The Ethereum-based stablecoin USD Coin (USDC) has experienced massive growth in supply over the past year. That means more investors may consider stablecoin as a viable investment.
When selecting a token to invest in, you have various options to choose with Bitcoin being the most popular.
Stablecoin vs. Bitcoin, which one should you go with?
As you explore this stablecoin and Bitcoin guide, you’ll learn what each coin is along with its differences. Keep reading to learn more.
Basic Stablecoin Guide: What Is Stablecoin?
A stablecoin is a type of cryptocurrency that aims to make up for Bitcoin’s volatility.
It gives users a means to invest in a token that’s backed or collateralized by a fiat currency at a 1:1 ratio. That means, for example, one US Dollar would equal 1 Tether USD (stablecoin).
Basic Bitcoin Guide: What Is Bitcoin?
Bitcoin is the most successful attempt to create an online and decentralized currency in its early efforts. Users can send these tokens to each other by using a peer-to-peer Bitcoin network.
If you’re looking for Bitcoins to let you take control of your privacy and finances, view one of ByteFederal’s 1,000 Bitcoin ATMs.
Differences Between the Cryptocurrencies
Aside from the way both cryptocurrency tokens’ prices fluctuate, there are varying ways that these coins differ.
These next couple of points will cover the most useful tips that will help you choose which to invest in.
Level of Control You Have Over Your Token
Stablecoins have the same value as the asset or national currency that backs them. Because of this, you cannot predict the returns that you’ll receive when buying them. Conversely, Bitcoins are volatile.
Despite their volatility, you can still try to predict other altcoins’ price directions by watching what way Bitcoin goes. For example, if you read a lot of Bitcoin tips, you can better predict where the market flows. Because of this, you can cash out your bitcoin for fiat currency or other tokens whenever you want.
Use Cases for Each Cryptocurrency
Unlike Bitcoin, stablecoins have more potential to serve as digital payment mediums since their values remain constant. Because of this, all someone would need to do is deposit money into a bank account and have it converted into a token, which the financial institution could peg against a national currency.
You could also use stablecoins as a vehicle to streamline peer-to-peer (P2P) transactions with smart contracts. Because of these contracts, you drop brokers and thus remove any risk third parties could put into your transaction.
Since stablecoin’s price remains constant, it removes any chances of its value appreciating. That’s where Bitcoin comes in. Since the token’s value stems from market trends and real-world assets, investors can have an alternate medium to invest their money into.
Stablecoin vs. Bitcoin: Is There a Winner?
When judging stablecoin vs. Bitcoin, there is no clear winner. Everyone invests in cryptocurrency for different reasons. Some of you may want a volatile token that has the potential to offer massive returns. Otherwise, you may want a token with a consistent price that you can use for transactions.
In the end, you will need to weigh the pros and cons of both tokens and find which you prefer.
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