, 2 years ago

What are Stablecoins?

Cryptocurrencies are highly volatile, which offers great opportunities for trading. Still, sometimes you would like to preserve the value and don’t want to risk any up-or downside. What are stablecoins and what do they have to offer?

Transferring value

Stablecoins offer a lot more options then regular currencies. They can be stored and transferred peer-to-peer just like regular crypto. At the same time, they represent the stable value of the underlying asset. For one instance, one USDT is backed by one real US-Dollar held by the company Tether.

But there are also different and decentralized stablecoins that don’t require a trusted third party. Maker DAO and the stablecoin DAI is such an example, but also Heaven Protocol and its assets like xUSD, xGold or xSilver.

These examples show that the underlying assets doesn’t have to be necessarily a fiat currency, but can also be a commodity as well. Aside from these qualities most stablecoins share the following features:

  • They don’t run on their own blockchain
  • In this sense they are tokens and not coins
  • These tokens apply to different standards, meaning they can be issued on different blockchains
  • They can represent a tokenized version of fiat currencies, crypto and commodities

Use cases

With these features stablecoins are most suitable to settle payments without risking any loses due to volatility. They also have a very important role in decentralized finance applications, since they can represent different assets.

This way it is possible to use Bitcoin with a stablecoin like WBTC and lock it into a liquidity pool for yield farming, for instance. It allows to hold BTC, while at the same time interacting with the Ethereum blockchain and one of its many DeFi protocols.

Another option is to use stablecoins for trading, because they represent the value of the US-Dollar or Euro. They become faster available to traders than a traditional wire transaction.

Are LiteBit Credits a stablecoin?

The short answer is no. While LiteBit credits offer you a very convenient and fast trading experience they are serving a similar purpose, but they are not representing the Euro. They are also only available on our trading platform.

Unlike a stablecoin they cannot be transferred or redeemed. Instead they can be sold for or bought with Euros or crypto like Bitcoin. As the name suggests, they serve simply as store credit and are not to be confused with existing stablecoin solutions.

Check out the market overview

Featured articles
Four trading strategies for crypto
Bitcoin and Ethereum: what are the differences?
What determines the Bitcoin price?
Related articles
What is VeChain?

Jan 30, 2023

What better use for blockchain technology than supply chains? Both are chains, right? Maybe that’s what the VeChain team thought to themselves when they launched in 2015. All jokes aside, the company has made strides in creating a platform for the currently siloed space of supply chain data for businesses.

Trade anytime, anywhere

Boost your trading impact and reaction time in over 80+ cryptocurrencies via instant access to your portfolio with the LiteBit app.

  • 2525 Ventures B.V.
  • 3014 DA Rotterdam
  • The Netherlands
More info
  • About LiteBit
  • Careers
  • Support
  • Sell
  • News
  • Education
  • Affiliates
Subscribe for updates

Sign up to stay informed via our email updates

Subscribe
Explore popular coins
© 2023 LiteBit - All rights reserved