Stable Coins - Digital Dollars
The idea of stable coins is in the name, stability.
All you need to know to understand stable coins is that they are crypto tokens that are pegged, or equal a real world asset. (Like the US dollar)
DAI, for example, has all of the properties a crypto currency, but 1 DAI will always = $1 US Dollar.
Q: What are the benefits of using a stable coin like DAI or USDC?
- You can pay an employee or freelancer in DAI, knowing the price won't fluctuate. This way, a $2,000 monthly salary can't turn into $1,000 overnight.
- Keeping profits or dollars in general, in a stable coin, allows you to interact with the DeFi world, like gaining interest on your stable coin via Compound or AAVE.
- You can swap stable coins like DAI for ANY cryptocurrency on an app like Uniswap. There is no US dollar or credit card option here. On centralized exchanges like Coinbase or Binance, you only can buy what they have to offer.
Q: Are there stable coin crypto currencies that are tied to the EURO?
A: Yup, stable coins can be tied to any fiat currency, and while US Dollar based stable coins are most popular, we're starting to see others come about.
Q: Do I pay taxes if I convert my crypto into stable coins?
A: Yup, it is still a taxable event, check with a tax professional.
Q: Can stable coins be tied to assets besides real world fiat currencies?
A: Yup! A stable coin can be tied to the price of Tesla stock for example. And it will equal whatever the price of this stock currently is. A lot of opportunities are opening up!
List Of Stable Coins:
- DAI = $1 US dollar. (Decentralized)
- USDC = $1 US dollar. (Owned by Coinbase)
- USDT = $1 US dollar (Centralized)
- sUSD = $1 (decentralized)
- TUSD = $1 (centralized & regulated)
- GUSD = $1 (centralized & regulated)