Cryptocurrency is booming and has been for a few years. It is the new way to trade and use money. The star of the game was Bitcoin for some time. Bitcoin initiated the cryptocurrency industry and heightened its popularity. Why? Bitcoin intervened with the global economy and redefined how money can be used. With recent Bitcoin price fluctuations, many wonder whether it is safe and worth the investment.
A new addition to the world of cryptocurrency is stablecoin. Stablecoin seems to be less volatile and be able to outsmart Bitcoin. If so, how? Today we will be sharing everything that you need to know about the two coin types, how they compare, and which could be the winner. What is the difference between stablecoin vs. Bitcoin?
Bitcoin was developed and introduced to the world of cryptocurrency in 2009. The difference with Bitcoin compared to regular currency is that it is digitally used, and no middle man is involved. Instead, it is coined as a decentralized currency that can be sent from one Bitcoin peer to another using a Bitcoin network. There is no need for an intermediate like there is for a regular bank. The transactions are verified instantly through cryptography and displayed on a public ledger known as a blockchain.
Since its introduction to the world of cryptocurrency, the electronic cash system has seen crashes and price fluctuations. Due to this, holders of Bitcoin have experienced conflict. It is a volatile coin that may not be as stable as other cryptocurrencies, such as stablecoin.
On the other hand, stablecoin is much more stable because it is pegged to a commodity, such as metals or the US dollar. As it is pegged to a commodity, the rate is more reliable and less vulnerable to fluctuation. Thus, your money can be safer with stablecoin.
Most stablecoins are found at a 1:1 ratio, which compares to fiat currencies like the US dollar. You can use these to trade or exchange, unlike Bitcoin.
Stablecoins are also available on the blockchain, which makes them more reliable.
Blockchain is a list of records (also referred to as blocks) that are exchanged and stored using cryptography. For currencies like Bitcoin and stablecoin, blockchains work to allow exchanges.
Using blockchain, currency holders can guarantee a safer and more reliable exchange of data and currency.
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An apparent difference between stablecoin and Bitcoin is the volatility. Stablecoin (as the name states) is much more stable and reliable. As it is pegged to a commodity, it is less likely to fluctuate and lose value. In comparison, Bitcoin has caused arousal in recent years due to the value fluctuation. If a person wants a more reliable coin, Bitcoin is not the best choice.
Alongside volatility, there are other differences between stablecoin vs. Bitcoin.
A key difference between stablecoin and Bitcoin is that stablecoin is available in different types. There is only one type of Bitcoin available. Whereas there are four different types of stablecoin:
Bitcoin and stablecoin are used for entirely different applications.
Bitcoin is a peer-to-peer transaction that can be completed globally within seconds, and transaction fees are typically low. On the other hand, stablecoin can serve more real-life uses, such as making digital payments like commodities and fiat currencies.
Bitcoin typically offers more privacy due to always being used on blockchains servers. In comparison, stablecoins are not (or do not have to be) exchanged through blockchain.
Bitcoin is most typically used for trading and investing. This means that traders can use the currency to buy and trade real-world assets while taking market trends into account.
On the flip side, stablecoin is typically used for actual transactions. Using stablecoin is similar to using real money as it can be used to purchase real-life things.
Another difference between stablecoin vs. Bitcoin is the level of control. Bitcoin has the ability to project and predict price increases and decreases. Whereas stablecoin typically has a fixed value, which makes them dependent on other assets such as commodities and fiat currencies. Users cannot dictate the returns they can receive with stablecoins, as the fiat and commodity market is out of their hands.
Bitcoin users can use their cryptocurrency and attain a higher return by understanding market trends. They can invest their Bitcoin into high return markets, where stablecoin users cannot.
Bitcoin and stablecoin are used in totally different ways. Bitcoin uses electronic payments only. These are made through decentralized servers and never require a middle man. Bitcoin payments are instant and can be exchanged on a global scale within seconds.
Stablecoins use digital payments and are similar to real-life payment methods, making them easier to understand for regular people. However, they are slower and have less opportunity to attain an increase in value.
There are clear differences between stablecoin vs. Bitcoin. Bitcoin is much more volatile, yet it can attain more profit and can be used on a global scale exceptionally easily. Payments are secured through the use of blockchain. Although stablecoin is much safer and more reliable, there is little room for a higher return and is similar to real-life currency.
Both are cryptocurrencies that allow users to make payments online, and both are changing the scope of the financial ecosystem. Stablecoins are definitely growing in popularity due to their reliability, yet Bitcoin is still the industry leader.
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