that have fiat currency backing, such as the US dollar, the British pound, or the euro, are known as fiat-collateralized stablecoins.
- Commodity Collateralised Stablecoins: Commodity-backed stablecoins are backed by tangible assets like gold, oil, and real estate.
- Crypto-collateralized Stablecoins: Crypto-collateralized stablecoins are backed by other cryptos. Such stablecoins are over-collateralized, which means that the value of the crypto kept in reserves exceeds the price of the stablecoins created because the reserve crypto could be volatile.
- Algorithmic Stablecoins: In general, stability depending on market supply and demand, can be achieved with algorithmic stablecoins. It’s also important to note that algorithmic stablecoins have the highest levels of independence and decentralization.
Regardless of your experience level, it would be best to always examine the top-performing cryptos before investing. This is because the leading cryptos to invest in are subject to rapid change that may surprise you. That’s why we have curated a stablecoins’ list for you to invest in 2022.
Top 6 Stablecoins list to invest in this October
#1 Bitcoin (BTC) – The Digital Gold
Bitcoin (BTC) is the first coin developed in 2009 by an individual or a group of individuals using the pseudonym Satoshi Nakamoto. Similar to the majority of cryptos, BTC records transactions across a network of many thousands of computers using a blockchain or ledger. However, Bitcoin is secure and protected from fraudsters because updates to the distributed ledgers have to be validated by cracking a cryptographic puzzle, a procedure known as Proof-of-Work (PoW).
Bitcoin is commonly referred to as “digital gold,” making it a reliable investment. According to economists, this has stayed the same; it’ll still be the most popular cryptocurrency in the coming years.
#2 Ethereum (ETH) – A Smart Contract Blockchain
Another choice for purchasing the most widely used crypto here on the market is Ethereum, as many people think it has a more considerable price potential than Bitcoin. In addition, the platform provides dApp developers with a means of implementing smart contracts into their applications, possibly disrupting various industries.
The release of Ethereum 2.0 has caused a stir because the platform will switch to a Proof-of-Stake mechanism, which will significantly increase speed and reduce fees.
#3 Curve (CRV) – An Automated Market Maker Platform
By only allowing liquidity pools composed of identically behaving assets, Curve is a famous Automated Market Maker (AMM) platform that allows a very efficient means to swap tokens while retaining low fees and little slippage. Furthermore, as Curve integrates with other DeFi protocols and offers incentives in the form of CRV tokens and interest, the liquidity providers who provide the pools with tokens benefit from cheaper fees as a result of this strategy.
#4 Chainlink (LINK) – A Decentralized Oracle Network
A decentralized oracle network called Chainlink provides smart contracts access to a trustworthy and secure source of real-world data. Since stablecoins collectively have immense value in DeFi applications, they need the same commitments and reliability guarantees as the blockchains they run on.
Chainlink uses decentralization to verify data to assure its accuracy. Chainlink ensures that all off-chain data transmitted on-chain is accurate by building a decentralized oracle network that employs smart contracts to check the oracle’s integrity, order match, and aggregate outcomes.
#5 Solana (SOL) – A Next-Generation Web3 Platform
The Web 3.0 platform Solana was designed as a publicly listed blockchain-based crypto network. Solana has created a fully integrated, user-owned, and operated cloud platform using a global network of decentralized computers. In contrast to previous networks, Solana allows high-speed and inexpensive transactions on a single-layer blockchain, eliminating the need for additional scaling solutions.
The SOL token is used to:
(i) power Decentralized Applications (dApps),
(ii) conduct payments,
(iii) pay network fees,
(iv) stake tokens to secure the network, and
(v) support network governance.
#6 Polkadot (DOT) – A Decentralized Multi-Chain Network
Polkadot is a scalable, trustworthy, decentralized multi-chain network for the upcoming web. It can be produced using Substrate, a framework that facilitates the construction of bespoke or pre-built blockchains.
Polkadot’s interoperability protocol uses segments, or shards, to expand the network and develop a completely user-controlled decentralized web. Additionally, it can connect distinct blockchains, open networks, and oracles to create a new kind of web that enables direct information and transaction interchange.
Stablecoins are a convincing substitute for the market’s volatile crypto tokens. They combine the simplicity of crypto transactions with the reliability and security of fiat money. Despite the fact that stablecoins come in a variety of forms, those with the largest market capitalizations are fiat-backed. Therefore, consider including the aforementioned cryptos in your portfolio if you want to invest in the crypto market.
Frequently Asked Questions
Virtual currency is a type of uncontrolled digital currency that can only be used online. It is exclusively stored and transacted using designated software, mobile or computer applications, or unique digital wallets, and all transactions are conducted through secure, dedicated networks. Because digital currency is just currency issued by a bank in digital form, virtual currency is not the same as a digital currency. Virtual currency, unlike ordinary money, is based on a trust structure and cannot be issued by a central bank or other banking regulatory organization.
No, cryptocurrency is not banned in India. India has seen its ups and downs in the crypto sector concerning its legal status. The Reserve Bank of India (RBI) issued a circular in April 2018 advising all organizations under its jurisdiction not to trade in virtual currencies or provide services to assist anyone in dealing with or settling them. A government committee proposed outlawing all private cryptocurrencies in mid-2019, with up to ten years in prison and severe penalties for anyone dealing in digital currency. The Supreme Court overruled the RBI's circular in March 2020, allowing banks to undertake cryptocurrency transactions from dealers and exchanges.
There are over 5000 other digital currencies available on the internet in addition to Bitcoins. The only problem is that they haven't gotten the users' attention. Besides Bitcoins, a few other digital currencies have gained popularity among users. It's been more than ten years since Bitcoins were first released, and now they've achieved new heights thanks to their phenomenal success.
Bitcoin has had the highest market capitalization, has been around the longest, has the most experienced development team, and has enormous network impact and brand recognition. As a result, while trading cryptocurrencies, the rate of return on Bitcoin is commonly used as a benchmark. However, the risks associated with cryptocurrencies remain, and the safest cryptocurrency for you depends on your analysis.
Cryptocurrency can be purchased in two ways: through mining or exchanges. The process of confirming and adding transactions to the blockchain public ledger is known as cryptocurrency mining. Cryptocurrency exchanges are another option. Exchanges make money by charging transaction fees, but there are alternative platforms where you may communicate directly with other cryptocurrency traders.
Cryptocurrency mining can be time-consuming, expensive, and sporadically profitable. Mining has an appeal for many cryptocurrency enthusiasts as miners are paid directly with crypto tokens for their efforts. The legality of cryptocurrency mining is dependent on where you live. In India, there is no restriction on crypto mining.
Cryptocurrencies use cryptography technology to keep transactions and their units (tokens) secure. Cryptocurrency works via a technology called the blockchain. A blockchain is a decentralized technology that handles and records transactions across numerous computers. The security of this technology is part of its value.
There are two ways of investing in cryptocurrency, mining and via exchanges. Cryptocurrency mining is considered the procedure of verifying and adding transactions to the blockchain public ledger. Another option is via cryptocurrency exchanges. Exchanges generate money by collecting transaction fees, but there are alternative websites where you can interact directly with other users who want to trade cryptocurrencies.
Cryptocurrency has the potential to make you extremely wealthy, and the potential to cause you to lose your money. Crypto assets, like any other investment, come with many risks and potential rewards. Fundamentally, cryptocurrency is an excellent investment, particularly if you want to gain direct exposure to the demand for digital currency.
Yes, with exchanges like WazirX, you may invest in cryptocurrency in India. To begin, go to the WazirX website and register. After that, you will receive a verification email. The link received by verification mail will only be available for a few seconds, so make sure you click it as quickly as possible. This will successfully verify your email address. The following step is to set up security, so choose the best solution for you. After you've set up the security, you'll be given the option of continuing with or without completing the KYC process.